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Future Stock Thursday – Building a Portfolio for the 21st Century

MADUN K The future is now, old man. Face Facial expression Head Forehead Cheek Chin Male ChildThe Future is Now!  

I was posting some news on Tuesday in our Live Member Chat Room and McDonalds (MCD) was selling Artificial Beef (BYND), the Freeport LNG Terminal was coming on-line in Texas to supply Japan with Liquefied Natural Gas, Virgin Galactic (SPCE) got an upgrade based on Hypersonic Travel and Wal-Mart (WMT) is testing Autonomous Grocery Deliveries.  I wasn't looking for them but that was all in one morning's news, which led me to comment to our Members:

I'm thinking we should put together a portfolio of "Future is Now" stocks like SPCE – Something that represents the leader in each Future Field like CRSP, ISRG, etc…

As I noted in yesterday's Live Trading Webinar, it's tough to pick winners this early in the game but we can pick the sectors that are likely to be important in the next 10-20 years and then, within those categories, we can find stocks we currently think are a reasonable value within a growing sector.  In yesterday's Member Chat Room and during the Webinar, we came up with the following ideas:

  • Virgin Galactic (Space Tourism) – SPCE
  • Tesla (Electric, Self-Driving Cars, Battery Storage) – TSLA
  • Beyon Meats (Plant-Based Meat) – BYND
  • Sunpower (Solar Cells) – SPWR 
  • Lockheed Martin (Fusion, Weapons) – LMT
  • Disney (Entertainment, Virtual Reality, Robotics) – DIS 
  • Xylem - (Water Conservation and Treatment) – XYL 
  • Waste Management (Recycling, Reusing) – WM 
  • Crisper (Gene Thearapy) – CRSP
  • IBM (AI) – IBM
  • Qualcome (5G…) – QCOM
  • Intuitive Surgical (Robot Doctors) – ISRG 
  • Ballard Power, Plug Power, Fuel Cell Energy (Hydrogen Fuel Cells) – BLDP, PLUG, FCEL (not sure which)
  • Amazon (Smart Homes, Smart Devices, Drone Delivery, On-line Shopping) – AMZN 

We're very open to additional suggestions and, over the next few days, we'll be refining this list and then deciding who the actual leaders in each space is and then deciding what the best plays to make in each category are going to be and then we'll have a new portfolio.  Easy peasy!  

Not much going on otherwise, the Fed didn't raises rates yesterday and that dropped the Dollar back below 97, so down 1.5% for the month and the S&P is right where we started the month, at 3,150 so, in Dollar terms, your S&P stocks may now be exchanged for 1.5% weaker Dollars than they could be on Dec 2nd.  Is that progress?

 


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  1. Very informative discussion last night and this morning with many members but a special thank you to Winston and Yodi for the information on their trade setups. If you have not read the comments, I really encourage you to do so. This is the reason why this board is so great – plenty of trade ideas to suit different styles, not just a one size fits all approach! 


  2. Good morning, All!

    The webinar replay is up now, here:

    https://youtu.be/Cx1CQRI_uCA


  3. Great discussion indeed !  Thanks Winston & Yodi.  Will not only re-read, will copy for reference.

     

    Bausch Health Companies (NYSE:BHC) upgraded to Overweight with a C$50.04 (30% upside) price target at JPMorgan. Shares up 2% premarket in the U.S.

     

    Took awhile on this one, finally paying off.


  4. And Winston – I am still not 100% sure on why you add the LEAPS put hedge to your setup especially when you sell the monthly strangles/straddles. It does mitigate some of the risks but as you mention on a big downside move, you might sell more short term puts as you roll so the mitigation loses its value there. 


  5. And will still do some tests using ThinkBack in TOS that can be used for reference.


  6. Winston, changing over to today's page, I very much enjoyed this healthy discussion. I found in all my different trading plays, selling short term premium is always the key of any leap situation. This applies to armchair, BCS, poor man's trades and on certain recommendations I like to sell vertical puts even naked puts if I like the stock. Your play is similar to my poor man's set up; I like to see intrinsic value in my long leap and try to make up the extrinsic cost on the long leap, as soon as possible with the sale of strangles. On a down market with yours, you stop the bleeding on the short leap put, Question is, takes TOS any consideration of your leap set up when selling strangles or do they consider it as a naked play? Than your margin will be relatively high!!!
     


  7. Good Morning!


  8. Thanks STJ, I enjoyed it as well. I sometime try to inspire newer members to participate in the discussions, as this might put much more wood on the fire!!!
    Re Winston's leap he just likes to cover his back on a down turn and hopes to make some money on the leap if the stock goes up. Not sure if you can use that leap as a compensation for your strangles.


