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$5,000 Thursday – Down We Go Again!

Wheeee, this is fun! 

We talked about how manipulated the market is yesterday morning and, in our Live Trading Webinar in the afternoon (1-3pm Wednesdays) we decided on the following Futures positions:

Shorting /ES at 3,100 and long /CL at $46.90.

3,100 is, of course, the strong bounce line on the S&P 500 (/ES) Futures that we drew for you in our Morning Report and we did go a bit over but we decided to stick with it because yesterday's rapid move higher was just silly as nothing has really changed.  On the other hand, we went long on Oil (/CL) Futures because something was about to change as we expected OPEC to announce production cuts.  And why did we think that?  BECAUSE WE KNOW HOW TO READ THE NEWS!  Trading is not that hard folks – we just read, think and trade…

As you can see from our /ES position, we're already up $5,720 on 2 contracts and we'll put a stop at $5,000 to lock in those gains or, once we fall below 3,050 on /ES – that becomes the stop with a goal of 3,020.  That's over $30,000 in Futures gains since the market began turning down, making a lovely bonus hedge to our portfolios.  That's why we keep shorting the market – it's not so much we are uber-bearish – it's just that we have plenty of long positions so, to BALANCE the portfolio, we prefer to look for things that profit when the market turns down.  OIl (/CL) is an exception as it's a news-driven trade. 

 Oil is surprisingly still at $46.90, I suppose because virus fears are back this morning (yes, it's getting worse but I'm bored talking about it now that everyone else is) DESPITE the FACT that OPEC just annnounced a MASSIVE 1.5Mb/d production cut, so there's still time to join us in the most obvious bet of the week!

"We now convene at a time when the outbreak of COVID-19 has had a **pronounced** adverse impact on economic and oil demand forecasts in 2020, particularly in the first and second quarters" – OPEC President Manuel Fernandez

Image result for oil supply demand balanceThis will not help oil much but we should get to $48.50 (not necessarily today), which would be gains of $1,500 per contract – so we'll take that, right?  The problem is OPEC has already cut 2.1Mb/d in the past few years and now they are cutting 1.5Mb/d because there is still a glut but that means now there is 3.6Mb/d of spare capacity, so much so that it takes the supply risk factor off the table and that is what generally drives Futures prices higher, not so much demand.

Unless the US joins OPEC and agrees to limit their supply of oil, prices will remain generally under pressure above $55 as the constant grind of electric cars, fuel efficiency and other manfufacturing efficiencies take their toll on oil demand – including the cutbacks in plastic use, which is about 10% of the World's Oil Consumption (10Mb/d) and plastic water bottles are litterally an act of environmental terrorism:

No photo description available.

And yes, I have a big bottle of Fiji right next to me as I write this because I'm not better than you are – I just think it's important to be aware of the damage we're doing but, clearly, we have bigger fish to fry this week as civilization is crumbling around us but at least Nero is pleased:

Yes, it's not The Daily Show or Our Cartoon President – this is our actual Commander in Chief talking about the positive impact of the virus that he clearly has no real plan to control.  The Fed did what they did and other Central Banks are promising action and Congress just pledged $8.5Bn to fight the virus while the ECB is putting $50Bn to work but this is likely a drop in the bucket to what it's going to cost to contain this thing and that too is a drop in the bucket compared to the staggering economic damage this virus is doing.

On the bright side, I can fly to California and stop off to see my daughter in Philadelphia for $350 round trip from Fort Lauderdale and I'll probably have the plane to myself and a good chance of getting an upgrade in a half-empty hotel because people are indeed "staying home" – but not in the good way Trump envisions.  The question is, do I want to risk the trip?  I live in a tourist town so silly of me to avoid travel but, despite my generally pragmatic outlook on these things – I still have some doubts as we simply don't know enough to make good decisions in this regard.

“In a dying civilization, political prestige is the reward not of the shrewdest politician, but of the man with the best bedside manner. It is the decoration conferred on mediocrity by ignorance.”  - Eric Ambler, A Coffin for Dimitrios


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  1. Phil – Great trading in the futures !

  2. Agreed! That was a great one – easy $$$

  3. This is creating more work for me… Let's settle down!

  4. Good morning!  It's pretty reliable that, if we have a rally like that on substantially lower volume, that we'll pull back at the strong bounce lines.

