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Fall Back Friday

Very bouncy but still not getting over the hump.

As we noted yesterday, 3,280 on /ES is the line to watch and we keep failing it – not a good sign into the weekend.  Unfortunately, the Dow dropped 140 points back from yesterday's rocket close and despite Amazon's 12% pop this morning (not a Dow component but boosting all indexes), which is keeping the Nasdaq green, at least.

People staying home with the flu is good for AMZN.  We're now over the 10,000 infection mark (213 deaths) but it does seem to be slowing for the moment, so that's a little encouraging.  We'll have a far better idea of the situation after the weekend but the US issued a Level 4 Travel Advisory for China, which is essentially saying DO NOT GO TO CHINA – so things are certainly not under control either.  

Image result for amazon sales over time 2019"AMZN's stock price is still out of control at $2,085 this morning as their "terrific" earnings were actually just $6.47/share so $23.01 total for 2019 means they are still trading at close to 100x their actual earnings and, on the whole it's barely up from 2018's $19.80/share. 

You might pay 100x earnings for companies that are going to grow their earnings 5 times in the near future but, to do that, AMZN would have to make $50Bn vs the current $10Bn and they currently have $280Bn in sales so Amazon would need to get close to $1Tn in sales before hitting $50Bn – 15% of all US Retail Sales!?!

Amazon Web Services is responsible for $10Bn in revenues and $2.6Bn out of $3.88Bn in profits – the Retail Operation is practically a loss-leader.  I really don't see how that's going be an engine for growth to justify the company's Trillion-Dollar price tag.

Have a great weekend, 

- Phil


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  1. IBM – Need to to some research on the new CEO – does anyone have any background on him?

  2. Phil any Thoughts on NFG for Div trade?

  3. Good morning!

    Without AMZN things would be very ugly.

    /NQ makes the best short below 9,200 as AMZN is not likely to top 2,100 and may pull back. 

    Krishna/Batman – Good guy.  I like that he's got the engineering background. 

    Arvind Krishna is an Indian American engineer and executive with IBM and was named chief executive officer in January 2020. He will assume the role on April 6, 2020, succeeding Ginni Rometty who had served as CEO since 2012.[1] Krishna joined IBM in 1990, and was most recently senior vice president for IBM's cloud and cognitive software.[2] He is credited as leading IBM's acquisition of Red Hat for US$34 billion in 2018.[3]

    Arvind Krishna has a Ph.D. in Electrical & Computer Engineering from the University of Illinois at Urbana–Champaign.[2] Before this he attended the Stanes Higher Secondary School, Coonoor,[5] and the Indian Institute of Technology KanpurUttar PradeshIndia (from 1980 to 1985) where he earned his B.E. in Electrical Engineering

  4. Good Morning!

  5. Big Chart – Watch those 50 dmas – very bad if NYSE and Dow fail them.

    NFG/Yodi – Nice, regional company trading at a good price with a 4% dividend.  No growth and you're paying $3.6Bn at $42 for $250M in earnings so 14.6x means I'd stay conservative on the entry.  

    Year End 30th Sep 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
    Total Revenue

    2,113 1,761 1,452 1,580 1,593 1,693 1,842 1,778 -4.33%
    Operating Profit

    570 -611 -417 594 520 512     -2.12%
    Net Profit

    299 -379 -291 283 392 304 260 257 0.324%
    EPS Reported

    3.52 -4.50 -3.43 3.30 3.33 3.51     -0.101%
    EPS Normalised

    3.52 4.18 3.84 3.30 3.33 3.51 3.10 3.04 -0.101%
    EPS Growth

    +14.3 +18.6 -8.21 -14.1 +1.11 +5.24 -11.7 -1.68  
    PE Ratio

              12.0 13.6 13.8  


    They don't have long-term options though, that's a big negative and, of course, thinly traded so I'd start with just the NFG short July $40s for $2 and see how that goes.  If you end up owning them in July for net $38, then you could sell Jan $40 calls for $3(ish) and more puts, like the $40s for $3+ (because it would be below or you wouldn't have been assigned) and then you would be in for net $32/36 – that seems very reasonable. 

  6. LOL – that was easy on /NQ!   AMZN with a quick $50 drop took the Nas down with it. 

  7. All that was was "shorting the laggard" – /NQ was up above the other indexes when I made the call and the reason it was up was clearly AMZN and AMZN was hitting resistance at 2,100 so it was a very high-probability short and the risk/reward using the 9,200 line for a stop made it a no-brainer to play.  

  8. Thanks Phil on NFG

    My thoughts buy stock and sell the Jul 40 straddle for 5.85. armchair trade

  9. Nice call Phil!

  10. AMGN gets a beating today

  11. My MO stock buy yesterday @ 46.48 was not to bad!!!!!

  12. XBI puts might be a good play given Bernie's expected showing in Iowa.

  13. AAPL down 8, Yesterdays Mar iron condor holding up well!

  14. ABMD  my conservative 2 option play for Feb PMtrade of 31/12 now up 4275.00

    Will set up new one for Mar and waiting for todays bottom. Possible /ES -50???

    Possible Mar 185 straddle and Jan 22 long call 170 all 2 off and sell Jan 22 150 put 1 off

    We see how it works out today. Very volatile stock!

    SBUX discussed by Phil yesterday or Tuesday holding up 85 very well will also keep an eye on it for PMtrade!