  9. From Yesterday

    yodi
    December 12th, 2019 at 6:05 am | Permalink | Tweet thisIgnore this user    

    Phil,

    Looking at AMTD in respect to the buy out. Even having only 200 stock bought in 7/11/19 for 40.34, (I did advise the board!) together with my put and option sales (Armchair etc.) I could rig up a nice profit. The stock now at the 51 still down from it's high days of 63, looks to me like being on the high side of the scale.

    Do you think the take over will be a mess as usual by these buy outs, with other words close the plays?


  10. Very good discussion. This is a wonderful place to share ideas, and most importantly to have them challenged by other members. There are no stupid questions, and I have to say that I got more out of this exchange than I gave. I always believed the man when he said 'to get a better answer ask a better question.

    And StJL you asked a question in the territory which has been niggling me at the back of my mind – and it provoked a question – would it be better to BUY shorter term puts (weekly or monthlies) than to spend the money on buying the LEAP puts? On a down move, shorter term long puts would experience a gamma explosion and would go up a lot in value. That's something I would like to look into. 


  11. You are welcome Yodi! I think that it will be interesting to see some scenarios on how things would have played out using your systema and Winston's system. I'll setup some examples with companies that went up, down and sideways to learn how you can adjust. Should lead to some good conversations!


  12. Yodi, I trade with IB. I've got margin coming out of my ears so it is not a particular issue for me.


  13. Daggone it! I wish Trump would tell me when he's going to do that!


  14. Winston – This makes sense as well! Once again, I'll setup some examples this weekend that maybe we can game over the next week or so like a play by play. We can then save that somewhere for new and less new members! 


  15. Future tech – carbon capture/storage could be a big one moving forward. Tech based approaches are being worked on, and wood/forest-based approaches are already being used out there. If the carbon market were to really take off, someone like Weyehaeuser could stand to make a lot of money by switching to longer-term forestry and selling carbon credits. They already own and harvest on 12 million acres, the market would need to come to them.


  16. STJ looking forward to see still some resonable stocks. But I am in for the fun


  17. Winston Long short term puts could ran up well in to the money in comparison to the leap long put!
     


  18. well, newbs have been encouraged to participate so i wanted to ask about GLD; 

    thoughts on a new trade?  Thoughts on % of portfolio?

    thanks!


  19. Good morning! 

    Yes, great conversation on trading in yesterday's chat – thanks to all who participated. 

    Rookie had the following suggestions for Future stocks:

    BRKS, ROK – for automation

    UBER, NVDA – Autonomous vehicles

    ADI – IOT

    I really like BRKS but they are more of a manufacturing solution company than a future-facing company.  It's like picking the company that makes the machinery Cyberdyne uses to build the Terminators.  You need cool machinery to make cool robots but really it's Cyberdyne driving the innovations.  Or do we invest in TSLA's Robot-Maker and not TSLA?  The case could be made but where's the fun?

    Image result for robot assembly animated gif

    ROK is just automating Real Estate – that's always a category (how I made my first $M) and expensive to boot. NVDA I could buy into as they are super cutting-edge but also over-priced at the moment and UBER is first but not nec the winner in this game.

    As a rule of thumb, if I can imagine them being wiped out – then I don't want them so Uber is an App that employs drivers who buy cars.  If the auto companies have new cars drive themselves off the lot and just start picking people up and giving them rides – then bye bye Uber, right?  Uber's valuation is based on this dream of eliminating the driver expense but, if there are autonomous cars – then what is it that Uber does that is special?  There are many competitors already in their space so all they can do is "maybe" leverage their customer base but it will very quickly become a price war that they will lose to the people who make the cars in the first place.  Musk has more of an edge than Uber here. 

    ADI – I'd rather pick INTC but again, they just make the chips that go in the things that are innovative.  Of course, that would have been a dumb reason not to pick them 20 years ago, right?  Oh wait, I take that back, 20 years ago they were at $30!  cheeky

    Wow, market blasted higher at the open!  Trump tweet! 

    Getting VERY close to a BIG DEAL with China. They want it, and so do we!

    Actually I've heard there have been nothing but low-level meetings for the past two weeks.

    BHC/Albo – Boy did they throw a great sale. 

    AMTD/Yodi – Sorry, meant to get back to that but I had to look things up.  It's an ALL stock transaction so you'll just get some number of SCHW in exchange for your AMTD stock and the options will get very wonky and no way to predict that.  Only an all cash deal closes you out early.  

    Speaking of TD – This deal is dropping 13.4% of SCHW in their laps at about $7Bn and that's way up from what they valued their remaining stake in AMTD.  TD is a good value anyway at $55.60, which is $100Bn with a $2.24 (4%) Dividend and they might spit out a special dividend down the road.  