    Date Open High Low Close* Adj Close** Volume
    Mar 04, 2020 306.12 313.10 303.33 312.86 312.86 176,025,500
    Mar 03, 2020 309.50 313.84 297.57 300.24 300.24 300,139,100
    Mar 02, 2020 298.21 309.16 294.46 309.09 309.09 238,703,600
    Feb 28, 2020 288.70 297.89 285.54 296.26 296.26 385,764,000
    Feb 27, 2020 305.46 311.56 297.51 297.51 297.51 284,353,500
    Feb 26, 2020 314.18 318.11 310.70 311.50 311.50 194,773,800
    Feb 25, 2020 323.94 324.61 311.69 312.65 312.65 218,913,200
    Feb 24, 2020 323.14 333.56 321.24 322.42 322.42 161,088,400
    Feb 21, 2020 335.47 335.81 332.58 333.48 333.48 113,788,200
    Feb 20, 2020 337.74 338.64 333.68 336.95 336.95 74,163,400
    Feb 19, 2020 337.79 339.08 337.48 338.34 338.34 48,814,700
    Feb 18, 2020 336.51 337.67 335.21 336.73 336.73 57,226,200
    Feb 14, 2020 337.51 337.73 336.20 337.60 337.60 64,582,200
    Feb 13, 2020 335.86 338.12 335.56 337.06 337.06 54,501,900

    I wasn't in the mood to write anymore, feels redundant to talk about the virus and that's the dominant market-mover still. 

    Global Economy Is Gripped by Rare Twin Supply-Demand Shock.

    IMF Sees ‘More Dire’ Global Economic Possibilities on Virus.

    Toyota Recalls 3.2 Million Vehicles Globally to Fix Fuel Pumps.

    China Stimulus Shot, BOE Pressure, U.S. Emergency Bill: Eco Day.

    California Declares Emergency; Dog Tests Positive: Virus Update.

    Just 29% of Americans Can Work Remotely, Leaving 100 Million in Virus Limbo.

    Senate Passes Bill Requiring 5G Security Review.

    President Trump blames Obama for coronavirus testing problems.

    Here’s what Apple suppliers have been saying about the coronavirus epidemic.

    All sporting events in Italy will be played without fans for the next month over coronavirus fears.

    Campbell Soup is increasing production to prepare for coronavirus demand.

    Amazon, other delivery services hit with delays as online shopping surges amid coronavirus outbreak.

    Globalization And Our Precarious Medical Supply Chains.

    Operations Suspended At F-35 Stealth Jet Factory In Japan Due To Virus Fears. 

    Jet Fuel Prices Dive Amid Stalling Aviation Industry; Global Tourism Bust Imminent. 

    Fauci Warns Outbreak Could Overwhelm US Health-Care System, Trump To Sign $8.3 Billion Virus-Fighting Bill: Live Updates. 

    Wuhan Seafood Market, Ground-Zero For Coronavirus Outbreak, Demolished.

    United is drastically cutting flights worldwide and offering unpaid leave to employees as the coronavirus ravages the airline industry.

    Lights Are On but No One’s Working: How China's Local Governments Are Faking Coronavirus Recovery

    I'm not cherry-picking – the news-flow is pretty bad! 

    LOL StJ – 10% down lines haven't been used in a long time.  

  5. Trump goes on Hannity and basically takes down the markets by showing how incompetent our leadership is:

  6. And Goldman joins the DNC hoax to take down Trump:

    New: Goldman Sachs predicts sharply lower US economic growth due to Cornavirus:

    1st quarter: 0.9%
    2nd quarter: 0%
    3rd quarter: 1%
    4th quarter: 2.25%

    if we do get this low, deficits are going to skyrocket at every level!

  7. The Bug – I was gloomy yesterday, and I was wrong when I predicted a measles outbreak in the third week of January (still puzzled over that – after cases reported in December at Disneyland and airports, it should've happened). But. While Korea is doing a fine job with the outbreak, and China is on the downslope of the epidemic curve, the US has a piss-poor medical system that no one can afford, so-so disease surveillance (except in a few places like Seattle, where they have the long-standing Seattle Virus Watch), and a CDC that's had heavy budget cuts.

    So – I predict a major outbreak in the third or fourth week of March that will make China look like a walk in the park, and the additional confusion will be that surveillance and diagnosis are so crappy that a lot of the outbreak will be undetected. Until hospitals and especially ERs (where you can get treated for free) get overwhelmed.

