Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Which Way Wednesday – Rallying Back to the Highs (Again)

This is just amazing.

It doesn't matter what happens during the day, in the overnights, we rally to new highs.  Oddly enough, we've been making our money on the short side (see last week's Webinar) by playing the indexes short when they peak and selling on the dips so this morning we're doing it again at 9,240 on the Nasdaq (/NQ) Futures, 3,335 on the S&P Futures (/ES) and 29,280 on the Dow (/YM) Futures.

Meanwhile, we're stubbornly long on Natural Gas (/NG), which is now at $1.90 but our average entry is $1.962 and we already have 4 long so we either get back to 2 even or we wait for $1.80 to add 2 more longs and bring the average below $1.90 (with a $6,000 loss on 6 contracts).   It's a long-term conviction play and could get very painful as we're bucking the overall trend.

I reviewed our logic on the Natural Gas plays in yesterday's Live Member Chat Room and we're doing another Live Trading Webinar this afternoon at 1pm, EST, so I'm sure we can discuss it some more.  The strong(ish) Dollar hasn't been helping the commodities very much.  Oil is still down in the dumps at around $57.50, which is a nice place to go long (/CL) with tight stops below that line, which should match up with $64 on Brent (/BZ) – so if Brent fails to hold, don't play /CL long!

Not that the news seems to matter these days but President Trump is back to threatening tariffs on Europe in an attempt to force them to make a Trade Deal with him because he needs the distraction to take away from his impeachment trial.  One thing that's distracting everybody at the moment is the Chinese virus scare, with 50% more cases today than there were yesterday (now 470) so no, it's not at all under control.   The US case that panicked our markets yesterday was from a guy who was in China recently and it does seem to be contained (so far). 

In drugstores and at airports, and on the online marketplaces increasingly at the heart of Chinese commerce, fear and confusion manifested themselves in shortages or long lines for suddenly scarce products promising protection from the deadly but still largely mysterious respiratory disease.  Surgical masks flew off shelves, travelers canceled plans and rumors flooded social media.   Drug makers are doing well, travel stocks are doing poorly.  

Speaking of travel stocks doing poorly, Boeing (BA) got crushed again as re-certification of the 737 Max is now pushed off "at least" until Q3 and BA made $0 this year and will likely make $0 next year yet $300/share values the company at $170Bn.  In a good year they make $10Bn – but when will it be a good year again for BA?  That's the question.  

Of course, after falling 25% from $400, BA will bounce off the $300 line and our 5% Rule™ tells us to expect a 20% (of the drop) weak bounce back to $320 or maybe even a strong bounce to $340 but, if the weak bounce fails – then even $300 may not hold so we're not jumping back into BA just yet – tempting though it may be. 

Other than that, we'll just have to wait and see.  The market has been remarkably resiliant 

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Good morning, All! 

    It's webinar day! Join Phil at 1pm, here:

    https://attendee.gotowebinar.com/register/4177380429370552075


  2. TSLA squeezing again

    $800 1 year target $1100 2 year target by analyst who called $530
     


  3. Phil – Tried to work with your comments from yesterday to draw these new lines. S&P, NYSE and Russell seemed to work OK. Dow, you were not sure so I  have not done anything. Nasdaq, I used the standard 10% lines but you mentioned 8000, 9000 and 10,000. Not a straight equation there and also, because of that rocket move, not real support anywhere which besides the chart issue should be concerning as an investment issue. Thoughts?


  4. Good Morning!


  5. Sold another 1/3 of SPCE warrants.


  6. BTW, I have to say that these rumors about Bezos and MBS hacking his phone are really, really strange and if true disturbing!



  7. So true:

    https://www.institutionalinvestor.com/article/b1jz6grn07x012/Monopoly-Power-and-the-Malfunctioning-American-Economy

    In the past decade the gap between income growth for ordinary Americans and that for their wealthiest countrymen has widened at a rate unseen since the Gilded Age. As a result, populists now openly challenge neoliberalism from both the left and the right. Talk of tax cuts and trickle-down effects by financial elites is a rearguard action fought on behalf of a crumbling economic consensus. Like the delusional Vietnam War–era generals who pointed to rising body counts as progress toward victory, Mr. Cohn, President Trump, and others frequently refer to a soaring stock market and low unemployment as indicators of a “surging economy.”