    Even if these are Canadian Dollars, TD is way undervalued:

    Year End 31st Oct 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
    Revenue C$m 29,961 31,426 34,315 36,202 38,892 41,065 40,947 43,418 +6.5%
    Operating Profit C$m 9,075 9,170 10,646 12,321 13,773 13,229     +7.8%
    Net Profit C$m 7,776 7,912 8,821 10,396 11,262 11,668 12,437 13,123 +8.5%
    EPS Reported C$ 4.14 4.21 4.67 5.50 6.01 6.25     +8.6%
    EPS Normalised C$ 4.15 4.52 4.74 5.50 6.04 6.33 6.88 7.33 +8.8%
    EPS Growth % +18.3 +9.0 +4.7 +16.1 +9.8 +4.8 +8.81 +6.51  
    PE Ratio x           11.5 10.6 9.93  
    PEG x           1.31 1.62 0.70
    Profitability

    So, as an eventual LTP play, we can put TD in the STP but let's also do a Dividend play:

    For the Dividend Portfolio:

    • Sell 5 TD July $57.50 puts for $4.10 ($2,050) 

    We're kind of full but I'd sell something else to buy TD for net $53.40.

    For the STP:

    • Sell 10 TD July $55 puts for $2.65 ($2,650) 
    • Buy 15 TD July $52.50 calls for $4 ($6,000) 
    • Sell 15 TD July $57.50 calls for $1.20 ($1,800) 

    That's net $1,550 on the $7,500 spread so $5,950 (383%) upside potential in just 218 days if all goes well and, if it doesn't, we're very happy to establish a bigger TD position in the LTP.  Ordinary Margin is $10,500 – not terribly efficient but very manageable.  


  20. R I did mention the other day 11/1/19, PE 21 div 4.2 up 520$ on a 200 stk armchair from 11/1/19


  21. I think today however is not a good day to buy as the clown balloon is inflated again, wait till deflation!!!


  22. SPX 3200 inbound. 


  23. Sold another 1/3 of recent SMLP position, up 22%.


  24. If you show no win today you are in the wrong game. Only pot stocks are just not smoking!!


  25. My CMI poor man's play of only 2 option play 12/9/19  up 480$
     


  26. It's amazing that another Trump tweet can move the market like this – once again, how much money was made by his friends on this blatant market manipulation?


  27. Stockburn suggested SQ and they are interesting but, to me, only A payment system.  I think ApplePay is way more innovative and gosh, we forgot to include AAPL – how silly! 

    Up 250 now as White House is backing Trump up on China:

    Welcome Potter!  Our Trade of the Year is GOLD, not GLD as GLD is just gold and goes up and down whenever while GOLD is the world's largest miner and they may go up and down with the price of Gold but, on the whole, they can still make money when gold is lower so your asset has value over the long-term while GLD contracts only reflect the price at the time (and there's a decay factor from churn and fees).  

    GLD is up 20% since June – nice.

    GOLD is up 41% since June – nicer!  

    A new entry on GOLD should be conservative as you would be chasing.  Something like:

    • Sell 10 GOLD 2022 $15 puts for $1.90 ($1,900) 
    • Buy 15 2022 $13 calls for $6 ($9,000)
    • Sell 15 2022 $17 calls for $3.60 ($5,400) 

    That's net $1,700 on the $6,000 spread so $4,300 (252%) upside potential if GOLD holds $17 through Jan, 2022 and the downside would be owning 1,000 shares of GOLD for $15 plus whatever you lose on the spread (up to $1,700) but, because you have $13 calls, the break-even would be about $14, which is 20% off the current price.  


  28. Those are a lot of concessions we're making to China for simply agreeing to start buying the crops they were buying before this all started.  Did we get tired of "winning" already?


  29. Closed a portion of my short VXX position on this spike. Up $7K in 10 days. 


  30. Palotay = Nice !


  31. Good deal Palotay! Since I have a much smaller position, I'll keep on squeezing the premium. I love this trade…


  32. Trade / Phil – As I said, it's simply exhausting to listen to these lies day in and day out! So, us, US taxpayers paid tens of billions in tariffs to possibly get back to where we were 3 years ago! And I am sure that China is making no promises to buy anything. They will probably only commit to include the US farmers in next negotiations with the rest of the world. Some markets will be lost for a long time. 

    It's always the same with Trump – big talk and if someone pushes back, he folds like a cheap card table!


  33. In the meantime, giving psychological advice to Greta Thunberg on Twitter! 


  34. I have a few short calls I'm trying to fix (or wait to fix).

    SIG short $17.5 Jan 2020 calls that I sold for $1.65.  Wasn't expecting to see them blast higher by a third.  So far, I've been waiting for the premium to die down a bit more (or hopefully a pullback) before buying them back.  I do plan on rolling before the end of the year.  My plan for the roll is April $22s at $3 which would lock in a small loss but I figure I could make that up on another quarterly sale in April.  These are currently covered by $8 2021 Longs and I also have short 2021 $13 puts.