  15. NFG Jul armchair filled filled!

  16. Comment content omitted because it is too long.

  17. XBI/Albo – You think Bernie's good for Biotech?

    Key events next week – healthcare

    • Noteworthy events during the week of February 2 – 8 for healthcare investors.
    • WEDNESDAY (2/5): European Association for Hemophilia and Allied Disorders (EAHAD) Annual Congress, The Hague (3 days). Catalyst Biosciences (NASDAQ:CBIO): Phase 2b data on dalcinonacog alfa for prophylaxis of hemophilia B.
    • International Scientific Congress on Spinal Muscular Atrophy, Evry, France (3 days). PTC Therapeutics (NASDAQ:PTCT) and Roche (OTCQX:RHHBY): Data from Phase 3 SUNFISH study of risdiplam in SMA 2&3.
    • THURSDAY (2/6): ASCO-SITC Symposium, Orlando (3 days). Jounce Therapeutics (NASDAQ:JNCE): Phase 1/2 data on vopratelimab in solid tumors. Forty Seven (NASDAQ:FTSV): Phase 1 data on magrolimab + avelumab in ovarian cancer.

    Delta cuts flight to China until end of April

    • Delta Air Lines (DAL -1.3%) says it will suspend all flights in and out of China on February 6 due to the coronavirus outbreak.
    • The suspension will last until April 30.
    • The flights between now and February 6 are being made to give customers a way back to their original destinations.

    Coronavirus risk-on trade sweeps over the consumer sector

    • It's another down day for consumer companies with a presence in China as novel coronavirus developments continue to point to an extended period of reduced store traffic in the nation and outbound tourism to key markets
    • Nio (NIO -7.2%), Canada Goose (GOOS -4.9%), Luckin Coffee (LK -7%), Yum China (YUMC -2.4%), Ralph Lauren (RL -1.6%), PVH (PVH -2.5%), Tapestry (TPR -2.7%), Fossil (FOSL -6.4%) and Capri Holdings (CPRI -3%) are all lower on the day.
    • Some of the selling pressure is tied to concerns over Chinese spending even after the virus outbreak is contained.

    CPRI coming back down – we like them long-term.

    Year End 30th Mar 2014 2015 2016 2017 2018 2019 TTM 2020E 2021E CAGR / Avg
    Total Revenue

    3,311 4,371 4,712 4,494 4,719 5,238 5,570 5,783 5,976 9.61%
    Operating Profit

    1,008 1,257 1,175 690 749 735 469     -6.12%
    Net Profit

    661 881 839 553 592 543 337 746 801 -3.87%
    EPS Reported

    3.22 4.28 4.44 3.29 3.95 3.58 2.23     2.17%
    EPS Normalised

    3.22 4.28 4.48 4.24 4.67 4.42 3.94 4.88 5.28 6.52%
    EPS Growth

    +63.1 +32.9 +4.62 -5.46 +10.3 -5.46 -15.8 +10.6 +8.03  
    PE Ratio

              7.11 7.97 6.43 5.95  

              0.671 0.752 0.801 0.726  

    Let's keep an eye on them, I definitely want to start an LTP position on them.

  18. Consumer sentiment strengthens in final January print

    • January Consumer Sentiment (Final): 99.8 vs. 99.1 consensus, 99.1 prior.
    • Current economic conditions 114.4 vs. 116.0 consensus, 115.5 prior.
    • Index of consumer expectations 90.5 vs. 88.9 prior.

    Fox/Roku dispute just in time for Super Bowl

    • Pay TV viewers have become accustomed to carriage disputes and blackouts on traditional pay television, especially around key events – and now the battle is shifting  toward streaming television.
    • Just two days before Super Bowl LIV (the year's premier viewership event on television), Roku (ROKU -5.7%) has notified users that its deal with big-game broadcaster Fox (FOXFOXA -0.2%) is ending due to a dispute.
    • For its part, Roku is blaming Fox and telling users it can watch the game through third parties that also carry Fox programming: YouTube TV, Hulu Live, Sling TV, Fubo and others. "Many of these services offer a free trial," Roku suggests.
    • Meanwhile, Fox has pulled references to Roku from various spots on its Super Bowl website. It's now pushing viewers toward streaming options Apple TV, Fire TV, Xbox, Android TV and Samsung Smart TV.
    • "Roku’s threat to delete Fox apps from its customers’ devices is a naked effort to use its customers as pawns," Fox says, calling it a "poorly timed negotiating ploy."

    Chicago PMI starts off the year weakly

    • January Chicago PMI42.9 vs. 48.5 consensus, 48.9 prior.

    Personal income growth falls short of consensus

    • Dec Personal Income and Outlays: Income +0.2% M/M vs. +0.3% consensus, +0.4% (revised) prior.
    • Consumer spending +0.3% M/M vs +0.3% consensus, +0.4% prior.
    • Core PCE Price Index +0.3% M/M vs. +0.1% prior.

    Employment cost index increased 0.7% for Q4

    'A black swan like no other' – Moody's goes survivalist on coronavirus

    • A cornoavirus pandemic would be more of a "black swan" than the global financial crisis, says Moody's Chief Economist John Lonski. And while policymakers could flood the world with freshly minted cash to combat the financial crisis, Lonski isn't sure what tools they would have to deal with a pandemic.
    • Lonski takes note of a 7.1% plunge in industrial metals prices since the coronavirus made the news. Global growth for decades has exhibited a strong correlation with this gauge, he says.
    • The trade in fixed-income for now has been to buy high-quality and sell high-yield – while yields for both have fallen, spreads have widened. And Moody's average expected default frequency metric – a leading indicator of high-yield risk – has jumped 44 basis points over the last few days.