    At this point many of us understand that beneath the hood, the once powerful American engine of mass prosperity is malfunctioning. When 10 percent of the American population owns 80 percent of equities, a 35 percent gain in the Nasdaq is a vanity metric rather than a true indicator of system performance. Similarly, low unemployment rates mask the neo-serfdom of the sharing economy — and thus tell only part of the story.  


  8. BA seems to be in a world of hurt – 737 MAX, Space, Air Force tankers:

    https://arstechnica.com/information-technology/2020/01/737-max-fix-slips-to-summer-and-thats-just-one-of-boeings-problems/

    There doesn't seem to be quick solutions!


  9. Sold remaining SPCE warrants at $7.66.  This is $1.16 above their maximum intrinsic vale.

    Thank you DawgyDaddy for pointing that out !


  10. Good morning!

    TSLA/Coulter – They spiked to $572!   Back to $567 but that's crazy too.  

    $1,100 – why not?

    Big Chart/StJ – I said the math didn't work but those are the actual lines that are more likely to be in play.  You can just do 10% off 9,000 if it makes you feel better.  The Must Hold lines are now serving a different purpose – to warn us when the rally falters and we need to hedge more heavily.  On the Dow, I meant 25,000 at -10%, 27,500 as Must Hold and 30,000 at + 10% but the math won't be quite right there either so just use 27,500 as the Must Hold.

    /NG popping nicely, $1.933!  Only down $1,640 on 4 contracts now (should probably be thrilled with that and cut back to 2).  I think I will take $1.95 and run on 2 contracts – just to keep things from getting out of control if they pull back again.

    /CL plunged right below $57.50 already.  Inventory report not until tomorrow 

    $1.60 on /RB is tempting to play for a bounce.  

    Bezos/StJ – I think MBS simply shared an already infected file with Bezos – I don't think he was hacking his phone but will be a great story if he did. 

    That company chart is interesting.  GM used to be 10% of the market!  Now, at $50Bn, it's only 4% of AAPL….

    BA/StJ – Those other issues are scary as BA is only 54% airplanes, 23% Defense/Space and 22% Services.


  11. Good teamwork Albo and Dawg!


  12. Big Chart / Phil – OK, will revise for tomorrow.


  13. What Americans Know About the Holocaust


  14. Jeff Bezos: UN calls for investigation into alleged Saudi hack


  15. Still working on my AAPL position .. did rebuy 10 short Mar/20 $220c as suggested but now have another idea (thanks for your patience!):

     

    Long 10 June’21 $200c ($29)
    Long 15 Jan’22 $240c   ($53.5)

    Long 30 Jan’22 $270c . ($60.6)

    Short 25 Jun’20 $270c ($17.6)

     

    Roll the 25 short Jun’20 $270calls to 40 $Jun’21 $320calls for +$20k

     

    Would then have: 

     

    10 June ’21 $200/320s bcs

    15 Jan’22 $240s vs 15 Jun’21 $320c

    10 Jan’22 $270c vs 10 June’21 $320s

    20 Jan’22 $270 longs

     

    Comments?

    THX!


  16. StJ, Pstas, et al.- Have you noticed that CTL has had a bit of a run?  Chart looks good, IMO.


  17. Company chart / Phil – And look at GE! Top of the pack 15 years ago and today, also ran!


  18. CTL / Albo – Looking good so far, especially considering the news around FTR. I still think that telcos will be facing issues with the investment needed moving forward but we'll take the money for now.

    $15 is a resistance line though. We'll see.


  19. Please help with BA  — a little bit of a long story

    OK – so I had the original 2022 300/350 BCS for 77.20/53.50  net 23.50    — only 2 

    I tried to get out of it but the spreads were too wide so I tried to 'leg out' and that did not work.

    The short 350's got bought back for $39.10 which gave me a $2920 profit on that end but I was still left with the long 300's  — this was when the price was around $325.  At this point I figured I would try to recoup some of the unrealized losses on the long 300's by selling some shorter calls – a Mar 330 for $11.20 and a Mar 335 for $9.25   — I figured I could collect $2000 if it stayed where it was at and basically get me back to even by March and then get out.

    Then came the 737 Max announcement and the plunge to $310  — so now I still have the 2 2022 long 300's which are currently $53.82 (down from 77.20 – so $4676 loss) and I have a short 330 at $6.50 ($470 profit) a short 335 at $5.25 ($ 400 profit) -  both of which expire in 58 days.

    Did I make a mistake?  How can I fix?