    Stay safe, people. And don't forget, I was wrong about the measles outbreak; I could be calling this wrong, too.

  8. Some select people are still doing well despite the market woes:

    President Donald Trump’s son-in-law and adviser Jared Kushner has sold his stake in a company investing in Opportunity Zone projects offering tax breaks he had pushed for in Washington, sparking criticism that he was benefiting from his White House role.

    Paid $5M, now worth $25M thanks to tax breaks that he pushed for! But hey, look, Hunter Biden…

  9. Virus / snow – But we have the best healthcare system in the world! The others countries are all jealous of it with their socialist systems! </sarcasm>

  10. Morning All! 

    The webinar replay is available.

    Here's the Youtube link.


    And Bitchute (may still be processing):

  11. Good Morning!

  12. Someone posted a screen shot of CCL CDS and its gone parabolic, thats going to make the markets nervous as im sure other companies will experience similar action.

  13. The Bug – oh, and I forgot the icing on the cake – "Thou shalt not take sick leave!" in the US – lose pay at least, possibly lose your job.

  14. Trump/StJ – True, this is a loss of confidence thing today.

    Virus/Snow – Wow, that's a turnaround for you.  That makes me nervous as you were not as worried as I was recently.  Not a convert I was hoping to win over!  

    Parabolic/Kustomz – Do you have a link?  I'm not seeing it.

    Certainly not good though:

    As I said, China was the BEST place to have a virus as they are capable at containment other countries would have to declare Martial Law to match.  Europe is gone – they'll have as many cases as China and US will catch up, we've been protected by two oceans (and Trump's wall) but it's clearly not lasting and the only reason we don't have thousands of cases now is because we've only tested a couple of thousand people in the whole country so far.  

    $7,500 on /ES now – not good.    Still, take it and run.  

    Fresh horse would be /NQ below 8,750 with very tight stops above but we should bounce here.  

    /CL still $46.75, too much pressure today for it to pop but a nice play by Easter (unless we're all quarantined). 

    97,000 cases, by the way, we'll hit 100,000  tomorrow or Saturday and that will spook people even more.  Plus it's a fat headline that will dominate the weekend news cycle.  

    Sick leave/Snow – Also idiotic school attendance policies, kids can get left back if they have too many absences.  My daughter used to be terrified of missing unplanned days.

  15. Snow – I assume that most companies will be more flexible this time with sick leave but as I said yesterday, we are in a bad spot with 20M people who can't afford healthcare and also can't afford to miss work! But people will call me a socialist! 

  16. /RTY at the 1,500 line is a good short too (tight stops above).  Remember, I mean IF the line fails.  If we're crossing over, we have to wait for it to cross back under so we can play with momentum.  

    The premise is we're looking for a weak (0.5%) bounce off the 2.5% lines

    Not helping….

  17. Phil, CCL the cruise line along with the airlines..

  18. The Bug: China seems, by Western reporting anyway, more draconian than Korea at containment – most friends in Korea are self-isolating. A friend went for a checkup and the health department have her a gift box of supplies – rice, noodles, toothpaste, the like. Very nice.

    I predict a baby boom in Korea in December….   ;)

  19. "gave"

  20. Dropped link to webinar 3 times from Mex .. didn't hear any adjustments for TD. Would it make sense to roll the Jul $55puts down to Oct 50s?

    15 Jul $50c @ $5.72

    - 15 Jul $55c @ $2.68

    -15 Jul $55p @ $2.08


  21. Still, good chance to adjust our positions back near yesterday's lows.  

    These are not full reviews, just the things I want to adjust:

    Butterfly Portfolio Update:

    • AAPL – Let's buy back the April $320 calls at $5.50 just to clear the slot to sell something else if they bounce back or something lower if they don't.  
    • DIS – Not worried about the short puts but let's buy back those short 2022 $160s at $3.85 and hope for a bounce but, if no bounce, we can sell the $110s ($17.50) and use that money to roll our long $130s ($11) to the 90s ($30).
    • X – 2022 $10 calls are $2 and the $5 calls are $4 so that's a good roll and we're not worried about the puts.  

