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Just Another Manic Monday

Image result for earnings season animated gifWhat a boring weekend!

For a change, there wasn't any news – things just sort of drifted along but, poof!, half of January is already behind us and already we're moving into the heart of Earnings Season with 10% of the S&P 500 reporting this week followed by over 20% next week and we'll be half done by the end of the month and then it's February already – boy time flies

This week we concentrate on earnigs from the Financial Sector and I find Schwab (SCHW) very interesting at $48 as that's $61Bn after they swalled Ameritrade but they are only making $3.6Bn this year, just $300M more than last year with Q4 likely to be down from last year – not too supportive of a record-high valuation.  

It will be a good test to see how rational traders are getting (if at all) in this ultra high-value market environment.  Bank America (BAC) and Wells Fargo (WFC) are also expected to be making less money than they did last year and they too are at year highs – might be an interesting time for a little correction?

WFC, of course, is coming off fake account scandal but it hasn't really cost them a lot of cutstomers after 3 years as Revenues were $88Bn in 2016 and $85Bn in 2019 and profits are down 10% but, of course, the stock is up 10% from the 2016 highs ($50) and 20% off the lows ($45) because – well because it's part of the overall Valuation Rally – where everything is more expensive than it used to be.  

Still, a good case can be made for shorting them here and WFC reports tomorrow morning and it seems very unlikely they are going to hit $55 so the way I would play it is:

  • Buy 10 WFC March $52.50 puts for $2.10 ($2,100)
  • Sell 10 WFC March $50 puts for $1.05 ($1,050) 
  • Sell 5 WFC March $52.50 calls for $1.30 ($650) 

That's net $400 on the $2,500 so there's $2,100 (525%) of upside potential in 67 days if WFC is below $50. If earnings are good and they stay above $52.50, we will owe the short callers money but we can always roll them and put up a bullish spread to cover (since earnings are so good) so let's add this trade to our Earnings Portfolio and see how it does.

After we see how WFC, C and JPM do tomorrow morning, we'll have a better idea on how we want to play the rest of the sector.  As you can see below, 2019 was not a good year overall for earnings and no help is projected to come in Q4 but guidance is supposed to improve for 2020.  If it doesn't, watch out below!


We'll be working on all of our Member Portfolios this week as January options expire on Friday, so there will be plenty to do and it's a busy week with 9 Fed Speakers scheduled as well as CPI, PPI, NY, Philly & Atlanta Fed Reports, the Beige Book, Retail Sales, Consumer Sentiment and Industrial Production.  

We're still shorting the indexes (2 contracts each) at Dow (/YM) 28,915, S&P (/ES) 3,276 and Nasdaq (/NQ) 9,024 and we'll go for 3 contracts if we can still get those prices at the open.  These are the same shorts we began scaling into during last Wednesday's Live Trading Webinar (replay available here) and they are hedges for our $100,000 Portfolios against one of those sudden moves down the market likes to make these days

As I said, it was a dull weekend, nothing much in the news, which leaves us with Earnings and the re-start of Trump's Impeachment as well as lingering tension with Iran that can blow up at any minute – of course we want to be hedged!  Trump signs that Trade Deal on Wednesday but the actual deal isn't very exciting and then what will they use to prop up the markets?


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  1. Staggering! And it would make sense if people here lived so much longer!

  2. And the cost for everybody:

    The U.S. health-care system is the most expensive in the world, costing about $1 trillion more per year than the next-most-expensive system — Switzerland’s. That means U.S. households pay an extra $8,000 per year, compared with what Swiss families pay. 



    Tesla target raised to $612 from $385 at Oppenheimer; Outperform.

  4. SSI

    Down sharply in reaction to disappointing earnings/guidance.

    Bought some in pre-market at $3.30.

  5. Phil – mixed up number: We're still shorting the indexes (2 contracts each) at ……, S&P (/ES) 3,726 and ……… and we'll go for 3 contracts if we can still get those prices at the open

    I guess you mean 3276 on /ES?