    Thanks


  20. Phil/Greg-

    Could you please post the last set of portfolio reviews (last week) to the 'virtual portfolios' tab when you get a chance?  So much easier to have them one-click away.  Thanks


  21. Phil/T – holding 200 of the 2021 28/35 BCS. Into them for $2.25 now at about $6.35 of a possible $7 so could make another $13,000 by sitting on them but seems like there might be a better play since the position is worth about $126,000 right now, that's "only" another 11% or so over the next 12 months. 




  22. Why Do People Become Homeless?


  23. Hey jeffl!

    I just moved the Butterfly/MoneyTalk post from last week into the category.

    Am I missing any?


  24. Just like to mention T is on the rise again, was down to 37 now 39 again!!!


  25. Just put up a play on WFC buy stock @ 48.65 and sell the jan 22 45 straddle for 11.65


  26. Winston Your trade idea on AAPL looking good

    Option Code    Exp    Strike    Type    Qty    Trade Price    Mark    Mark Value
    AAPL200221C310    21-Feb-20    310    CALL    -1    13.65    15.06933659    ($1,506.93)
    AAPL200221P310    21-Feb-20    310    PUT    -1    11.15    6.7392813    ($673.93)
    AAPL220617C260    17-Jun-22    260    CALL    1    80.65    84.35905508    $8,435.91
    AAPL220617P260    17-Jun-22    260    PUT    -1    23.7    22.51867994    ($2,251.87)
                                                                                                                           $4,003.18


  27. Admin (Greg?)

    I think Phil did an Stp/ltp review the day after – so last Thursday?  It was in the comments section 

    thanks 


  28. TSLA 2020 – approaching $590. Runaway momentum combined with a short squeeze sprinkled with delusional analysis equals 'Shades of CMG 2019'. 


  29. jeffl - 

    Yep. Found it. Should be there now.


  30. Wheee, and down we go!

    AAPL/Wing – Looks good to me but what are the extra 20 longs for?  Are you going to sell short calls or just let it ride?  The 2022 $270s are $75 so $150,000 and a Delta of 73 so, if AAPL drops 10% ($30) you lose about $45,000 – is that your intention?  If, on the other hand, you sold the $350s for $35, your net would be $40 and the net Delta would be 0.25 so if AAPL drops $30 you only lose $7,500 – this is why we hedge.  Yes, you make less on the way up but that doesn't matter much because, once the premium expires and if AAPL is over $350, it's a $160,000 spread with a $120,000 profit – surely you don't need to be greedier than that to risk losing $37,500 more on even a small pullback?

    If AAPL goes higher, you could always take that extra $37,500 you don't mind losing and buy another $160,000 spread.

    GE/StJ – Tragic.  At least they are off the bottom:

    It's too bad though, I was considering them for Stock of the Year but they popped before Thanksgiving.

    BA/Jeff – It's a mistake but fixable as you just sell more puts and calls once these expire.  You made $1,460/contract on the short calls and now you will make $520/contract back on the new set and your 2022 $300s are down $2,338 so net down $358 per contract isn't a catastrophe – especially considering BA went the wrong way on you!  This is why we hedge…  The question is, since you don't seem to be able to sell naked short calls, even against a long spread, is BA the best place to park your remaining $10,700 just to try to make back $716?  If you can't sell puts and you can't sell naked calls and you don't have the margin to deal with good or bad news moving the stock another 20% – I'd say just move on and find a better stock to play with.

    Portfolios/Jeff – Yes, been a busy week.

    T/Dawg – That's a lot of spreads.  It's a $140,000 potential so it all comes down to do you have a better way to make $14,000 with $126,000 than leaving it in?  You don't have to cash out now, if you see a better opportunity, then you can cash all or some.  Most likely you can do better and you might want to have $30,000 (1/4) for earnings plays back in cash but, otherwise, you're getting 1% a month while you wait.  

    TSLA/Winston – CMG is doing a CMG too!

    $250 in Oct to $600 is 140% in 3 months….


  31. FuelCell -25% after Q4 miss, lower than expected backlog

    • FuelCell Energy (NASDAQ:FCEL) drops sharply off yesterday's eight-month highs following Q4 results, including a $23.4M gross loss vs. a $1.1M gross profit in the prior-year quarter and adjusted EBITDA loss of $11M from an $8.8M loss a year ago.
    • FuelCell's Q4 revenues sank 38% Y/Y to $11M, reflecting the company's decision to de-emphasize product sales to focus on utility scale power purchase agreement opportunities and grow its generation portfolio.
    • Total contract backlog was $1.32B at the end of Q4 after management suggested in November that backlog may have topped $2B.
    • During today's earnings conference call, the company said it believes Posco (NYSE:PKX) has materially breached its obligation under its manufacturing and technology transfer agreements and misappropriated FuelCell's intellectual property.
    • FuelCell has formally objected to the Posco Energy spinoff and will continue to evaluate its options in its relationship and agreements with Posco in an effort to resolve its continued inability to access Asian markets.