    Earnings Portfolio Update:

    • HBI – Let's roll our 7 2022 $15 puts at $4.60 ($3,220) to 10 short 2022 $13 puts at $3.40 ($3,400) and let's add 20 2022 $10 ($3.50)/15 ($1.45) bull call spreads at $2.05 ($4,100).  
    • WYNN – What a catastrophe for them!   May as well roll the 3 2022 $120 calls at $13.50 ($4,050) to 5 2022 $100 calls at $21 ($10,500) with the intention of turning  it into a sales vehicle down the road.  We can sell 3 April $110s for $5 ($1,500) for example, using just 43 of the 687 days we have to sell so I have confidence we'll make our $6,000 back very easily – but too early to sell now.

    • CLF – Let's DD on the 2022 $5 calls at $1.65.
    • HRB – Lets buy back the short July $24 calls and DD on the long July $20 calls.  I doubt the IRS will forego collecting taxes due to the virus.
    • IMAX – Let's roll the 5 short June $23 puts at $8.45 to 10 Sept $18 puts at $4.
    • M – Let's buy back the Jan $15 calls at 0.85 and let's roll the 15 2022 $13 calls at $2 ($3,000) to 25 2022 $10 calls at $3.20 ($8,000).
    • SQQQ – Let's sell 15 June $25 calls for $3 ($4,500) to lock in some of the gains on the spread.  If SQQQ pops over $25, we'll just DD on the $15/30 spread (net $4) and roll the short calls (and the short puts would go worthless too).  

  22. TD/Wing – Your position is different anyway.   I would roll the 15 July $50s at $2.20 ($3,300) to 20 Oct $45 ($5.50)/50 ($2.40) bull call spreads at $3.10 ($6,200) and put a stop on the short July $55s (0.45) at $1 as they are probably not worth buying back but that would be OK too.  The short July $55 puts (you sold too many) at $6.30 can be rolled to the Oct $52.50 puts at $5, which would put you in those at net 0.78 – not terrible.

  23. A good read from Howard Marks:

    Nobody Knows II

  24. Phil throwing an eye on VLO stock is not a bad buy at 62. needs to go up one day again. What do you think.

  25. Short-Term Portfolio Update (STP):  We're not upping our hedges yet, just adding longs unless the floor for the week collapses.

    • TSLA #1 – We decided to kill this at + $6,000.  The short calls are going to take 2 weeks to pay $1,830 but there's too much risk that our long calls can lose more than that so not worth it when we can lock in an $8,000 gain.
    • CMG – Came down nicely today but let's say that's lucky and kill it with a huge profit.

    • FXP – Doing a triangle squeezy thingy so I'd like to see how it resolves.  Still a good hedge if things get worse in China.

    • SQQQ – Let's sell 40 of the Jan $30 calls for $4 ($16,000) to lock in some gains but bump it up to 80 $15/30 spreads (+20) for $6,000(ish) more.  We can always buy more if SQQQ pops $25.  Let's put a stop on the June $26 calls at $3.50 (and then we'll look to sell more at higher prices, of course). 
    • TLT – Boy did the Fed screw us!   June is a long way away so we'll leave those puts and sell 20 April $155 puts for $2.55 ($5,100) and buy 30 Jan $155 ($7)/145 ($3.25) bear put spreads for $3.75 ($11,250) and roll our 7 short June $140 calls at $17.70 ($12,390) to 10 short Jan $150 calls at $11 ($11,000).
    • TSLA2 – We're on track to make another $100,000 though very scary! 

    • USO – We have to take advantage of this.  Let's buy back the short July $12 calls and sell 10 more puts (20 total) and add 20 more July $10 calls (50 total).

  26. this bounce up is easy $$$ but IWM is down even though QQQ/SPY/DIA are heading up so be careful for a turn around

  27. Marks/Pstas – Good points.  I find that funny too when people in foreign countries ask me what's going to happen in their markets – how am I the best guy to ask?

    VLO/Yodi – Oil finally heading up a bit but not enough to call a bottom.  I do like VLO for a long-term play and a $3.92 dividend makes it worth adding.  As I was saying yesterday, it's not about the price of gas or oil but about the "crack spread" – the difference between the two – higher is better for VLO:

    So they should be making MORE money in Q1 than last year though perhaps there are less sales that offset it.  The problem is though that the prices (and the spread) may not hold through Q2 and things could get rough for VLO so you have to be willing to ride it out.  