  6. Phil/WFC trade
    The short March puts on your trade are closer to .85 than 1.85. Did you make a mistake?

  7. Added more SSI at $2.99.

  8. Good Morning!

  9. Sold 1/2 of SSI.  Up 15% from average entry.  Stop at entry on balance.

  10. Albo/TSLA

    I don´t know if we are evaluating Tesla for the past (financial statements) or the future (Excel spreadsheets), but true is somewhere between.

  11. Sold more SSI at $3.80 up 20%.  Keeping 1/4.  Stop up to $3.50.

  12. Good morning!

    Hate to start off with politics but this is too interesting:

    Figure 1. Presidential administrations corruption comparison

    That's only through 2016 – Trump already has us well over 160 indictments with 37 under the Mueller Investigation alone

  13. Medical prices/StJ – It is amazing and even more amazing how hard the GOP fights to keep things this way.  20% of our GDP goes to Heath Care and we could save 10% of our GDP ($2Tn/yr) if we simply adopted the model the rest of the world uses – AND THEY LIVE LONGER THAN WE DO!  Imagine what we could do with that $2Tn/yr…

    Tie that in with a 50% reduction in military ($400Bn) and go back to pre-Trump Corporate Taxes ($300Bn) and pre-Trump Billionaire taxes ($400Bn) and we're saving $3Tn a year to pay off the debt, fix our infrastructure and maybe even try to save the planet?  

    Phil 2020 – If it's not too late for Bloomberg…

    TSLA/Albo – Gosh, why stop there?  

    /ES/Winston – Well, I'd love to have the 3,726 short but yes, it's inverted, thanks.

    WFC/DC – I don't know what it said before but now the March $52.50 ($2.13)/$50 (1.05) bear put spread is net $1.08, which is perfectly fine and the short $52.50 calls are $1.24 so 10 spreads ($1,080) less 5 short calls ($612) is net $468 – better than I'd hoped as a net and still the trade we want to make for the Earnings Portfolio. 

  14. Ah, I see what I did.  I changed my mind from the $55/52.50 spread to the $52.50/$50 spread and then ended up with mixed up results.  We'll go for the $52.50/50 spread as noted above and fixed in the post (refresh). 

  15. 160 indictments … you know that F*x will just spin that as Trump draining the swamp. 

  16. Copper is flying!  

    I guess because of the China signing on Weds.  

    Europe is down and we're not excited so /NKD is a nice lagging bet to make below the 23,800 line with tight stops above. 

    Oil falling off a cliff:

    Coffee cheap again:

    Draining/Malsg – But it's the guys he brought in!   I know, the logic won't matter….

  17. Syopped out of last 1/4 of SSI at $3.50.

    Started a new trade at $$3.20

  18. Advill- TSLA is too unpredictable for me.

  19. ABMD   :(

  20. Stop at entry on SSI.  Not willing to give back any profits.  Likely to get stopped out.  Love the fact that stock trading is free.

  21. Albo, agree with you at this moment but a good entry will come in the next months..(hopefully) for a long term entry.

    What about SSI …-55% today, you think is a good entry? why?

  22. Advill – Thought the news wasn't that bad.

    Stage Stores (SSI -54.4%) says it expects to report comparable sales for the holiday period to be up 1.4%, a mark which falls short of expectations.

    The retailer anticipates full-year earnings of $25M to $30M vs. a prior forecast for $35M to $40M.

    Huge swings are nothing new for Stage Stores, with the stock still up over 300% for the last 52 weeks after a sizable rally during October and November.

    Raised stop on last batch to $3.25, just to lock in small profit if stop is hit.

  23. Phil/WFC,

    Instead of WFC can we play FAS for the entire banking sectors? I think we had a FAS bear put spread before but not sure whether it got expired.


  24. Phil / ALXN – BioPhram was looking at this this weekend.  in the Bio Pharm space.  has had some issues / scares with  efficacy and even safety, but was not found to have any issues.  They cleaned out Sr. Execs in '16 ( had made poor decisions on acquisitions) and the new crew is now settling in.  on 1/7 a compeitor received positive news on a competing drug, but ALXN indicated this was not as positive for their competitor due to a key marker not being significantly better.  Scok went up over next five days.  If they are able to get approval for new drug approved ( Ulimoris) hey should be back to a reasonable growth rate…  I'm thinking a $140 share price is reasonable, but do't know this space well.  Thoughts?  