    MAX delay not due to new technical issues, Boeing exec says

    • Boeing (BA -2.7%) shares continue their descent, extending 52-week lows after saying yesterday that it did not expect regulators to approve the 737 MAX's return to service until the middle of the year.
    • Boeing's decision was not due to any new technical issues, senior marketing executive Darren Hulst told the Airline Economic aircraft finance conference today in Dublin.
    • "It was just our evaluation of the process, of progress and of the timeline," Hulst said.
    • Jefferies analyst Sheila Kahyaoglu says Boeing may now need to increase its compensation package for customers by another $10B and revise its cost estimate related to MAX production by an additional $5.4B.
    • The company already has booked $9B in costs related to the grounding, including $5.6B as compensation for airline customers and $3.6B in charges to cover additional production costs.
    • Vertical Research analysts are expecting Boeing's upcoming results to be "an absolute disaster, and that now looks guaranteed… We don't see Boeing being in a position to increase cash returns to shareholders until 2022.

    Build-A-Bear rallies again on Baby Yoda anticipation

    • Build-A-Bear Workshop (NYSE:BBW) runs up another 7.09% gain as the Baby Yoda rally continues for the retailer.
    • Investors seem to be taking positions on BBW ahead of a possible announcement by the retailer on the timing of its plush Baby Yoda product.
    • Build-A-Bear isn't expected to report Q4 earnings until the early part of March.
    • Build-A-Bear is up 67% YTD.

    Energy underperforms as crude oil prices slide

    • The energy sector (XLE -0.7%) is the only S&P sector currently trading in the red, pressured by concerns that the coronavirus outbreak in China will cause people to reduce their travel plans, which would mean lower demand for oil.
    • WTI March crude -2.3% at $57.05/bbl, after losing 1.5% yesterday, and March Brent crude -1.9% at $63.35/bbl.
    • International Energy Agency head Faith Birol says he expects the oil market to be in surplus by 1M bbl/day in this year's H1.
    • "I see an abundance of energy supply in terms of oil and gas," Birol told the Reuters Global Markets Forum yesterday while attending the World Economic Forum in Davos. "It's the reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn't boost international oil prices."
    • XLE has dipped beneath its 200-day moving average and is at its lowest level since early December.

    IBM targets raised after Q4 strength

    • Morgan Stanley's Katy Huberty maintains an Equal-Weight rating on IBM (NYSE:IBM) and raises the target from $155 to $164 after yesterday's earnings beat.
    • Huberty says some of the strong results came from less sustainable sources like currency and mainframe software but sees Red Hat as a genuine bright spot in the quarter.
    • Morgan Stanley raises its 2020 EPS estimate by $0.53 to $13.33, accounting for the lower tax rate.
    • More action: Citi maintains a Neutral rating and raises its IBM target from $140 to $155.
    • IBM shares are up 4.1% to $144.85. The company has a Neutral average Sell Side rating.

    Virgin Galactic interest rivals Tesla – Morgan Stanley

    • It's the best monthly performance for the stock since since going public more than two years ago: SPCE is up 66% since Jan. 1.
    • As appetite for the space tourism heats up, Morgan Stanley analyst Adam Jonas wrote in a note that the bank is having more conversations about Virgin Galactic than "any other U.S. stock in our coverage with the possible exception of Tesla."
    • Shares of the company are up another 10% in early trade, on track to add to an eighth consecutive record close.

    Oil CEOs at Davos debate tougher carbon cuts – Bloomberg

    • CEOs of some of the world's biggest oil companies, including Royal Dutch Shell (RDS.ARDS.B), Chevron (NYSE:CVX), Total (NYSE:TOT), Saudi Aramco and BP, are discussing the adoption of much more ambitious carbon targets at a closed-door meeting at the World Economic Forum in Davos, Bloomberg reports.
    • The meeting reportedly showed broad agreement on widening the industry's target to include reductions in emissions from the fuels they sell, not just the greenhouse gases produced by their own operations.
    • Among major energy companies, only Shell, Total and Repsol have publicly announced they are either targeting or monitoring Scope 3 emissions; BP CEO Bob Dudley, who retires later this year, previously has opposed such a target.