    WWE -26%; analysts cut after management ouster

    • World Wrestling Entertainment (NYSE:WWE) has opened hitting the mat with a thud today, -25.7%, after last night's news that it's ousted its co-presidents, a reported reaction to quarterly performance.
    • Previously bullish analysts have backed off. Morgan Stanley has cut its recommendation to Equal Weight from Overweight, and set a $54 price target, implying 13% downside from yesterday.
    • The firm was joined by Evercore ISI, which cut to In-Line and set a $50 target, and Loop Capital, which cut to Hold and set the same $50 target

    Amazon has $3,200 bull case after earnings – RBC

    • Analysts are out positive on Amazon's (NASDAQ:AMZNknockout holiday quarter report.
    • Barclays analyst Ross Sandler says the print should put AWS fears to rest with "only 100bps of deceleration and more dollar-adds Y/Y" than Microsoft Azure and Google Cloud combined.
    • Sandler recommends continuing to add to positions, saying shares are "near an all-time trough and many investors are underexposed" and seeing more "room to run."
    • RBC Capital's Mark Mahaney raises his Amazon target from $2,500 to $2,700 and now sees a bull case at $3,200.
    • The analyst says Amazon has been one of the most dislocated of the high-quality, large-cap stocks, and expects this to quickly change after the earnings report.
    • More action: Morgan Stanley (Overweight) raises AMZN by $200 to $2,400; Bernstein (Market Perform) steps from $2,050 to $2,150; UBS (Buy) lifts the stock from $2,305 to $2,440.

    Discover Financial execs buy the dip

    • Between Jan. 23 and 27th, Discover Financial Services (NYSE:DFS) shares sank 16% after two analysts downgraded the stock after the company's outlook for expenses in 2020 was worse than expected.
    • Four Discover executives took advantage of that lower share price and purchased 24,777 shares on Jan. 27.
    • CEO and President Roger Hochschild picked up 15,000 shares at $74.12 per share.
    • John Greene, executive vice president and CFO, bought 3,377 shares at $73.84 per share.
    • Wanji Walcott, executive vice president, chief legal officer and general counsel, acquired 3,400 shares at $73.95 per share.
    • Carlos Minetti, executive vice president, consumer banking, bought 3,000 shares at ~$73.74 per share.

  19. NAV +55.9% (receives $35/sh takeover bid from Volkswagen subsidiary).

    Nice payday for Icahn.

    Phil, Re: Bernie.  He's very negative for the entire biotech/pharmaceutical industry.  Hence the puts.

    • LOL, Butterfly Portfolio is loving this sell-off so far:

    • Dividend Portfolio not bothered much, still up 22.3% at $122,324
    • Earnings Portfolio drifting along at +3%, $102,953 so all playable.  

    • Hemp Boca up 3.6%, $51,808.
    • Money Talk holding up well at 7.5%, $107,535.
    • LTP up 3.8%, $518,995
    • STP down 22.3% (TSLA), $77,728

  20. Bernie/Albo – I don't think it's that impactful on Biotech, still need new drugs, just a margin squeeze on the other end, which is likely to trickle down but not so harshly I'd short the sector after they already had a nice pullback…

  21. Thanks, Phil.

  22.   Looks like we reached the /ES -50

  23. ABMD

    Sell Mar 20 strangle @ 185/180 @ 24.95 x2

    Jan 22 long call @ 54.10 x2

    Sell Jan 22 150 put @ 25.00 x1

  24. Some light reading if you enjoy doomsday scenarios:

    "Findings In our baseline scenario, we estimated that the basic reproductive number for 2019-nCoV was 2·68 (95% CrI 2·47–2·86) and that 75,815 individuals (95% CrI 37 304–130 330) have been infected in Wuhan as of Jan 25, 2020. The epidemic doubling time was 6·4 days (95% CrI 5·8–7·1). "

  25. 50 DMA still holding on the Dow but breached by the NYSE that has taken the biggest hit of all the indices this week. Of course, not impacted as much by the AAPL, TSLA and AMZN.

  26. Phil/DFS – Discover FInancial Services; Trading at $75 Near lows; Trailing PE = 8.5

    EPS for 2020 = $9 (approx) and EPS for 2021 = $10 (approx); Dividend of $1.76; Lot of insider buying recently (you had printed the insider buying activity a few minutes ago). Do you think it's worth opening a position?

    If so, How do you do this in a retirement account (that allows covered calls); And how would you do in a brokerage account (non-retirement account).


  27. PMTrade SBUX

    Sell Mar 20 85 c @ 3.05 x2
    Sell Mar 20 82.5 p @ 1.50 x2
    Buy Jan 22  70 c @ 20.13 x2
    Sell Jan 22 75 p @ 6.20 x1

  28. Lancet/Ati – I don't see the worst-case panning out so far in the numbers.  So far, there has been no other major outbreak outside of China.  I think awareness and the lockdown have done a very good job mitigating the spread.  If people who are sick are worried enough to go to hospitals and hospitals take it seriously, you end up with spread vectors far below what we had with SARS and MERS, which were not taken this seriously this early.  Maybe I'm just being optimistic but, as I said yesterday, anything below 11,000 today is an improvement and if we're under 20,000 on Monday – I won't be all that worried it's going to get out of hand.

    NYSE/StJ – The only truly reliable index.

    DFS/Vkat – I posted earlier, insiders are buying at $75 and they are very interesting down here.  

    Discover Financial execs buy the dip

    • Between Jan. 23 and 27th, Discover Financial Services (NYSE:DFS) shares sank 16% after two analysts downgraded the stock after the company's outlook for expenses in 2020 was worse than expected.
    • Four Discover executives took advantage of that lower share price and purchased 24,777 shares on Jan. 27.
    • CEO and President Roger Hochschild picked up 15,000 shares at $74.12 per share.
    • John Greene, executive vice president and CFO, bought 3,377 shares at $73.84 per share.
    • Wanji Walcott, executive vice president, chief legal officer and general counsel, acquired 3,400 shares at $73.95 per share.
    • Carlos Minetti, executive vice president, consumer banking, bought 3,000 shares at ~$73.74 per share.