  25. Might have to roll up to those TSLA 580 calls after all

  26. Albo, thank you

  27. Another day, another reminder not to short any of these crazy stocks – AMZN, TSLA, NFLX and some others! None of them are worth what people are willing to pay but the operative word here is willing! No logic applies.

  28. LB finally over $20, 3% up today

  29. StJean / EXACTLY! 

    expensive morning letting my /NQ run up like that. I finally tapped out at -600 per contract. Messy

  30. Still a slow news day overall.  

    This is ridiculous:

    And the health care costs are astronomical – caused by this anti-vax silliness that, of course, the President supports.

    FAS/Pat – Was in the old STP but we didn't renew.  You and I discussed in Dec but not for portfolios:

    Submitted on 2019/12/18 at 11:43 am

    FAS/Pat – Nice defensive play, if nothing else.  FAS was $25 back in 2016 so we are through the roof here as XLF went from $17 to $30, so up 100%ish and FAS is up 300%.

    FAZ, on the other hand, is $28 – also interesting as it was $300 in 2016.

    So, to make a good play, you have to consider which will have more pop if XLF drops 20% and FAS would drop 30% ($30) while FAZ would pop 30% to $35ish.  Then we have to look at the options to see which is more interesting.  

    • FAZ April $26s are $3 and the April $32s are $1.10 for net $1.90 on a $6 spread with $4.10 upside (215%) 
    • FAS April $100s are $10.50 and the April $90s are $5.50 for net $5 on the $10 spread – only 100% upside potential though we expect a move below $70 so we could look at -
    • FAS April $90s are $5.50 and the April $80s are $2.90 so net $2.60 on the $10 spread has $7.40 (284%) upside potential.  

    Given the choices, I kind of like FAS April $90/80 bear put spread at $2.90, say 10 of those for $2,900 and selling 3 of the STT May $80 calls for $5 ($1,500) to net in for $1,400 on the $10,000 spread.

    The April $90 ($4)/80 ($2) bear put spread is now $2, so down $1,000 and the STT May $80 calls are $6, so those are down $300 which drops the net to about $0 as a new trade (on the bright side)! 

    ALXN/Batman – Not one I follow but $110 is $24Bn and they are dropping $2.4Bn to the bottom line so not a small company and not a start-up.  Of course that means the impact of a single approval isn't likely to move them 25% but, on the other hand, it might as they are reasonably priced in the first place.  

    Total Revenue

    1,551 2,234 2,604 3,084 3,551 4,131 4,736 4,906 5,586 21.6%
    Operating Profit

    528 869 537 667 627 270 1,623     -12.6%
    Net Profit

    253 657 144 399 443 77.6 1,470 2,366 2,544 -21.0%
    EPS Reported

    1.27 3.26 0.669 1.76 2.17 0.094 6.04     -40.6%
    EPS Normalised

    1.38 3.43 0.914 2.04 2.71 3.59 7.16 10.4 11.2 21.1%
    EPS Growth

    +8.76 +149 -73.4 +123 +32.6 +32.7 +99.2 +189 +8.27  
    PE Ratio

              30.5 15.3 10.6 9.74  

              0.161 0.081 1.28 1.20  

    They specialize in orphan drugs (another reason I don't follow them) so I doubt the impact of a new one is going to matter all that much as they all have limited potential so I wouldn't go high but you can make plenty or money where they are with something like 5 short 2022 $90 puts for $12 ($6,000) and picking up 15 of the 2022 $85 ($40)/$110 ($25) bull call spreads for $15 ($22,500) and selling 5 of the short May $115 calls for $7.50 ($3,750) to net $12,750 on the $37,500 spread with 3 more chances to sell $3,750 ($11,250) worth of short calls too.

    No logic/StJ – Same as 2007, people are paying crazy money for things like it will never end.

    Speaking of which, TSLA passing $515 with ease.  

    LB/Albo – About time!