    Big end-of-year surge in existing home sales

    Total wins contract to install 20K EV charging points in Netherlands

    • Total (NYSE:TOT) says it was awarded Europe's largest concession contract for electric vehicle charging, to install and operate as many as 20K charging point for EVs in the Netherlands.
    • The latest EV charging network will cover 3.2M people and ~15% of current Netherlands EV charging demand; financial terms are not disclosed.
    • The company says the electricity to power the network will come entirely from renewable sources and will be produced in the country.

    For reference, TSLA has 15,000 charging points (1,800 sites) in the US yet the analysts call that an "insurmountable" lead.  TOT will install more than that in the Netherlands alone (17.2M people).  This could happen any day in the US and TSLA's biggest advantage goes up in smoke.  


  32. From TOT statement:

    “By combining the experience and legacy of our team in the Netherlands -formally PitPoint Clean Fuels- with the expertise of Total in EV charging and in Solar Power, we were able to present an innovative offer fitting the needs of both the MRA-Electric and the future users. For Total, providing the Dutch EV drivers with such reliable charging infrastructure and services, powered by clean and renewable electricity, is a significant and unprecedented step toward sustainable mobility. It is in line with our ambition to operate 150,000 charging points by Europe by 2025 and to become a major player in the electric mobility business.”


  33. Now I laugh every time someone says "sustainable".  

    Image result for sustainability cartoon extrapolation


  34. Hi guys. 
    Phil – AAPL – Do you have a general view going into the earnings report? I have done extremely well with AAPL so far, but current levels are well beyond what I anticipated. I will circle back with detail on positions and ask for specific advice but wanted to see if there is a general view/logic regarding the upcoming report?
    ty!


  35. AAPL/Crazy – I think it will be hard to live up to the hype.  There won't likely be a 5G phone until Xmas so what's causing the jump this early in the year?

    Webinar Time!


  36. Ha ha .. the uncovered 20 AAPL '22 $270 longs were the 'bait' for you to make a great suggestion for a good cover, ie the '22 $350s  ..  they're even creeping up .. $36ish now – thanks Phil   ;-)

    And I like that I can do some rolling with the other spreads.


  37. Phil / I remember reading this quote (not so long ago but my search engine can't find it!) and as always inspirational:

    "OK, you guys know how I feel about CMG over $820 so it's time for another short in the STP as $820 is $23Bn and EVEN CMG doesn't think they are going to make more than $500M in 2020".

    And on December 26th you delivered with an interesting put twist on the classic ABW – buying a put spread and selling a call. How could you not follow the trade idea when it is introduced thus:

    "CMG, on the other hand, is a F'ing RESTAURANT.  They already have 2.500 locations and 80,000 employees (MCD has 210,000) so there's a physical limit to growth and $833 is $23Bn and they are making $391M this year and even if you give them $500M next year, still 46x earnings for a RESTAURANT that doesn't have any serious chance of giving you an upside surprise so they could either miss a Q or risk appetite could change and down they go.  That makes them the best short to me."

    Sell 2 CMG June '19 $900 calls for $40 ($8,000)  now at $55 ($11,800)

    Buy 4  CMG June '19 $875 puts at $80 ($32,000) – now at $57 ($22,800)

    Sell 4 CMG June '19 $825 puts at $55 ($22,000) -  now at $37 ($14,800)

    Although the new net is not that terrible, do you think it is worth rolling this combo up by $50 points for example:

    buy 925 / 875 put spread and sell $950 calls

    Or is this something you would ride out into earnings (4th February) and let the chips fall where they may?

    Very interested in your thought processes on this one.

     



  38. Phil – Ty. 


  39. Winston/CMG – Interesting; This is what I see. May be Sep dates are better;

    Sep 18, 2020; $925-$875 bull put spread ~$26  ($99-$73); $950 Calls = $53.15

    Jun 19, 2020; $925-$875 bull put spread ~$27 ;  $960 Calls = $32.5 (TD Ameritrade did not show $950 Calls)


  40. CTL-Albo- yes, nice move. Hope it is not just the yield chasers but I'll take it anyway.


  41. Phil / real estate 

    hey ! hoping to beef up my portfolio with some dividend paying REIT, combined with some options to reduce net or even a BCS if it's something you really like! dipping my toe in for around 15/20k

    thanks!