    For the LTP, we can simply play them not to go lower with this spread:

    • Sell 10 DFS 2022 $70 puts for $8 ($8,000) 
    • Buy 20 DFS 2022 $60 calls for $18.50 ($37,000) 
    • Sell 20 DFS 2022 $75 calls for $11 ($22,000) 

    That's net $7,000 on the $30,000 spread that's in the money to start.  All DFS has to do is hold $75 and we make $23,000 (328%) and,  if they recover back to the $80s, we can even sell some short calls for income while we wait. 

  29. TOS- anyone else having margin issues with TOS today? I have a PM trading account that is 70%+ cash and got a notice of margin deficiency. They have not been able to explain it to me so far but "looking in to it".

    Never had a problem in the past so something is screwed up. Waiting to hear back with an explanation.

  30. SBUX/Yodi – Hopefully they hold the channel.  

    TOS/Pstas – I've gotten false notices from them before.  Usually they fix it by the end of the day – unless you are short TSLA!  

  31. Phill/  I Sold naked CHL Sep 18 2020 45.0 Put at $4:00 and now it is at $5:35.  Is it time for me to roll it down and out?  


  32. Phill// BTW, I sold 5 Contracts on CHL for the above trade.  Sorry I forgot to mention that.  Thanks.

  33.  Market extends lows on report of coronavirus in NYC.

  34. /CL – Make or break for oil right here, 51 is the multi-year uptrend and last year's recurring bounce line. Wonder how a breakdown will trickle into overall market psychology.

  35. CHL/Rookie – There's nowhere to roll it to and there's nothing wrong with the target – it's just down on virus fears.  I'd leave it for now. 


    NYC/Albo – Oops, so much for not worrying! 

    /CL/MrM – If this thing is breaking out in other cities, no low is going to be safe.  Travel bans, industrial shutdowns…  Lots of things to depress prices.

  36. Caterpillar sees more weak demand ahead as firms defer capital decisions

    • Caterpillar (CAT -2.5%) slides to three-month lows as it expects revenues will decline again in 2020 after slipping 8% in 2019, joining several other manufacturers that have warned sluggish conditions likely will carry into next year.
    • CAT forecasts demand from companies that buy its machines to fall 4%-9% this year; in North America, the company expects construction activity to decline and demand from oil and gas customers to remain weak.
    • "Customers are being cautious due to global economic conditions," Caterpillar CEO Jim Umpleby said during today's earnings conference call.
    • CFRA downgrades CAT shares to Sell from Hold with a $120 price target, cut from $156, following the Q4 report, citing the outlook for global sales to weaken further and the need for lower production to better match dealer and end-user demand.
    • "North American construction markets will likely be weaker in 2020 than we previously anticipated," CRFA's Elizabeth Vermillion writes. "Within Construction Industries, we expect state and local infrastructure spending to remain solid, but lower dealer inventories will require lower production through most of 2020, offsetting spending benefits."

    This is that situation I've been worried about all year.  People want to sell things but there are simply not enough buyers (low volume rally) to let people liquidate and, if they begin to panic and force liquidations – prices could fall very quickly on all sorts of stocks.  

    Airline stocks bid down on traffic concerns

    • Airline stocks are underperforming broad market averages again as the latest coronavirus developments aren't encouraging for a quick turnaround in global air travel demand.
    • While flight cancellations and refunds and are piling up in China, even carriers that don't fly to Asia are being bid down on broader macroeconomic concerns.
    • Notable decliners include Spirit Airlines (SAVE -3.4%), American Airlines Group (AAL -2.8%), United Airlines (UAL -2.7%), Delta Air Lines (DAL -1.9%), Azul (AZUL -2.1%), China Southern Airlines (ZNH -1.8%), SkyWest (SKYW -6.6%), Gol Linhas (GOL -1.9%), Southwest Airlines (LUV -1.6%), Air France-KLM (OTCPK:AFLYY -1.6%), Air China (OTCPK:AIRYY -1.4%) and Hawaiian Holdings (HA -1.5%).

    Gold creeps towards $1,600 as market jitters rise

    • The yellow metal did briefly spike above $1.6K earlier this year, but hasn't been above that level in a prolonged way since 2012.
    • At the moment, gold has reversed early losses, and is now modestly higher on the session at $1,592. GLD +0.65%.
    • Behind the move is a bit of panicky action in stocks over the coronavirus. More countries are advising citizens not to travel to China, including the U.S., where the State Department has issued a Level 4 warning (the highest level). Mongolia and Russia have reportedly closed borders.
    • The Dow is currently down 1.5%, and S&P 500 and Nasdaq 1.2%.

    Silver came back hard and fast!  

    Nike's Vaporfly to fly in Tokyo Olympics

    • The governing body of world track and field announces a series of new regulations for running shoes used in competitions.
    • Nike's (NKE -0.8%) Vaporfly shoes will be allowed at the Tokyo Olympics this summer, although certain modifications by competitive runners won't be allowed. World Athletics is also recommending more research be undertaken to establish the true impact of the technology and to assess any new shoes that enter the market.
    • The general buzz over the flurry of running records set by runners wearing Vaporfly is seen as a positive for Nike in selling the products to recreational runners.

    Huge news for NKE and they are down.  Quite a few records will be set in those shoes this summer – massive PR.

  37. Phil -   /long index 

    Do we want to call a bottom with tight stops?

  38. Does it make sense to hold some short index futures into the weekend? If CV gets worse then bottom drops out, and market could decide to go ahead and correct anyway – it'd be nice to have a couple contracts on tap in a 5% or 10% correction. But… the market is generally insane right now (see TSLA, CMG, AMZN, NFLX etc). Thoughts?