    With plays in LB, SIG, and M, I decided to use XRT as a hedge.  Terrible idea--XRT is a garbage hedge for these retail plays so nobody make the same mistake as me.  http://schrts.co/ekIxvfur if you want to see the perfchart on the relative performance of these stocks.




  35. Automation – The industry can be broken down into three areas – Integrators, Builders with scale, and technology developers.   The integrators are ATS ( Canada) BBS Imation, Pentmaster (Malaysia), Doerfer (US) Hirata (JPN their competitors and Fanuc (JPN) Hon Hai (Foxcon) from TWN. KUKA, Germany  Then there the companies that develop the vision technology ( Cameras ) IR etc, the Micro assembly – The pure integrators (ATS) are large but profits are lower, and they have little to no IP,  The Builders w/ scale ) Hon Hai, Fanuc have the ability to develop ad reply solutions across a factory. these have IP ( at the lower level) and with the on going support generate nice recurring revenue.  The technology developers are usually smaller and less known – they have excellent engineering talent but are many time private, and small in scale.  The profit margins here at in the 80% and 60 % GM and NI…    I would focus on Fanuc, KUKA,Baush these as these have some IP with integration and deployment….  I haven't looked at these in a few years, so don't know what they are upto now and what the financials look like.





  36. Winston/Yodi/StJ – Thanks so much for the spirited discussions. This discussion opened up various options for trading options (pun intended). This is what I learnt – the key I guess is selling frequent (weekly/monthly/quarterly) premium and in Winston's case have a max loss predefined with a put spread in case of a black swan event (for the market or for that stock) occurs.

    Phil – For robots – TER (teradyne); Barrons had an article on them recently 

    https://www.barrons.com/articles/teradyne-semiconductor-test-equipment-robots-robotics-industrial-automation-51572991549


  37. JPH SIG I would roll to Jan20 22.5 your combined loss on the roll is 1.25 or so you should obviously have made up on the longs. After Christmas sales will not be the same for SIG

    I am holding the Dec 18 and rolling to Jan 20 24th to 22 call.


  38. Future / Phil – I don't think that we can have IBM and leave GOOG from that list. The AI investment is there to justify it. Of course AMZN and MSFT are there as well. 


  39. Some of these futures are with high PM high on the scale, TSLA, BYND from 239 to 75, I lake my steak medium not fake ???? FCEL lost money on.


  40. 8,500 rejected on /NQ – no surprise there.  

    28,200 is resistance again.

    SIG/JPH – You aren't going to win them all.  If you had the 2021 $8s with short Jan $17.50s and the short 2021 $13 puts – I'm sure it's nice and profitable – you just with it were more so.  This is why I prefer regular bull-call spreads and don't try to squeeze out more by selling short-term calls – I'd rather not have the occasional hassle.  

    My adjustment would be (assuming 10 of each):

    • Roll 10 short Jan $17.50 calls at $4.70 ($4,700) to 15 July $22 calls at $3.20 ($4,800)
    • Sell 10 2021 $18 puts for $2.70 ($2,700)
    • Sell 10 2021 $8 calls for $14 ($14,000) 
    • Buy 15 2022 $15 calls for $9 ($13,500) 
    • Sell 10 2022 22 calls for $6.10 ($6,000) 

    That's taking net $9,300 off the table and you're left with 15 2022 $15 calls covered by 10 2022 $22 calls and 15 July $22 calls with 10 short 2021 $18 puts.  You can't lose on both Julys so you'll just sell another $7,500 of 2021 premium when the time comes and, if you are worried about getting in trouble, it would cost you just $2,000 to stop out 5 of the short $22s at $4 or $4,500 (maybe $5,500) to buy more long calls before they hit $11.  Either way, you can fully cover for less than you have in your pocket if SIG goes crazy higher but you have a $10,500 long spread that's in the money and $7,500 of short pure premium AND $9,300 in your pocket with the potential for 3 more premium sales ($22,500) while you wait.  

    You don't really need a hedge with a play like this as you have that $22,500 coming to you if SIG stays in a lower range – the long money is just a bonus if it hits.  That's the secret to the Butterfly Portfolio (which we hardly ever hedge).

    Good rundown Batman, thanks.

    TER/Vkat – That always makes me think of water picks.  All these are nice, boring companies SUPPORTING the companies of the future but I don't know that I'd consider them the actual companies of the Future.  

    GOOG/StJ – So far, I see GOOG defending their current circa 1999 product – not so much coming out with new stuff – though they do seem to try.  Everyone is investing in AI – I still choose IBM as the long-term winner and, don't forget, "Business Machines" meant typewriters – so IBM doesn't sit on their laurels…

    To some extent, GOOG switched to playing defense and we'll see what the new CEO does and MSFT also hasn't really gotten out of their 1999 box either except that they ALSO do cloud now.  Cloud is not the Future to me, just the evolution of paper, disk, chip, cloud methods of storing data (so far) – more of a tool than a think unto itself.  