  31. Hoping this is a meaningless Monday 

  32. It seems a little odd that DIS isn't participating in this strength…

  33. Just like to remined you of the T trade of the other day buy stock and sell Jan 22 33 straddle.

    I sold even 33/35 and 33/37, still a good time to enter the trade. T38.11!!!!

  34. Participation/Palotay – It's hard for high-value stocks to move up on this small market volume.  TSLA has a very tiny float – that's how they can keep going up.  Big stocks can't do that when volume is so dead.

    Date Open High Low Close* Adj Close** Volume
    Jan 13, 2020 326.39 327.55 325.93 327.27 327.27 24,088,537
    Jan 10, 2020 327.29 327.46 325.20 325.71 325.71 53,029,300
    Jan 09, 2020 326.16 326.73 325.52 326.65 326.65 48,473,300
    Jan 08, 2020 322.94 325.78 322.67 324.45 324.45 68,296,000
    Jan 07, 2020 323.02 323.54 322.24 322.73 322.73 40,496,400
    Jan 06, 2020 320.49 323.73 320.36 323.64 323.64 55,653,900
    Jan 03, 2020 321.16 323.64 321.10 322.41 322.41 77,709,700
    Jan 02, 2020 323.54 324.89 322.53 324.87 324.87 59,151,200

    You can just see how badly liquidity is drying up all over the place but people just ignoring it.

    T/Yodi – I'd still rather see it pull back first.  

  35. AXLN – Thanks Phil   I'll look at some Putters and maybe a BCS 


    Pharmboy / AXLN – Do you follow this?

  36. Phil T to discount the stock to 30 to 31 is not a bad deal. In May 2019 we would have never believed TSLA would make it to 250, look where we are today, seams like we still find enough fools to buy. Forward PE 88 T PE 17.

  37. T/Yodi – No nothing wrong with that but could be net $29 with patience is all I am saying.  

    OMG, there's going to be a China Deal!  BUBBUYBUY!

    Stocks extend climb as U.S.-China prepare for trade pact signing

    • U.S. equities extend gains after reports that the U.S. will remove the currency manipulator label from China before the two countries sign the first phase of their trade deal on Wednesday.
    • The week also kicks off Q4 earnings season, with JPMorgan, Wells Fargo, Delta Air Lines, Citigroup, IHS Markit, and Aphria scheduled to release their reports tomorrow.
    • Nasdaq drives up 0.8%, S&P 500 advances 0.5%, and the Dow adds 0.2%.
    • 10-year Treasury slips, pushing yield up 2 basis points to 1.84%.
    • Crude oil slips 1.1% to $58.39 per barrel.
    • Checking in on S&P 500 sectors, materials (+1.0%), real estate (+0.9%), and utilities (+0.8%) lead the gainers, while energy (-0.2%) and healthcare (-0.2%) are the only declining industry sectors.
    • By name, GE rises 3.0% as Iran admits to shooting down  a Ukrainian airline, meaning the crash wasn't the result of an engine failure. Netflix jumps 3.3% after getting more Oscar nominations than any other studio or distributor.
    • Anthem (-2.4%) and UnitedHealth (-2.2%) are among health insurers moving down as Presidential candidate Bernie Sanders takes the lead in Iowa according to one poll.
    • In overseas markets, the Stoxx Europe 600 closed down 0.2%, the FTSE 100 rose 0.4%, and the DAX ended the session 0.2% lower.
    • The U.S. Dollar Index was little changed at 97.34.

    WTF?  U.S. set to lift China's currency manipulator status – Bloomberg

    • The U.S. will remove the currency manipulator label from China before the trade deal is signed, according to headlines crossing the Bloomberg.
    • A Treasury report is expected before the deal is signed on Jan. 15.
    • The offshore Chinese yuan jumps 0.4% to 6.8848 per U.S. dollar.
    • Treasury Secretary Steven Mnuchin formally named China as a currency manipulator in August.