  39. well, at least FINALLY the market is responding properly to the coronavirus that will send the world economy into recession by Q3. 

    Interesting to note the virus appears to be weaponized. The envelope protein, which is the most mutable part of the virus, contains a bat sequence that was published years before the virus was released. Not only do they match, they match 100.0%. The statistical chance of this happening in the wild is 0%. There's a couple of Level 4 biohazard labs in Wuhan. The question that's left is whether it was done intentionally or not.

    My vote is for the 50-year old lab low level lab employee that says "hmm, why should I incinerate this bat instead of taking it to the Wuhan wet market for a few extra bucks?"

  40. Bottom call/Potter – Nope, not feeling very bullish here.  I guess I'd play /RTY over 1,615 with tight stops for a quick bounce but VERY tight stops.  

    It's all about where that box ends up next week. 

    Spanish flu infected 500M people with 50M dead – could go in that direction.

    Index Futures/Dawg – If the virus subsides you could get really burned.  I still prefer the SQQQ hedges we have in the portfolios.  If we had held up today (other than /NQ), I wouldn't have minded shorting into the weekend from those levels but this is down 1.5% already – very dangerous. 

    Speaking of which – taking short /NQ money and running, of course (stop at 9,030 and below 9,000 that becomes the stop).

  41. NKE / recreational runners. Oh F yeah! That's me and the hype is real. I'll be wearing Vaporfly Next% at this coming Boston Marathon in april, if I can find any.

    They claim you can take 4.2% off your performance. I wanted to run 2:43, so can I change my shoes and run 2:36? That would be something. Sub 6 minute pace one more time in my life.

    Worth it. I'm sold. So are 500,000 recreational runners ($125M in revenue right there). 

  42. Amazing – looks like you need to be long TSLA in a sell off (down 0.3% to $639.

    My weekend homework is to:

    Check all short put positions (very few) and look at maximum roll to Jan 2022 and see what strike that delivers. If happy to accept stock at that price – do nothing, otherwise look at buying puts and financing with short calls – but recognizing I may just be entering another position that will need to be managed.

    Look at the best way to get short deltas. Check out the videos available on delta busters and ZEBRAs. The ones from TT have all the info but are rather verbose – but speed view them and they're OK.

    What we are seeing are short to mid-term issues – the positions for protection should reflect that. 

    Better to layer on protection incrementally than go gung-ho full on negative – some of the biggest rallys are in declining markets. 

    Don't overthink stuff. Simpler actions are better than complicated strategies, e.g. 45 DTE Buy QQQ long puts with not too much extrinsic – I think Phil used to recommend around the 70-80 delta mark. The Mar 20 $230 long puts are $11.40 – so just $1.40 of extrinsic – but of course you need to be prepared to manage them on any reversal. Going longer dated may cost more but give you more time to adjust.

    Stock I'd just leave alone – unless your investment case has radically changed.

    Better to think about these kinds of strategies and dust off the action plans while the downtrend is in its infancy.

  43. I have a buyer in Taiwan that wants 3M N95 surgical masks immediately. Anyone in the medical or medical supply profession LMK.

  44. CPRI   discussed this morning.  Which one of you sold over 2000 August $25 puts? 

  45. ZM   Zoom Video  conferencing   Green today as business re-think their travel plans.  

  46. DFS – Not mentioned in the insider buying in DFS on 1/27.

    Glenn Schneider, EVP, and Chief Information Officer sold 15,000 shares..

  47. Yodi & Winston….Thanks for sharing your valuable views and trades. Always look fwd to learn from experienced traders.

  48. Experienced Traders??? But thank you

  49. Dawg/futures short

    I've used spx or spy puts (weeklies) are useful if the move is moderate/large. You can participate and control the risk if it moves against you aggressively. 

  50. CPRI    traders buying the March $35 / $40 call spreads x2000

  51. LB    buyers come in for the Jan $30 calls x1750 as 82 year old Wexner might step aside as they look at alternatives for the push up bra brand VS

  52. should we trade for another 2-hour mega stick? Besides, it's the Market That Can Never Go Down: This Time It's Different, edition

  53. Albo/The Bug – that's pretty much where I am on this as well. The unknowns described in his final paragraph will improve as our surveillance gets better and we reduce both the false positives and false negatives in our counts.

  54. Shots Fired At Mar-a-Lago

  55. Snow – Hope so.

  56. I think buying cheap Apple calls for today 315's or something around there is an easy way to play for a stick up close

  57. coulter531 – or maybe TSLA 645 calls at 12:30, unstoppable!

  58. NKE/BDC – Apparently it's the real next stage in shoe tech.  $250 seems like a bargain after watching that Bernie video (which I think is the point of it).  

    Strategies/Winston – Layering is the way to go.  In the STP, for example, our main hedge is SQQQ:

    2021 15-JAN 20.00 PUT [SQQQ @ $20.10 $0.69] -15 1/17/2020 (350) $-6,900 $4.60 $-0.05 $-4.60     $4.55 $-0.05 $75 1.1% $-6,825
    2021 15-JAN 17.00 CALL [SQQQ @ $20.10 $0.69] 60 1/17/2020 (350) $29,100 $4.85 $0.55     $5.40 - $3,300 11.3% $32,400
    2020 19-JUN 20.00 CALL [SQQQ @ $20.10 $0.69] -40 1/17/2020 (140) $-9,200 $2.30 $0.53     $2.83 $0.28 $-2,100 -22.8% $-11,300

    We have 20 open calls and we're at $20 so $18,000 potential (if it stays here) but the 40 short June $20s ($11,300) can be rolled to 40 Jan $30s at $2.75 ($11,000) so $300 can buy us $60,000 more headroom if we feel the need (so no reason to adjust yet) or we could cash in the 60 long calls at $32,400 (paid $13,000 for the spread) and add 80 of the Jan $25 ($3.40)/$35 ($2.40) bull call spreads at $1 ($8,000) and then we'd have $14,400 off the table and now a free spread of 80 Jan $25/35 bull call spreads covering 40 short June $20s.  