    For the LTP, let's sell 5 VLO 2022 $60 puts for $12 ($6,000) to remind us to keep an eye on them.

  28. current prediction

    today (thurs): runs up

    Friday: follow-through into head0fake weekend

    Monday: Black Monday -12%

    Tuesday: follow through down (another 5-8%)

    Wednesday: bounce back +7%

    Overview: the market runs on false hopes into the weekend and then reality hits. Professionals use the next two days to get out so the minions can hold the bag.

    Entire school district in north seattle closed for 3 weeks. It's starting.

  29. Albo, I saw the Zell statement and starting to look like a good move but a still a lot of uncertainty. Dipping my toe in selling XLE put June 44.21.

    Just a few for now. May do some of that VLO also.

  30. Phil Thanks on VLO set to buy the stock and sell the Jul 60 put possible the 65 caller.

    WRK as well a good deal div OK

  31. Phil// We had a trade to sell naked TD $55 puts.  Was there an adjustment made to that trade?  Let me know.  

  32. Pstas – This is probably not the bottom in energy, but maybe a good time to nibble.  I'm not heavy in the sector but buying some MLPs with ultra high yields..  You don't need a big position when you're getting a 20%+ yield. Of course, things may get worse and distributions may get cut. But as you know stocks frequently appreciate after the cuts. Also at some point the effects of coronavirus will get adequately discounted by the market, but we don't know when. Meanwhile just nibbling.

  33. my prediction is only 1 hour old and it's already wrong 

  34. A follow up to snow's warnings:

    Really scary how unprepared we are! Hopefully we contain it because could be trouble.

  35. Phill/  The trade is a July $55 puts combined with a 52.50/57.50 BCS


  36. Jobs number tomorrow should matter

  37. The Bug – the age chart for the bug in Korea will have some college age female skew because that cult recruited young women fairly heavily.

  38. Getting ugly again.  BDC wrong already.  cheeky

    BDC did you get my notes on Canna Coin?

    TD/Rookie – Oh, I forgot about that then, didn't intend to have 2 of them.  Doing LTP review next.

  39. Wow airline stocks off 50% in just 3 weeks

  40. TD/Phil  Thanks. "The (15) short July $55 puts (you sold too many) at $6.30 can be rolled to the Oct $52.50 puts at $5, which would put you in those at net 0.78 – not terrible."

    That trade was actually from your Dec24/19 post:

    VERY simple on TD Bank (TD), who are beaten down with the Canadian Dollar but that has stabilized and the bank, at $56, is at $100Bn in market cap while dropping $12Bn a year to the bottom line – a great value!  

    Sell 15 TD July $55 puts for $2.25 ($3,375) 

    Buy 15 TD July $50 calls for $5.80 ($8,700) 

    Sell 15 TD July $55 calls for $2.35 ($3,525) 

    That's net $1,800 on the $7,500 spread so the upside potential is a $5,700 (316%) potential gain in 206 days and that means we have to get to net $3,600 or better in just 7 months to make 100% back on the $1,800 cash outlay.  



  41. TD/Wing – Yes but it wasn't a PORTFOLIO play, was it?  We already had TD in the LTP at different strikes.  

  42. tangledweb, this is crazy. I have a UAL 40 put (January) and it's up 780%

  43. note that TSLA is still a $700 stock and was $330 in early December. This rally isn't really killed until TSLA goes below 200, or 100 even.

  44. TD/Phil No not a portfolio play, a Member Xmas Special Play ;-)

    But could you say why you suggested short 15 TD $55 July puts in the bcs in Dec but now you say that was too many? Trying to understand the logic .. 


  45. Long-Term Portfolio Update (LTP):  We certainly want to maintain our firepower so not going too crazy with adjustments but certainly want to take advantage of current positions before taking on new ones.  

    • AVGO – Net $223.40 would be great so not worried at all at $279.  Let's add 10 2022 $280 ($40)/320 ($26) bull call spreads at $14 ($14,000) and we sold the puts for $13,300 so that's net $700 on the $40,000 spread.
    • ET – Net $7.80 is fine 
    • XOM – Let's add 20 of the 2022 $50 ($5.60)/$60 ($3) bull call spreads for $2.60 ($5,200).