    Renault slides as more doubts emerge

    • Shares of Renault (OTC:RNSDFOTCPK:RNLSY) finished the day down 2.82% in Paris trading after the Financial Times reported that execs at Nissan (OTCPK:NSANY) are looking for ways to split the troubled alliance.
    • Nissan execs are said to see Renault as a drag on the Japanese automaker's bottom line.
    • Renault is in the process of choosing a new CEO amid the changing auto landscape.

    GE tagged short-term Buy at Deutsche Bank

    • General Electric (GE +3.3%) recoups most of last week's losses after Deutsche Bank makes the stock a "Catalyst Call" Buy as a short-term idea, while still keeping a Hold rating with a $12 price target.
    • While it is difficult to identify positive catalysts this quarter, given that sell-side consensus forecasts generally remain too high, Deutsche Bank's Nicole DeBlase sees the potential for GE to deliver a beat in Q4 and 2020 guidance "that suggests upside to current consensus at the midpoint of the range."
    • DeBlase expects GE to report Q4 earnings of $0.19, edging the $0.18 Wall Street consensus, driven by Q/Q improvements in the company's four business segments.
    • GE's average Sell Side Rating is Bullish, while both its Seeking Alpha Authors' Rating and Quant Rating are Neutral.

    No reason to stimulate or slow down economy, Fed's Bostic says

    • Atlanta Fed President Raphael Bostic sees no reason to boost or slow down the economy as the economy is doing just fine.
    • Sees nothing to indicate deep economic contraction, Bostic said in speaking at the Rotary Club in Atlanta.
    • Still, uncertainty is a concern and he hopes the country can resolve issues around such areas as trade policy.
    • via Bloomberg.
    • Bostic won't be a voter on the Fed's monetary policy-setting committee until next year.

    Dry bulk freight rates at three-year low – S&P Global Platts

    • Time charter equivalent rates for capesize, panamax and supramax vessels were much lower in the first week of 2020 than the rates registered during the same period over the past three years, according to data from S&P Global Platts.
    • The drop in rates is contrary to expectations that IMO 2020's 0.5% sulfur regulation would prompt higher freight levels due to the expense of clean marine fuels, with shipowners struggling to pass on the bunker cost to charterers.
    • The ebb in cargo flows toward in late 2019 and early 2020 is being blamed for the current sluggishness, S&P Global says.
    • Meanwhile, the Baltic Dry Index skidded to its lowest in nine months today, weighed by shrinking demand across all vessel categories.

    Netflix +3% after Hollywood love

    • Netflix (NFLX +3.3%) rallies after landing more Oscar nominations than any other studio or distributor.
    • The 24 Oscar nominations for the streaming juggernaut include Best Picture for The Irishman and The Marriage Story, as well as Best Animated Film for Klaus and I Lost My Body in a bit of a surprise.
    • Netflix is due to report Q4 results on January 21.

    JPMorgan defends Five Below

    • JPMorgan digs into Five Below (FIVE -12.9%) after the retailer's disappointing sales update, pointing to the shortened calendar this year in particular.
    • "Importantly and adjusting the calendar apples to apples, FIVE comped positive over the key Black Friday, Cyber Week noting material acceleration (& above-plan sales) in the 7 days leading into Christmas with same-store-sales returning to “at least” +2-3% January-to-date (particularly noting a material turn in Tech) supported by the high-end of management’s updated guidance implying a ~600bps+ improvement (relative to Nov/Dec)," writes analyst Matthew Boss in his detailed breakdown.
    • Boss also provides notes on a follow-up with Five Below management. "Taking a step back, while not providing excuses, management cited a more discretionary offering (vs. grocery peers) driving a larger condensed calendar impact noting a 4Q13 similar 450bps Holiday miss versus guidance," he updates.
    • JPMorgan sticks with an Outperform rating on Five Below.

    Apple gets new Street-high target on 5G

    • D.A. Davidson raises its Apple (NASDAQ:AAPL) target from $300 to $375, citing the 5G iPhones expected this fall. That would be about 20% upside from current levels.
    • Analyst Tom Forte: "There is enough complexity and hype when it comes to 5G that we believe Apple can exploit this multi-year opportunity."
    • Forte expects Apple to grow its iPhone sales in each of the next two launch cycles.
    • Apple shares are up 0.5% to $311.74. The company has a Bullish average Sell Side rating.
    • Related: Last month, BofA raised its Apple target, expecting the 5G iPhone to drive consistent 200M+ iPhone units in CY20-22.