    We'll just have to see how it goes but we always try to make moves that get some money off the table.  

    Masks/BDC – Try Amazon.  Is it 3 Million or MMM brand?  Here's the broad category.

    CPRI/Stock – That's a bit aggressive! 

    LB holding up nicely too:

    Stick/BDC – I wouldn't into the weekend.  Very doubtful all will be well on Monday.  Maybe not worse but all fixed is a big stretch. 

    TSLA/Coulter – With just over an hour to trade the TODAY TSLA $645 puts and calls are $2.50 and $2.85.  Next week's are $21/21 and Feb (21 days) are $33/31.  Seem+s like there's money to be made on this somehow.  In theory, you could buy 4 of the Feb $645 puts and calls for $25,600 and sell 5 of the $645s today for $2,675 and then sell 5 next weeks at the close for $21,000 and see how it goes.  Could be a fun trade.  

  59. I'm also wondering how China will open on Sunday night/Monday. If that goes poorly we could pulled down with them. 

  60. NYSE is back to where it was the first week of December! And Dow below the 50 DMA although it's a fake index!

  61. Phil on my WBA 2021 50/60 spread the 60s are 87% in the money — would you close them out and wait for a bounce or roll the whole spread down – thanks

  62. Hi Phil,  What is your take on IMAX in face of the coronavirus?  I have been rolling my long calls down and out.  I now have Sept 16 longs, offset by June 22s, which I will allow to burn off further, unless you think it is better to roll them now.  I also have September 16 and 17 short puts.  Thanks.

  63. They are still not going to call witnesses in the Senate but:

    Representative Adam B. Schiff of California, the lead Democratic House manager, opened by referring to The New York Times’s revelation on Friday that President Trump’s role in the Ukraine pressure campaign began earlier than previously known. Mr. Schiff emphasized that Pat A. Cipollone, the White House counsel, was present when the president delivered that instruction.

    “He said all the facts should come out,” Mr. Schiff said of Mr. Cipollone. “Well, here’s a new fact, which indicates that Mr. Cipollone was among those who were in the loop.”

    Mr. Schiff called the Times article, which cited an unpublished manuscript by John R. Bolton, the former national security adviser, as “yet another reason why we want to hear from witnesses.” Reports about Mr. Bolton’s unpublished book, Mr. Schiff added, was evidence of the need to call the former aide as a witness.

    Compelling stuff.  The GOP is being sloppy because, with all this new stuff coming out – the House can impeach Trump again as soon as this one is done and then the next Senate trial would be after November and it would become a huge election issue for GOP Senators with the Dems imploring to throw the bums out if you want to get to the truth.  

    WASHINGTON — More than two months before he asked Ukraine’s president to investigate his political opponents, President Trump directed John R. Bolton, then his national security adviser, to help with his pressure campaign to extract damaging information on Democrats from Ukrainian officials, according to an unpublished manuscript by Mr. Bolton.

    Mr. Trump gave the instruction, Mr. Bolton wrote, during an Oval Office conversation in early May that included the acting White House chief of staff, Mick Mulvaney, the president’s personal lawyer Rudolph W. Giuliani and the White House counsel, Pat A. Cipollone, who is now leading the president’s impeachment defense.

    Mr. Trump told Mr. Bolton to call Volodymyr Zelensky, who had recently won election as president of Ukraine, to ensure Mr. Zelensky would meet with Mr. Giuliani, who was planning a trip to Ukraine to discuss the investigations that the president sought, in Mr. Bolton’s account. Mr. Bolton never made the call, he wrote.

    The account in Mr. Bolton’s manuscript portrays the most senior White House advisers as early witnesses in the effort that they have sought to distance the president from. And disclosure of the meeting underscores the kind of information Democrats were looking for in seeking testimony from his top advisers in their impeachment investigation, including Mr. Bolton and Mr. Mulvaney, only to be blocked by the White House.

    China/Jeff – They were in free-fall when they closed this morning and should be 14-15,000 infections by Monday, even if it's slowing so I don't think they will be all happy then either.

    If we assume 25,000 is a critical floor then 20% up is 30,000 and that is the non-spike top so figure that's the range and each 1,000 is retrace or bounce so 26,000 line is weak bounce and 13.3% fall from the top but they fell 1,000 on Thursday (3%) and 1,500 on Friday (5%) so accelerating also means hard to reverse and China rally has same low volume problem as US so they will be lucky not to fall 7.5%  Monday (24,500), which is pretty much limit-down in China since they halt stocks at 10% so very hard to get the average for the index past -7.5%. 

    Nikkei really bad too:

    See – accelerating.

    What's that theory about shorting the laggard?

    WBA/Coulter – Cash is king in a downturn and that's a good way to raise some so I would.  

    IMAX/John – Well they'll recover but Q1 is shot in China and probably Asia – I'm sure not anxious to go see a movie…  I didn't even want to play poker last week in the casino because who knows who's touching the chips?  I think we all need to be patient and see what happens – certainly not rushing to put money in at the moment if it can be avoided.  

  64. Nas 9,000 is failing!   THAT should be bouncy.  

    /RTY  still 1,613 – that stopped falling, mostly.  1,600 would be a critical fail. 

    28,200 once again is significant on /YM, 3,200 holding on /ES (so far) 

  65. Did the DFS $75 calls already move that much or did you mean the $70 calls for $11?

  66. or maybe the 72.50 calls?