  42. As you approach the ex div date of a high div stock the price typically rises to near the div amount.  Will ATM call options 6 weeks beyond that date rise too or will their price already take into account the price will drop again after the ex div date?


  43. Nice little sell-off we're having.

    China essentially closed that city.

    Bait/Wing – Darn, I fell for it again! 

    CMG/Winston – It's in the STP already as the original $820 comment led to this

    CMG Long Put 2021 15-JAN 920.00 PUT [CMG @ $877.14 $6.41] 2 12/6/2019 (359) $30,000 $150.00 $-38.40 $150.00     $111.60 - $-7,680 -25.6% $22,320
    CMG Short Put 2021 15-JAN 820.00 PUT [CMG @ $877.14 $6.41] -2 12/10/2019 (359) $-19,200 $96.00 $-33.00     $63.00 $-2.68 $6,600 34.4% $-12,600
    CMG Short Call 2020 20-MAR 900.00 CALL [CMG @ $877.14 $6.41] -2 12/6/2019 (58) $-4,400 $22.00 $7.45     $29.45 $2.45 $-1,490 -33.9% $-5,890
    CMG Short Put 2020 20-MAR 750.00 PUT [CMG @ $877.14 $6.41] -2 12/10/2019 (58) $-4,400 $22.00 $-16.30     $5.70 $0.30 $3,260 74.1% $-1,140

    The other trade, was just another way to play but wasn't for one of our portfolios.  Ours is more like a bearish butterfly and still on track, though I'm certainly a bit concerned but we're collecting $8,800 for 1 Q out of 4 and the spread was only net $11,000 – so I think that one is going to work out.

    The other one – Remember we first look to see if something looks too high or too low and then we look to salvage our cash for a new trade.  The June $875/825 bear put spread was net $25 ($10,000) and now net $20 ($8,000) and the short $900 calls are up but not in the money and I sure wouldn't pay $11,800 (all premium) out of fear of CMG being over $900 after earnings.  

    So, the $875 puts at $57 ($22,800) is $18,000 more than we paid for the spread so I'd like to cash those out and buy 4 Jan $1,000 ($160)/$940 ($120) bear put spreads for net $40 ($16,000) so we're pocketing $6,800 and now we have a $60 spread at a much higher strike covering the short $825 puts, which are rollable.  The short calls are also rollable so then we just see what earnings look like and then do the next rolls.  

    Now you have a very good chance of collecting $24,000 for the spread (plus the $6,800 in pocket) against the $2,000 outlay so $28,800 potential profit/4 contracts is $7,200/contract for the short $900 calls and the short $825 puts so anything between $750 and $975 is profit at the moment. 

    That's the key with these plays – as long as you act before they go too far out of your range, they are not too hard to adjust and then we only have to hit our target range one time to make a very nice return!  

    REITs/Potter – NLY we just looked at in the webinar.  They are pretty cheap and pay out $1 dividend (10%) and $9.69 means you can sell the 2022 $7 calls for $2.80 and the 2022 $10 puts for $1.65 to drop the the net to $5.24/7.62 so worst case on 2x if assigned is net $7.62, less dividends collected.  If called away over $10, you get back $7 for the stock off the $5.24 (up $1.76 or 33.5%) plus $2 in dividends over 2 years is another 38%.  That's a nice way to go.

    Remember, the more they pull back the less likely your short caller wants the stock so it's actually good if they drop.  

    SKT is my favorite REIT though and that's in the Dividend Portfolio at $17.15 and still playable:

    SKT Tanger Factory Outlet Centers Inc. 1000 10/29/2019 85 $17,150 $17.15 $-0.57 $16.80     $16.58 $0.65 $-575 -3.4% $16,575
    SKT Short Call 2022 21-JAN 15.00 CALL [SKT @ $16.58 $0.65] -10 10/29/2019 (730) $-2,950 $2.95 $-0.70     $2.25 $0.90 $700 23.7% $-2,250
    SKT Short Put 2022 21-JAN 15.00 PUT [SKT @ $16.58 $0.65] -10 10/29/2019 (730) $-3,200 $3.20 $0.00     $3.20 $-0.20 $0 0.0% $-3,200

    Now net $11,125 ($11.125/share) and called away at $15,000 with a $3,875 profit (34.8%) and they pay $1.42 so $2,820 over 2 years is another 25.3%.  Not bad for coupon-clipping!