    Of course you could argue that I would have said that about ball-point pens at the time so the list isn't going to be all-inclusive of future tech but I don't want to clog it up covering things that are just parts of other things.  

    GOOGL invested $335M in Lime (scooters) and I'd love to get a bit of one of those companies.  I think scooters are an amazing solution for urban travel – if we get rid of the cars.  So now LIME integrates GOOGL maps AND the advertising on GOOGL maps generates another revenue stream – so it's very smart.  Also, a big cost to scooter companies is having to pick them up and recharge them ($5/scooter/day) but GOOGL already invested big in self-driving tech that could be applied to the scooters so they can go and get their own damned charge when they need it…

    Expensive/Yodi – That's why I'm still finalizing and some we may have to just watch and wait.  


  41. GOOG/Phil – Back in the 70s I stored files and ran programs on the mainframe (a CDC 6400 IIRC) across campus, in good part because the terminals I used had no storage or programming capability. How does that differ from "cloud" computing? Maybe the difference is I can't walk across campus to the mainframe, and it no longer takes up an entire building?


  42. I have and still are making good $ on bynd.  Goes up and down like a yo-yo. It almost looks coordinated and we buy a lot of the product when we can find it!! 


  43. Enjoyed reading the chats although not understanding the details yet.

    Need to read up on:

    LEAPs, straddles, strangles, synthetic stock.

     

    On a more basic level, wondering if there is anything useful to do about my (deep) ITM AAPL spreads other than closing one out in Jan?

     

    A) I have 3 AAPL Jan’20 $150/160 (which yielded -$17.43 to set up). 

    Assume no point in trying to roll the short 160s to anything with the same expiry date, right? Or would it pay to sell ATM calls with some premium after buying back the 160s with little premium? 

     

    B) Also long 20 AAPL Jan’21 $140calls (@ ~$26)

    Managed to roll 10 short Mar $240c to 10 Jun’20 $270calls for $13 ($13 to gain $30)

    Still have 10 short Mar’20 $220calls that I couldn’t find a good roll for.

     

    C) Have 30 Jun'21 AAPL $200/240 @ $11.1

     

    Thanks for any suggestions!


  44. Wing walker

    AAPL

    I am amazed you play with such high numbers, but still all looking good.

    A do nothing and let expire.

    B March calls are still 3.5 Month away, so why panic? let the premium burn down and than in March think of rolling provided none goes fully ITM without premium left.

    C also just leave alone and let expire.

    As you say you do not know much about Leaps and strangles please study up before you get in to this. Amazing how well you did with AAPL!!!!


  45. Nice McKinsey Report on Oil – agrees with my notes on demand from yesterday

    Cloud/Snow – Funny how it turns out IBM was right all along and PC's were kind of a fad and now we're back to mainframes.   That's why IBM got caught flat-footed back in the 80s, they didn't see the future in local storage and thought the whole thing was a wasted effort.  30 years later – they're right.  

    BYND/Pirate – You'd a better trader than I am if you're making money on the long side of this:

    Still, back at $75 I do like them again.  That's $4.5Bn and they'll do $500M next year in sales but the average American consumes 222.2 lbs of meat per year (including chicken), which seems insane but…  

    Americans are set to eat more meat in 2018 than ever before. According to data published by the US Department of Agriculture (USDA), consumers are expected to eat 222.2 pounds (100.8 kilo) of red meat and poultry this year, up from 216.9 pounds per person in 2017. That will surpass the previous record of 221.9 pounds per person, set in 2004, Bloomberg reports. The predicted increase is ending a trend of falling meat consumption that began with the Great Recession in 2008. In 2014, the consumption of red meat and poultry was still down at 201.8 pounds per capita before it started to climb steadily, reaching 211.1 pounds in 2015 and 214.6 in 2016. The figure predicted for 2018 corresponds to a meat intake of roughly 10 ounces (or 280 grams) per day, almost double the amount recommended by government nutritionists. According to USDA’s Choose MyPlate nutrition guidelines, adults should not eat more than 5 to 6 ounces of meat per day.

    The popularity of dairy products, for example cheese and butter, has also increased to an all-time high, the USDA figures reveal. Domestic meat production is on the rise as well. The total production of red meat and poultry is expected to reach about 103.5 billion pounds in 2018, compared with 97.6 billion pounds in 2016. (ab)

    So 100Bn pounds at $2 a pound is $200Bn and let's say plants get to $40Bn in 10 years and BYND has 10% of that market so $4Bn – that seems to justify $4.5Bn as they should make much more than $225M selling that (economies of scale, etc).  So, when a Company of the Future can easily grow into conservative estimates – I have to like the play – even if it's a bit ahead of the curve now.