  67. Meanwhile, if this thing is a major crisis – how awful is it that Donald Trump is the guy that has to get us through it?  

    DFS/Tangled – I think the Bid/Ask was there but now it's collapsed to $9.30/10 but I'd just go long and wait and worst case is you sell the $70 calls (now $11.50/12) and offer $3 to roll the $60s ($18.50/19) to the $55s ($21.90/23.20).  So let's say you get $11 for the $70s instead and then spend $3 to roll, that would be net $13,000 on the $30,000 spread with much lower strikes so it would be safer to sell calls so we can certainly make up the $6,000 later (5 short March $75s at $2.70 brings in a quick $1,350 selling 49 days out of 721).

    Also, don't forget, when in doubt – sell 1/2.  We're bullish so a 1/2 cover (10) of the longs (20) would keep us from over-committing to a bad price so you could take $9.67 for 10 of the short $75s and hopefully sell the other 10 for $12.33 to make up for it or, as we know, you can get maybe $12.33 from the $70s and then it would be the same net $7,000 but now a $25,000 spread – not terrible and also adjustable over time.  

  68. CDC making a statement that the risk (at this time) to the American public is LOW.  

    They are trying to keep the consumers from freaking out into the weekend. 

  69. LOL – CDC guy is doing a TERRIBLE job of reassuring people.  Talking about how much we don't know and how steep the rising number of patients is and talking about 8,900 dead from influenza in the US – I don't know who he thinks his audience is but:

    Image result for carlin average american"

    Hopefully the media will spin it right.

    Oops, now the other CDC guy says they are declaring it a National Health Emergency – WTF?

    I feel like I'm living in the beginning of a Zombie apocalypse movie – "Remain calm, rrrrrrrrrrrrrrrrrrrgggggghhhh!"

    Saying 28 days of quarantine is recommended for people coming in from China.  Banning them from entering the country (anyone who traveled in China in the last 14 days).  Holy crap – I almost flew back through Hong Kong 3 weeks ago – I was going to spend the weekend there!

  70. coulter531 - I should have taken my own advice, AAPL down, TSLA soaring into the close, wow.

  71. Trump is showing off his virus mask:

    Image result for trump virus mask"

  72. Well this is a fine time to end the week! 

    Let's keep things going in chat if you have news (especially those of you in Asia).

    Have a great weekend folks,

    - Phil

  73. I didn't sleep last night. I had that thought of Dumpy having to deal with a national emergency. A man with maybe 5 gray cells popping around in that empty head!

  74. Damn, I wish Bloomberg was President!  Makes you realize who the best leader would be.  I'm sure Warren, Biden or Sanders would get the best people on it but Mike would be the best person and organize the crap out of this thing (trouncing civil liberties for our own good).  

  75. Now a guy is listing all the unknowns like incubation period, transmission period, transmission radius…  OMG!  

    If you have been in China in the past 14 days they are rounding you up!  

  76. Self-quarantine for 28 days after travel to China (monitored by local health authorities).  

    How can this not be more serious than they are telling us?  

  77. Phil/The Bug – the official (CDC etc) response is beginning to sound like a hatchet job on China. Just saying……

  78. Hatchet job/Snow – Well it is ground zero and legitimately they don't want this thing getting out into other countries.

    Now they are funneling people into just 3 airports from China:

    President Trump has temporarily suspended entry into the United States for any foreign nationals who have traveled to China, the administration announced on Friday.

    The action will restrict all foreign nationals who have been to China — other than immediate family of American citizens and permanent residents — from entering the United States.

    Beginning on Feb. 2, any United States citizen returning home who has been in the Hubei province of China within the past 14 days will be quarantined for up to 14 days, administration officials said. Those who have been to other parts of China within the past 14 days will be subject to “proactive entry screening” and up to 14 days of monitoring and self quarantine.

    The United States will also funnel all flights from China to just a few airports, including J.F.K., Chicago’s O’Hare and San Francisco International Airport.

    Well thanks a f'ing lot from NYC!  Sure, send all the possibly infected people to the World's most crowded airports – SMART!  

  79. Guy on CNBC making a good point.  If we are doing 14-day self-quarantine then China should be doing it nation-wide to get past this but that means China is essentially off-line for most of Q1 – that's a very big ding on the global economy if they enact those safeguards.  

  80. Meanwhile:

    Be very afraid!  

    Desert locusts—the most devastating of all locust species—can consume their weight in food each day. Swarms potentially containing hundreds of millions of insects each can travel over 90 miles a day; a swarm the size of Manhattan can consume as much food in a day as the population of the New York tri-state area, said FAO locust expert Keith Cressman. Some swarms are far bigger.

    “This is a more serious emergency than we had earlier anticipated,” said Guleid Artan, the climate prediction director at East Africa’s Intergovernmental Authority on Development. “More locust swarms are entering northern Kenya daily and at this rate they could soon spread into Uganda and South Sudan.”

    Extreme weather is behind the infestation, according to the U.N. East Africa experienced abnormally heavy rains late last year, flooding regions that are normally semiarid. Such conditions are favorable for locust breeding, which can grow substantially if not disrupted—a challenge in cash-strapped countries contending with insurgencies and other security challenges. Continued breeding in some areas is already deepening the crisis.

    Cash-strapped because we cut down foreign aid?

    Aerial spraying is the only effective method to reduce locust numbers, according to the U.N., which said it needed more than $70 million from donors to address the crisis.

    If unchecked, the locust swarms could grow by 500 times by June, when drier weather is expected to slow breeding, according to the FAO.


    A major locust outbreak in northern Africa between 2003 and 2005 cost nearly $600 million to control, including some $90 million in food aid distributed to affected nations, according to the U.N. Post-harvest losses topped an estimated $2.5 billion, the U.N. said.