    Calls/Tangled – They generally track as well.  Nothing is definite though.


  44. BA/Phil-

     

    Thanks for the analysis.  I actually do have the ability to sell naked puts/calls I just wasn't sure if extending myself even more on this position was advisable given the recent news.  I think a drop to 250 is more likely than a pop to 350 so I would be more partial to selling calls.  But absorbing a $700 loss now and sleeping better at night might be the better route.


  45. What a ride on NTRP today:

    Neurotrope secures $18M capital raise

    • Neurotrope (NTRP -0.3%) has received commitments from certain institutional and private investors to purchase 18,000 shares of its Series D Convertible Preferred Stock at $1,000 per share yielding gross proceeds of $18M.
    • The Series D Stock is convertible into ~10.9M common shares. Buyers will also receive five-year warrants to purchase up to the same number of common shares at $1.65.
    • Net proceeds should be ~$16.4M. Closing date is January 23.

    GE, exposed to Boeing's 737 MAX issues, extends losses

    • General Electric (GE -2.3%) shares are on track for a sixth straight loss and 10th decline in 11 days on concerns over the fallout from Boeing's delay in the anticipated return of the 737 MAX.
    • Bank of America analyst Andrew Obin says Boeing's delay "increases the likelihood" that the 737 MAX production pause extends through H1 2020, which presents a risk to GE, Honeywell (HON -0.4%), Parker-Hannifin (PH -1.6%), Eaton (ETN +3.3%) and Rexnord (RXN -0.2%), which all have exposure to the MAX program.
    • Obin also thinks investors may underestimate the MAX's impact on secondary and tertiary suppliers and broader U.S. industrial firms.
    • The BAML analyst reiterates his Neutral rating and $12 price target on GE, whose shares have jumped 27% over the past three months but have lost nearly 5% during the six-day losing streak.
    • Both GE and Boeing are scheduled to report quarterly results before the open on Jan. 29.
    • GE's average Sell Side Rating and Seeking Alpha Authors' Rating are Bullish, while its Quant Rating is Neutral.

    Volkswagen to face heavy fine in Canada

    • Volkswagen (OTCPK:VWAGY) faces a fine for as much as $150M in Canada as part of its guilty plea to dozens of diesel emissions violations.
    • The German automaker was formally charged in December with importing 128K vehicles in violation of the nation's emission standards.
    • The global Volkswagen emissions cheating case dates back to 2015.

    Brexit bill clears final hurdle in U.K. parliament

    • The British pound strengthens 0.6% against the U.S. dollar after the U.K.'s House of Commons passed Brexit legislation that will then go to Queen Elizabeth II for signing, which could occur as early as tomorrow.
    • The lower chamber of the U.K. parliament earlier overturned changes the House of Lords had made — adding protections for child refugees — to the legislation for the Jan. 31 exit from EU.
    • Prime Minister Boris Johnson refused to accept any changes to the withdrawal agreement that he had negotiated.
    • The House of Lords could have attempted to reinstate the changes, but stood down, allowing the law to clear its final obstacle.

    Films, parks should lift Disney – BofA

    • Disney (DIS +0.4%) is just inside two weeks from its first-quarter earnings report, and the company should benefit from recent strength at the film studio and its parks, BofA says.
    • The company wrapped an outstanding year at the box office with no letup, analyst Jessica Reif Ehrlich suggests: Frozen II quickly became the highest-grossing animated film ever, and Christmastime brought Star Wars: The Rise of Skywalker.
    • Frozen II has grossed $1.41B worldwide, with $938.7M of that coming from overseas markets. The Rise of Skywalker has his $1.03B worldwide, with $535.95M of that from international.
    • Star Wars is also a spur at the theme parks as attractions roll out, and business in that division should be "healthy," Ehrlich says.
    • And shares face other tailwinds, including success at Disney Plus.
    • For Q1, consensus expectations are the Disney will log EPS of $1.48 on revenues of $20.9B. BofA expects $1.28 in EPS, raised from $1.22.
    • BofA has a Buy rating and a price target of $168, implying 17% upside.