    Beyond Meat clears $100 as rally extends

    • Beyond Meat (BYND +10.5%) is a triple-digit stock again as sentiment stays favorable on the company's products.
    • "Plant-based alternatives have absolutely gone mainstream and are gaining much more acceptance among consumers," notes Technomic's Lizzy Freier.
    • Shares of Beyond Meat are up more than 40% over the last week. Some of the positive vibe on BYND is linked to the expectation that more restaurant chain partnerships are on the way

    Health insurers under pressure as Sanders takes lead in Iowa

    • Health insurers are under modest pressure in apparent reaction to the news that Presidential candidate Bernie Sanders (I-VT) has taken the lead in Iowa according to a poll conducted by CNN and The Des Moines Register.
    • Mr. Sanders was favored by 20% of would-be caucusgoers followed by Elizabeth Warren (17%), Pete Buttigieg (16%) and Joe Biden (15%).
    • Mr. Sanders, along with Ms. Warren, are advocates for a single-payer U.S. health system dubbed "Medicare-for-All" which would decimate the private health insurance market.
    • Selected tickers: eHealth (EHTH -1.9%), WellCare Health Plans (WCG -0.8%), UnitedHealth Group (UNH -1%), Humana (HUM -1.1%), Cigna (CI -2%), Centene (CNC -1.8%), Anthem (ANTM -2%), CVS Health (CVS +0.7%)

    S&P sees U.S. bank earnings roughly flat in 2020

    • S&P Global Ratings expects banks' revenue and earnings to be pressured by low rates.
    • Fee income and expense cutting, though, should provide some support.
    • Risks to banks include low interest rates, potential return of market volatility amid geopolitical risks, possible re-escalation of trade wars, and the upcoming U.S. election.
    • via Bloomberg.

    Evercore hits IBM sidelines on H1 challenges

    • Evercore cuts IBM (NYSE:IBM) from Outperform to In-Line with a $145 price target, a 6% upside.
    • The firm sees a challenging H1, citing macro headwinds and a "difficult" setup.
    • Upcoming catalyst: IBM will report earnings on January 21. Consensus estimates see $21.64B in revenue and $4.70 EPS.
    • IBM shares are down 1.1% to $135.24.

    Fed's Rosengren continues to stake out hawkish territory

    • Boston Fed chief Eric Rosengren says the chances for too-perky inflation and asset bubbles are a greater risk than downside threats
    • Wage growth is nice, he says (thanks so much), but inflation could result, particularly when wage pressures outpace productivity growth.
    • He also takes note of weaker corporate earnings, and how that might pressure companies to stop absorbing higher wages, and instead hike prices.
    • Rosengren isn't an FOMC voter this year, but he voted against the Fed's rate cuts last year.

    JMP upgrades Goldman to outperform on transformation

    • JMP Securities analyst Devin Ryan raises Goldman Sachs (GS +0.6%) to Market Outperform from Market Perform, saying the the firm is in the early stages of the most meaningful transformations in the financial services industry.
    • Chart analyst Mark Newton of Newton Advisors also likes Goldman, which is "just starting to show much better signs of acceleration," he told CNBC.
    • “I think Goldman can potentially get back towards former highs, but this group as a whole has been under pressure, it’s an underperformer and my thinking is it’s right to really hold off for now, for the most part,” he said.
    • Ryan's rating contrasts with Quant rating of Neutral; Sell-Side average rating is Bullish (9 Very Bullish, 5 Bullish, 13 Neutral, 1 Bearish, 1 Very Bearish).
    • In the past six months, Goldman shares have risen 18% vs. financial sector median performance of +5.2% during that same period.
    • See Goldman's key stats comparison with those of its peers.
    • Previously: Goldman hits 52-week high as two analysts go bullish (Jan. 9)

  38. Phil how do you decide when (if) to Roll up and out TSLA 2021 480 calls to 2020 580 calls?


  39. Some AAPL progress (slow but steady)!

    It’s 2020 so I have sold my 20 AAPL ’21 $140calls and bought 30 AAPL $270calls @ $61 (now $72). 