    Certainly I like BYND enough to sell 2022 $60 puts for $14.50 to net in for $45.50, which is 40% below the current price so let's make that the first trade of the Future is Now Portfolio:

    • Sell 5 BYND 2022 $60 puts for $14.50 ($7,250)

    Now we have $107,250 to start with though the margin is a rude $7,500 as BYND is so crazy – otherwise I would have sold 10.  

    AAPL/Wing – You end up paying bid/ask spreads and fees to buy out the trade early so I would not do that.  Just look towards making a new play after you cash in.  As to the rest, I think you have:

    • 30 June $200/240 bull call spreads, now $72/38 ($68,000) 
    • 20 2021 $140 calls, now $131 ($262,000) 
    • 10 short June $270 calls, now $19.50 ($19,500) 
    • 10 short March $220 calls, now $51.85 ($51,850) 

    So, on the whole, you're in good shape but, to me, the $140 calls are wasted potential so I'd cash those ($262,000) and buy 40 of the 2022 $220 ($68)/280 ($38) bull call spreads for $30 ($120,000) and then you can roll your 10 March $220s ($51,850) to 20 June $270s ($39,000) and I wouldn't sell puts because AAPL is so high.

    That would leave you waiting for the Jan and June spreads to cash out and then you'd have that $120,000 + $30,000 + $129,150 ($279,150)  back in your pocket and:

    • 40 2022 $220/280 bull call spreads (potential $240,000) 
    • 30 short June $270 calls ($60,000 ish) 

    See, nice and simple and if AAPL goes lower you can sell some puts for balance but, meanwhile, I'd keep a stop on 10 short $270s at $25 and 10 more at $30 so you'd have to put $55,000 back but only if AAPL were flying higher.  Otherwise, over time, you have an excellent chance of taking $500,000 off the table on your $100,000 ish investment – very nice!  

    And, as Yodi says, leave profits alone to expire unless you can do something really good with them now.  The June $200/240 spread is only $68,000 and will be $120,000 if AAPL just stays over $240 – why mess with it if you don't have to?


  46. Thanks Yodi/Phil much appreciate your help!

    Phil, my June $200/240 bcs is for 2021, not next year.

    Also if I sell the '21 AAPL $140 calls, they will hit me with big margin for my then 20 naked short calls (no portfolio margin allowed in Canada). Could I sell the $140s and buy 40 '22 $220s and sell only 20 of the $280s then work with the 20 shorter June $270 calls and keep rolling them out?  Probably have to buy 20 $220s first and THEN sell the $140s, THEN do 20 $220/280 bcs.

    Thanks from the cold snowy north!


  47. wingwalker you first roll the 140 to Jan22 220 Than you could buy another 20 Jan22 220 calls.

    It is a good idea just sell 20 short 280 calls which than matches your complete position. I trust this would balance your margin.


  48. Phil / Future – I think we should look hard at the CO2 mitigation industry….  this is an area that will explode –  

    there are several approaches to this – some use excessive amounts of water, others are very inefficient.  


  49. Wow – very rich discussion on the options strategies so special thanks to Winston and Yodi.

    I have a curious question on the purpose of the Put Spread. Typically a synthetic stock position has 1 delta, but the implementation of the Put Spread would mute the delta, right?

    If you are protecting for the downside, why not just do the Long LEAP call (Yodi's poor man strategy)?  Or did you want that credit Put Spread to also help lower the cost of the LEAP call?  Noting it will not offset the risk of writing short term short puts, I wonder if I'm missing another reason you would add that.

    On selecting monthly vs. quarterly – do you guys also consider the IV at the time (relative to average)?


  50. My thoughts as well, Batman. Another sector that stands to make a lot of money from carbon capture, barring some tech that solves the problem, are the industrial foresters like Weyerhauser, West Fraser timber, etc, who own and farm millions of acres of forestland. At the moment I'm pretty sure their model is to grow trees for a relatively short period of time and then chop them down. If the carbon market ever really takes off those companies may pivot to a longer-term strategy where they can make piles of cash by growing the trees for longer time periods, say 75 years, and selling carbon credits against them as they grow.



  51. GOOGL / Phil – They are investing in all kinds of different stuff besides AI:

    Calico, DeepMind (AI), X, Jigsaw, Makani, Sidewalk Labs, Verily, Waymo, Wing and Loon

    Some might pay off, other not. But still trying. And they are also doing well in quantum computing and that's the future. Others including IBM doing it too, but not many.


