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Friday, March 31, 2023


Just Another Manic Monday

Image17,400 infected (double SARS), 364 people dead.  

On the bright side, only 2% mortality is down from 3% but maybe that's because the rate of infection are exploding fastert than people are able to die.  There were 10,000 infections on Friday and 213 deaths so 74% more infections and 71% more deaths isn't exactly what we usually call "under control" over a weekend, is it?

The Shanghai Stock Exchange re-opened from their New Year's holiday down 7.34% and, as I explained to our Members in Friday's Live Chat:

China rally has same low volume problem as US so they will be lucky not to fall 7.5%  Monday, 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%. 

China is trying to stop the slide by stepping in economically, with the PBOC pushing in a massive $173Bn stimulus measure as well as a cut in the reverse-repo rate to push liquidity back into the system (something our own Fed has been doing since November).  Short selling has also been halted on the Chinese markets.  Apparently, oil demand in China (the World's 2nd largest consumer) was down 20% in January and that will get worse for February as more and more people are in the ever-expanding quarantine zone.  

Hong Kong's Carrie Lam (pictured) is fighting her own people who want to shut down the boarder with China and she doesn't exactly inspire that "Don't Panic" vibe wearing a mask when she's interviewed, does she.  Hong Kong's hospital workers voted 3,123 to 10 to shut down the boarders and they are going on strike today to attempt to foce a shutdown before they are overwhelmed by an epidemic they feel can get quickly out  of hand.  

My kids asked me why people in America don't seem to be worried about the virus and I told them to picture the Earth as a ball and us as ants and we hear rumors about a fire on the other side of the ball but we can't see any actual sign of it.  We can panic about it or we can go about our daily lives and those are both the wrong choices because what we need to do is realize that things that happen on the other side of the ball will, ultimately, affect us and the only wise course of action is to help.

Well, you know that's not going to happen so either this problem fixes itself while we ignore it or all the panic in the World isn't going to help us by the time it finally gets close enough to our side to become "our problem".  Our real problem is we have an unimpeachable, unidictable, untouchable President who doesn't even know what state the Chiefs are from, let alone where China is on a map!

Gilead (GILD) is up 5% pre-market because they have been working on an anti-viral vaccine for Ebola and SARS called Remdesivir and it's being rushed into human trails in China to see if it will be effective against the Coronavirus. 

I like GILD down here at $65.50 (where it should open) as it's "just" an $80Bn valuation and GILD is good for about $8Bn in profits, though not last Q when they lost $1.2Bn on write-offs and such.  Overall, they are a great company with a respectable pipeline and I think this is a great entry so we're going to add them to our Long-Term Portfolio as follws:

  • Sell 5 GILD 2022 $62.50 puts for $8 ($4,000) 
  • Buy 15 GILD 2022 $55 calls for $13 ($19,500) 
  • Sell 15 GILD 2022 $65 calls for $8.50 ($12,750) 

That's net $2,750 on the $22,500 spread so $19,750 of upside potential if GILD can simply hold $55 through Jan, 2022.  Ordinary margin on the short puts is $2,400 so it's a very efficient way to make $19,750 over 2 years.

While we can look for potential brights spots, like GILD, the bottom-line is that the entire first Quarter for China is now shot to Hell and that's a $13Tn economy so $3Tn+ potentially hit and I'd say that's at least a $1Tn hit to the Global GDP (1%), which has a good chance of pushing many countries into recession – and that's WITHOUT the virus spreading.  

So, as tempting as it may be – I wouldn't be jumping in and buying the dips just yet as we only have about the same number of recoveries as deaths, which makes this virus 42.6% fatal as it runs its course, possibly.  While the Global Media is downplaying the virus, you might want to check out some of the stuff that's being posted on Social Media from the battle zone.  Here's a woman being dragged from her home for not reporting to a quarantine center:


Yep, things are getting crazy!  Keep in mind you are being told not to worry by the Media that is owned by the same Billionaires that want you to go out and buy their products as well as the products of their sponsors.  If the empty streets of China begin to spread around the World – it's a lot more than 1% of the Global GDP that's going to fall off a cliff.   We have lots and lots of earnings reports this month and we'll see how many of them are concerned about the Virus:


There's very little Fed Speak this week – Just Bostic and Kaplan but a good amount of data ahead but we'll be more conerned with Global Data to see who's numbers are being affected by the virus already:



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Don't want to capitulate on TSLA but this is getting painful

Phil// Any adjustments needed for the below trade on IMAX.  Thanks

In the Webinar, we wanted to add IMAX to the STP, which is going to be the LTP so really, this is for the LTP:

Buy 50 IMAX June $17 calls for $4 ($20,000) 

Sell 50 IMAX June $20 calls for $1.90 ($9,500) 

Sell 50 IMAX June $20 puts for $1.30 ($6,500) 

That's net $4,000 on the $15,000 spread so $11,000 (275%) upside potential if IMAX is over $20 on June 19th.  The risk is being assigned 5,000 IMAX at $20 ($100,000) but, realistically, maybe they are down 20% to $16 and the loss (if not rolled or stopped) is $4 x 5,000 or $20,000 – that's the true risk.  ToS says $8,494 in ordinary margin is required – pretty efficient.  

this is just wow factor. The TSLA weekly 800 call is up form 0.25 to ~15, that's some 5800%

No Problem sorry I just wanted to find a reason why CCL is down to 43 must be some reason???

Panic/Phil – 3



TSLA – $900 in 2020, and $200 in 2021. Although if I were Elon I'd be looking to make all-stock acquisitions of suppliers in order to make my accounts payable go away, while the stock is trading at 10x its actual value. Who knows, he might even accrete some profitable businesses that way.

Super Bowl 2020 ad review

Polling: Americans dissatisfied with the state of the union

Sold ETHE off today. It's trading some 150% over intrinsic value, which is 0.09481*Ethereum's Price =~ $18.

natural gas is $1.81 per mmbtu and my bill it's $4.46 (before extra charges like delivery).


next week BPS 730/720 for 3.50? too risky? it will continue upwards if the shorts are not yet squeezed…just a couple of those.


Small IMAX position started with 4 17/20 jun BCS and short 4 jun $20 puts, rolled down to 8 Sept 15/19 BCS. Anything else I should do right now?

I left the 4 Jun $20 puts alone. Roll now or wait?

The Bug – not to say there isn't an outbreak, and not to say I'm not at least somewhat worried, although the data on the number of "confirmed cases" is at best questionable, and more likely worthless…


I think there's some serious big money/media taking advantage of this, stirring panic and trying to tank China's economy. IMHO there's some big bucks to be made by making lots of noise over the outbreak.


 do you think there is a reasonable strike to sell CMG short puts to hedge my 2021 840 short calls instead of buying a 2022 spread?  thanks

The Bug/  guys, do a search using the terms "ncov 2019 lab test shortages"

Most revealing.

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