    Would like to capture some of the enthusiastic AAPL premium by rolling my short calls up.

    I have 10 ‘extra’ longs so could sell 10 ’22 AAPL $310s but prefer the idea of selling more short term calls and rolling them out or letting them expire.


    30 AAPL ’22 $270calls @ $61 ($72)

    15 AAPL  ’22 $240calls @ $53.5 ($92.5)

    -10 AAPL ’20 Mar 220c @ $16.5 ($94).

    -25 AAPL ’20 June $270c @ $17.6($50) 


    Still have 30 ’21 $200/240 BCS. ($29/$18)


    Any words of wisdom?

  40. TSLA/Coulter – Well, in the STP, for example, we have 5 short March $400 calls we sold for $40 and they are killing us now at $128.50 and $120 in the money.  TSLA went up so fast a normal roll wasn't possible so we're on the hook for a $46,000(ish) loss, though we do have $12,000 coming to us from the short puts.  

    The 2022 $520s are $126 so we have $120 to roll higher but will that be enough?  This stock is crazy so the best thing to do, at the moment, is just let it calm down so we can see where it consolidates.  The 2021 $600s are $65 so, if I were to take the loss in March at $46,000, I can roll to 8 of those short and hope TSLA doesn't pop another 20% and, of course, I can sell the 2021 $400 puts for $40 so, if I sold 4 of those for $16,000, I'd only have to roll a $30,000 loss to 5 short $600s.  With TSLA at $500, I can live with that because the 2022 $330 puts are $40 and the $750 calls are $60, so that's my "safety range" for rolling my 5 short March $400s – so I'm still not too worried – even though it sucks that they currently look so awful.

    Of course, you have to keep in mind that it's not likely that the 2022 $750 short calls will stay at $60 – as that's ridiculous so I'm going to consider selling them and buying the 2022 $550 calls for $116 ($58,000) to cover the short calls as that's net $28,000 for $100,000 worth of insurance against the short $400s going even higher.

    Those are the things I'm considering and we'll do our STP Review by Thursday for a final decision.  

    As to your 2021 $480 calls, which are now $115 with $75 of it in premium – I don't see a reason to touch them until the premium is more like $40 as TSLA could easily come back and, if it doesn't, the things you want to roll to will only get higher while the premium in your short calls continues to burn away.  

    AAPL/Wing – $315 now.  Adding an entire TSLA in market cap for every $25 move higher.   Analysts are jumping way ahead – a year ahead – on 5G predictions so AAPL is going nuts at the moment.  I'd still feel a lot better seeing earnings before making changes. 

  41. Phil: Would you pick a strategy to short BKNG here? (looking like a triple top and not moving in pace with the other crazies)

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  43. Mito / Crazy Short BKNG – my unasked for 2 cents

    With BKNG capable of moving 200 pts per expiration cycle (when you look at the current expiration cycles post earnings on February 26th) then the only play I would consider is a defined risk play. 

    Given the high price of the stock I would go for a speculative Put Butterfly trade (of the Broken Wing variety):

    April 17, 1850 / 1880 / 1900 ::::: +1 x -2 x +1 (all puts) for a credit of $0.45.

    The short strike ($1880) is placed around about the strike of the expected move.

    In terms of risk / reward – 1 contract has a max profit potential of $2,000 and a max loss of $1,000. Of course there is no way that the stock will pin at the $1880 strike – so rather an all or nothing play – but the nothing is pennies so that is not an issue. Obviously no risk to the upside as you as the trade involves puts.

    If BKNG does start to slide then you could consider layering on a Put debit spread – but a small position.

    With any trade on BKNG I would not consider any strategy which involves naked short options – been there, done that – conclusion: don't like it.

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  45. BKNG/Winston – Thanks that's a good idea.  I was considering a plain April 2100-2000 Bear Put Spread but yours require less upfront. You are right this name is so volatile I prefer not to have uncovered legs!