  52. Going to be rough for GME moving forward:

    https://arstechnica.com/gaming/2019/12/why-new-consoles-probably-wont-be-enough-to-save-gamestop/

    The next Xbox might not even have a disk drive! It's all digital now. You won't even need a console anymore soon. I am using Google Stadia now (it's so cheap, so why not) and you can run top games in a Chromebook, a phone (rough in the small screen) or a tablet. MSFT and others will have competing services. No need to buy a gaming rig anymore – except to run stock analysis :-)


  53. That's not that far in the future:

    https://www.engadget.com/2019/12/12/gm-cadillac-electric-vehicles-2030/

    GM has another promise for us: by 2030, the majority (and possibly all) Cadillacs will be electric vehicles.


  54. mitomejo,
    Two different strategies. Poor man's is a deeper ITM long leap call, and is set up in connection with a thorough searched stock. Best are proven stocks having reached a bottom. The leap call is very much married to the stock. Buying a leap put would reduce very much the profitability of the overall play.
    Winston's synthetic stock in my opinion has really very little relationship to the stock. To me it is not clear if this synthetic stock has any margin consideration in relation to selling strangles. The cost of the long leap put he tries to reduce by selling the strangles.
    Does the stock go down, the long put will compensate for the sale of the short leap put.
    In respect to my play stock or long leap call, in a down turn both in proportion lose money. Obviously by having bought a long put, the same will, to an extend compensate for the down turn.


  55. Talking about future, the near earth space will be the area of growth  with companies starting from zero (Standard Oil style), the  6th division of the U.S Military will meant huge amounts of work for companies like BA, Space X, SPCE, Virgin Galactic, LMT  etc.

    This companies has the technology to launch and relaunch the same rocket, drastically reducing cost and allowing bigger structures up there, SpaceX is building the first private spaceport in the Grande/Bravo River delta (in the border with Mexico) , I visited the place last October, they are just building a launch pad but the company has enough soil to compare with Cape Cañaveral.in the future-

    https://www.businessinsider.com/spacex-boca-chica-texas-launch-site-spaceport-corporation-eminent-domain-2019-9?IR=T

    Virgin Galactic is pushing you with $250.000 for a ride and has over 700 paid tickets (150 launches), is the same moment that flying the Atlantic with a Focke-Wulf, if price is reduce, the market is infinite, and they can milk it the way they like because there is no competition at the moment.

    https://www.washingtonpost.com/technology/2019/10/02/how-much-does-ticket-space-cost-meet-people-ready-fly/







  56. advill    add AJRD to your space idea. 



  57. And TSLA, of course.

    They could have around 30% of the new cars sales  during the next years….turning the carrier needs time for actual car companies and many of them are ill equipped for the change.

    https://www.nextbigfuture.com/2019/12/tesla-has-17-of-the-global-ev-market-and-could-maintain-or-grow-share-through-2025.html

    Having all that said have to declare that, as Yodi, I prefer a ICE engine or a hybrid nt a EV with actual batts technology


  58. Phil

    I loved LMT from 250-360.  I thought they reached full value and left them (thank you LMT!).  Was I too early?  Do you think there exist new value based on the space opportunities ahead? 


  59. mitomeio / Horses for courses. There is no one 'right' trade – it depends on your preferred style, your risk tolerance (how much drawdown are you willing to accept) your account size, the amount of capital you want to use, the amount of time you are willing to dedicate, your experience…… and so on. 

    I want to be a net seller of premium. I prefer to own an asset to sell that premium against. With options there is a panoply of ways to do that. 

    Start with one contract and try a range of different setups over a 3 month period. Paper trading is fine to learn the setups, but I find you miss the heat of battle which only real money trading gives you. 


  60. Now they are saying we do have a China Deal – DONE!  

    AAPL/Wing – I'd buy 30 of the 2022 $300 calls for $30 ($90,000) to cover the short June $270s then.  You might still get whacked for $90,000 more in margin but you know and I know you'll roll them out eventually into another bull call spread over time.   Less money in pocket but nothing naked that way.  Keep in mind the point is to PROTECT you from a downturn – just buying more very bullish calls doesn't accomplish that.  As to the June 2021 – no difference really, just longer to collect.  That's the good and bad of the vertical spread – you're pretty much stuck with them – especially you if you are restricted in your adjustments.  

    Image result for lorax treesCO2/Batman, Ati – The modern version of Waste Management.  I agree but it kind of makes me think of GE – as it's the kind of scale you need them for.  As to trees – can they really save us?  I think we're past the point of a natural solution making a difference.  

    Puts/Mito – I'll leave that to Winston and Yodi – this sort of complexity is why I don't get into those trickier set-ups or this would become "Phil Explains Stuff Over and Over World".