    MAX delay not due to new technical issues, Boeing exec says

    • Boeing (BA -2.7%) shares continue their descent, extending 52-week lows after saying yesterday that it did not expect regulators to approve the 737 MAX's return to service until the middle of the year.
    • Boeing's decision was not due to any new technical issues, senior marketing executive Darren Hulst told the Airline Economic aircraft finance conference today in Dublin.
    • "It was just our evaluation of the process, of progress and of the timeline," Hulst said.
    • Jefferies analyst Sheila Kahyaoglu says Boeing may now need to increase its compensation package for customers by another $10B and revise its cost estimate related to MAX production by an additional $5.4B.
    • The company already has booked $9B in costs related to the grounding, including $5.6B as compensation for airline customers and $3.6B in charges to cover additional production costs.
    • Vertical Research analysts are expecting Boeing's upcoming results to be "an absolute disaster, and that now looks guaranteed… We don't see Boeing being in a position to increase cash returns to shareholders until 2022."

    Simulator training drove new MAX forecast, Boeing CEO says

    • Boeing (BA -1.1%) shares bounce off sharp earlier losses as CEO Dave Calhoun says the company's recommendation that pilots should undergo simulator training caused its decision to delay its timeline for 737 MAX's to return to service.
    • Calhoun says airline pilots are key to restoring consumer confidence in the plane, which has been grounded since March following two fatal crashes.
    • The CEO also says Boeing will not cut its dividend despite the extended grounding, and that the company expects to resume MAX production "months" before the mid-year return to service.

    Microsoft exposed 250M customer support records

    • Microsoft (MSFT -0.1%discloses a database error that temporarily exposed approximately 250M customer support records.
    • Security researchers found the flaw on December 29, and Microsoft fixed the problem two days later.
    • Microsoft says the exposure was due to a misconfiguration of an internal customer support database.
    • The company found no evidence of malicious use.

    Opko Health up 12% on Frost comments

    • OPKO Health (OPK +11.7%) is up on average volume on the heels of comments from CEO Phillip Frost about the prospects of growth hormone deficiency candidate somatrogon. He told the Jerusalem Post that the long-acting human growth hormone is a "significant advance" in the treatment of children with GHD compared to the current standard.
    • Collaboration partner Pfizer (PFE -0.4%) expects to file a U.S. marketing application in H2.

    Trump says GDP would be near 4% if Fed hadn't hiked so much – CNBC

    • U.S. economic growth would have been closer to 4% if it weren't for the residual effect of Federal Reserve rate hikes in 2017 and 2018, President Trump told CNBC's Joe Kernan in an interview at the World Economic Forum in Davos, Switzerland.
    • He also pointed to the GM strike and Boeing's 737 MAX issues as restraining U.S. growth in the past year.
    • "We had things happen that are very unusual to happen,” he said.
    • “Now, with all of that, had we not done the big raise on interest, I think we would have been close to 4%,” Trump said.
    • “And I – I could see 5,000 to 10,000 points more on the Dow. But that was a killer when they raised the rate. It was just a big mistake.”
    • The Fed raised interest rates seven times by 25 bps each time over the course of 2017 and 2018, bringing the federal funds rate to 2.25%-2.50 in December 2018.
    • Last year, the central bank cut rates three times, each time by 25 bps, bringing the key rate to 1.50%-1.75%.

    Crude prices could fall $3/bbl on China virus, Goldman says

    • The outbreak of the deadly coronavirus from China likely will provide a "negative shock" to oil markets globally, with aviation fuel suffering most, according to Goldman Sachs in predicting a nearly $3/bbl impact on oil prices.
    • Goldman expects concerns over the virus' impact on oil demand to counter jitters around supply disruptions across Libya, Iran and Iraq.
    • "While an OPEC supply response could limit the fundamental impact from such a demand shock, the initial uncertainty on the potential scope of the epidemic could lead to a larger price selloff than fundamentals suggest," Goldman analysts write.
    • The International Air Transport Association estimates an 8% decline in annual traffic for Asian airlines during the outbreak, while North American carriers experience a smaller drop.

    BA/Jeff – Bouncing back already.   So crazy.


  46. Phil – thanks for the detailed explanation – spot on. How many times I wish that I had made an adjustment earlier rather than later. Time is such a volatile element.


  47. Apparently the coronavirus might've come from snakes:

    https://www.scientificamerican.com/article/snakes-could-be-the-original-source-of-the-new-coronavirus-outbreak-in-china/

    Wuhan has 11 million people, I don't see how they can effectively quarantine that city without building walls and posting armed soldiers with orders to shoot to kill.  


  48. LOL, they should get Trump to take over – that’s right up his ally!  cheeky



  49. GM’s investors school Tesla’s on self-driving hype