    “We need to deal with the locust invasion now,” said an FAO spokeswoman. “And also take forward-looking action to protect rural livelihoods and safeguard food security.”

    Well, that's not going to happen, is it?

  81. TSLA finished at $650.57 so a loss of 0.22 on the sale of weekly TSLA $645 puts and calls.  We'll see how next week goes.

  82. Stick/QQQ – well TSLA was the play as QQQ was not (-$270 for me). I had to hedge my hedge though, the Super Market has been burning me lately. Of course the one time I go long for it, she don't show…

    If we're looking at a 20% plunge anytime soon, next week couldn't be timed any better. Apparently Trump is going all-in on "the economy" both with super bowl adds and again at the State of the Union on Tuesday. This couldn't be better timing, if nothing else, to take a little bit off of that shit-eating grin we have to endure as the country's lowly peasants.

  83. You know I remember the locusts from 2003. It coincided with the run up to the war in iraq and also the SARS epidemic at the time. The Rapture nutcases went, well, nutcasey back then. They're up to it again now.

  84. yeah, this is just a regular flu….

    That whole "multiple organ failure leading to death" sounds a little different. Whatever helps you sleep I guess.

  85. BDC – Did you see the stats! Of the 99 people in the sample for the test, 11 of them died! That might not be fully representative but still a scary number.

  86. Thats the reason why the coronavirus might be a little more scary than the common flu, some of the links to other co-morbidities like organ dysfunction and also this little tidbit: A direct link between coronavirus and more serious neurological diseases like encephalitis -

  87. BDC, Kinki/The Bug – c'mon guys, you all understand numbers, ratios, etc. The Lancet article is a review of charts of people who were sick enough to be hospitalized, 99 of them, average age 55+ – of course they were very sick, that's why they were hospitalized. If you were to select a similar group of patients during a flu outbreak, they'd look the same. The "multiple organ failure leading to death"  (11 out of 99 sick, hospitalized patients in a Chinese hospital) does _not_ sound different from regular flu. Unless you know something different than what I learned in 20+ years teaching medical school and practicing epidemiology.

  88. And Kinki – that article is from 2016 and talks about a different strain of corona virus. There are a lot of them.

  89. This may be a weaponized virus which would have additional experimental toxicity, hence the snake regime. The Lancet article was discontinued after 99 patients. Why that was no one knows. There are videos of people falling over dead in China on twitter. So that's interesting to me. Did you study that in Med school?

    Regardless of what anyone thinks, the world's second largest economy essentially shutting down for the next 6-8 weeks would definitely have an effect on world markets, hence the importance of the discussion, and independent as to actual toxicity versus hype/mania, which mean the same thing in said markets.

  90. Phil / FXP --   Phil, want are your current thoughts and intentions regarding the June 2020 FXP spread in the STP?   I assume we are not touching it for now.  Right now, do you expect FXP to be over $65 on 19th June 2020 to collect the full amount?  

    Or, like the Wells-Fargo earnings play,  is this being watched as the news unfurls, for a potential exit before expiration?


  91. Tesla:

    Has anyone in this chat been driving a model S?, if so what is the opinion.

  92. snow: oh will I definitely defer to an expert in this area.  I really do hope that it turns out to be not that bad — especially since I have had a history of liver disease.  Though I am glad that people are scared rather than the opposite which would be to underestimate the impact because I feel like it will be contained faster rather than later.

  93. FDA approves first treatment for kids with peanut allergy

  94. any expert opinion at this current juncture would indicate the problem is, at the least, both fluid and very serious. The US flu burden, according to the CDC, is 19-26M cases this year which will kill 10-25k people, or roughly 0.1%. CV's have known, and unexpected, quickly developing acute toxicity indications that determine their warranted heightened concern, in addition to affecting younger patients more indiscriminately than older ones versus the standard flu. We don't know the absolute death rate yet but the data are mostly coming out of China where it is difficult to determine both the true number of cases and deaths. However, a death rate of 2% would be 20 times the standard flu. The "hope" here is that it is much lower, but it is still simply "hope." We simply don't know. And it could still turn out to be higher.

    The disease will most probably wash through the US similar to the standard flu, given its transmission ability. This would represent 380 to 520k deaths, given an infection rate similar to the traditional flu, in one season. 

  95. 14,350 cases and 300 dead and its only Sat night.  Not Good….

  96. I heard there could be a vaccine by the end of this month if there was urgency.

    Trump is a fucking disaster, so we're fucked.

  97. China opens down 8% and our futures up? 

  98. jeffdoc   just a low volume bounce so far im watching with thoughts of shorting ym

  99. That was my assumption but I still find it odd. 

  100. First open so they are catching up but remember what I said, that’s essentially limit down for them.  

  101. A beautiful commercial from tonite's Superbowl….

  102. Good morning Monday morning in Europe. Looking not to bad this morning.

    Winston gave some good advice re acc. revision, which I did as well. I must say not to bad stocks got a bit brused and my over hot short call options got more in line to my liking. Some obvioulsly still to hot and and I fortunatelly do not have to many short puts which would be in the ITM range. So overall we will see what this week will bring. The Dax is slitly in the plus.

    The coronavirus still the big question. Shanghai 7.7 % down. Dead from the virus 361

  103. Morning Yodi – I share your thoughts on the 'hot' callers. I think it validates the process of selling short calls and roll when needed/forced to. At some point in time they have to come back to reality. Except for, of course, the ones that don't conform to any rules: AMZN, BKNG, CMG, BYND, TSLA etc.

  104. Winston Good morning.

    I am waiting for IBM caller to come back to reality again. 6$ up on a /ES -62 down day must have been some crazy buyers around???