    GOOGL/StJ – I know but they are throwing money at all the same things we're picking individually and I'm not sure GOOGL is the best ETF for the Future.  X is just "let's fix things with Tech", Jigsaw is an AI App, Makani is kites (I think Ben Franklin had one when he started this whole Global Warming thing), Verily and Calico are just out of control Billionaires who don't want to die (there's lots of them in the World), Wing I doubt they'll do better than AMZN and Loon sounds like a good idea but they don't seem able to execute so far – so something must be wrong with it.  Nothing there gets me too excited – just a lot of stuff to make investors feel like they are going to stay relevant.  

    GME/StJ – I'm actually surprise they lasted this long after the introduction of Apps.

    Near space/Advill – Will be lots of cool things there.  I trust Branson over Musk and Bezos is also doing well with his space project.  Get me a space elevator to invest in!  

    Image result for space elevator animated gif

    LMT/DC – Sure, I hope they come down at some point but $385 is $109Bn and they are dropping $5Bn to the bottom line so 22x isn't all that expensive, even now (before they were a no-brainer).  We'll just have to watch it.


  61. Poor Phil no tricks just honest trading!!!!!


  62. China done and now the govt is funded as shutdown nears.  Looks like congress wants to start their vacations tomorrow.  


  63. Phil / Future CO2 recapture.  Definitely not trees but using CO2 in other processes to expend. / eliminate it while producing another useful product…   Below is a good primer on this good read.

    https://blogs.ei.columbia.edu/2019/05/29/co2-utilization-profits/

    CLIMATE

    Capturing Carbon's Potential: These Companies Are Turning CO2 into Profits

    Captured CO2 has long been injected into depleted oil fields to enhance oil recovery. It has also been pumped into greenhouses to boost plant growth. But today, many companies and researchers are developing new uses and products for captured CO2, such as varieties of concrete, chemicals and fuels. McKinsey & Company estimates that by 2030, CO2-based products could be worth between $800 billion and $1 trillion, and the use of CO2 for producing fuel, enriching concrete and generating power alone could reduce greenhouse gas emissions by a billion metric tons yearly. The Global Carbon Initiative projects that, with the proper incentives, by 2030 the overall CO2 based product industry could utilize seven billion metric tons of CO2 each year—about 15 percent of our current global emissions.


  64. Wow, what is going on today? Now there’s a budget deal too?

    Maybe the GOP finally agreed to get rid of Trump and the Dems agreed to pass all the bills…


  65. SKT / Phil, anyone else who still cares about SKT -  SKT closed today (Thurs) at $15.10,  down from $16.00 at Tues close. 

    Bloomberg says Trump has signed off on Phase 1.  Other than Retail numbers tomorrow, I see no other headwinds and they are good, I expect to see some sort of relief rally tomorrow.

    If it continues to slide down tomorrow and/or go nowhere, am I beating a dead horse in still believing there is value in this thing?  Or am I clearly missing something, which is looking increasingly likely.

    Top 10 Owners of Tanger Factory Outlet Centers Inc:

    Stockholder

    Stake

    Shares
    owned

    Total value ($)

    Shares
    bought / sold

    Total
    change

    SSgA Funds Management, Inc.

    29.60%

    27,492,799

    418,440,401

    +8,048,970

    +41.40%

    The Vanguard Group, Inc.

    13.98%

    12,985,152

    197,634,013

    -1,088,985

    -7.74%

    BlackRock Fund Advisors

    11.56%

    10,735,645

    163,396,517

    -465,849

    -4.16%

    State Street Global Advisors Ltd.

    4.20%

    3,904,610

    59,428,164

    -293

    -0.01%

    Marathon Asset Management LLP

    2.68%

    2,486,925

    37,850,999

    +148,748

    +6.36%

    Ceredex Value Advisors LLC

    2.49%

    2,309,353

    35,148,353

    -70,500

    -2.96%

    Northern Trust Investments, Inc.(…

    1.95%

    1,811,571

    27,572,111

    -6,000

    -0.33%

    Charles Schwab Investment Managem…

    1.80%

    1,674,798

    25,490,426

    +89,190

    +5.62%

    ProShare Advisors LLC

    1.72%

    1,597,344

    24,311,576

    +330,493

    +26.09%

    Geode Capital Management LLC

    1.66%

    1,545,994

    23,530,029

    +37,274

    +2.47%

    Am I correct in assuming these are essentially algos/robots? 

    If so, on what basis did they sell off SKT this week? 

    If INX has gone from 3133 to 3168, clearly other stocks have gone up, and are the algos programmed to scan every stock's movement every nanosecond and move money into bigger movers and out of SKT, based on some of volume-based volatility payoff metric or something? 

    Just trying to understand why and how SKT is behaving as it is.  Like what the hell….right now this makes absolutely no sense to me.  I am clearly missing something.



  66.  I would totally love that if it actually worked. Unfortunately I am still waiting over a year for my electric Mate bike, so not too keen on kick starter right now.  


  67. Humans are genetically hardwired to only live for 38 YEARS




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