    • PAA – Seems like a gift to me and we're only in for net $23,000 so let's DD on the stock and buy back the short 2022 $18 calls and roll the 20 2022 $20 puts at $9 ($18,000) to 30 of the 2022 $15 puts at $5 ($15,000) and we'll sell calls again when they bounce back.
    • SKT – On track
    • CSCO – Let's buy back the short callers for $2 and roll the 2022 $40 calls at $5.25 to the $35 calls at $7.50.  That's a reflexive play, if you aren't willing to do that, you shouldn't be sticking with the stock because clearly you don't think it will ever recover…
    • DFS – Let's buy back the short 2022 $75 calls.  Here we're not doing the roll down because it's $3 to roll down $5, not under $2.50.  
    • FCX – Astounding return potential, let's bump it up to 30 of the bull call spreads and 20 puts.

    • GILD – Winner
    • GM – Let's buy back the short $37 calls.
    • IMAX – Let's buy back the short June $20 calls.
    • JO – $9,000 out of a possible $10,000 – let's cash it in.
    • LB – On track
    • M – Let's roll our 2022 $13 calls at $1.70 to the $10 calls at $2.85 and buy back the short $20 calls.
    • MIDD – Not worth adjusting.
    • MJ – No changes
    • MO – Let's roll the 15 March $42.50 calls at $2 ($3,000) to 30 2022 $40 ($7)/50 ($2.85) bull call spreads at $4.15 ($12,450) and sell 10 2022 $40 puts for $7.20 ($7,200).

    • SPWR – On track
    • TD – Let's roll the 15 July $52.50 calls at $1 to 25 Oct $45 calls at $5.50 ($13,750) and see how things play out.  
    • TOL – Holding up well.  
    • TXT – Well, I could say we're rolling everything but essentially we're closing this and our new position will be:  Sell 10 Dec 2021 $40 puts for $8 ($8,000) and Buy 25 Dec 2021 $30 ($12)/45 ($5) bull call spreads at $7 ($17,500).
    • VALE – Let's buy back the short $15 calls.  
    • VIAC – Let's roll the 30 2022 $35 calls at $1.70 ($4,800) to 50 $25 calls at $3.50 ($17,500).

    • WBA – On track.

  46. Long /NQ at 8675.75 

  47. TD/Wing – Yes, it should have been 10 as you always want room to make a 2x roll.  Clearly we didn't see this coming and I was over-confident at the time. 

    Long/Dawg – No thanks, those were my longs (above).

    Done with /NQ shorts now.  

  48. went long QQQ weekly fo rebound (today and into tomorrow for any follow-thru)

  49. stopped out at 8707.25. looked good for a minute there.

  50. I realize that compared to biodieselchris, I ride the short bus with a helmet, BUT I still think they are lying to us.  Look at this from Dr. Fauci "Dr. Fauci's "estimate" that "15-20%" of those infected with the virus will require hospitalization." 

    I will be the first to admit I dozed off during epidemiology during med school, but that's a high number.  These days, we don't put the people in the hospital with a very big reason.  I was in the hospital 3 weeks ago for a crazy strange infection (  Believe, I had been trying to heal myself.  I failed taking antibiotics by mouth and finally went to the ER when the mass in my neck was so large I could not open my mouth.  The bastard insurance company is trying to deny my hospitalization. 

    My point, people are not really inpatient for R&R these days.  The CDC says that between 9million and 45 million cases of the flu happen yearly with 140K – 810K hospitalizations.  By my math that is 1.5-1.8%.  Think how hospitals go on divert in a bad flu season!  They start discharging people early, and leave people in the ER and in hallways for a "bad" flu season. 

    What aren't they telling us?

  51. What portfolio has/had FCX  2022 $10 long call, $12 short put, $15 short call  ?

  52. Grrrrr, and what portfolio has/had July 2020 $57.50 short put?

  53. TD/Phil  Does that mean we might still have a shot at the free membership if the spread doesn't make the net $3,600 by July – a first perhaps   ;-)

  54. Pence VP pick down to 80%

  55. The Rich Are Preparing for Coronavirus Differently

  56. Seattle is essentially on voluntary quarantine at this point

  57. STJ/VXX – How's it going so far?  Is your expectation of the VIX/VXX relationship curve still holding up? 

    We are in backwardation now, with future dated /vx contracts being considerably lower than the current contract (and the current spot price on the VIX).  This means that if the VIX stays elevated, each time VXX rolls to the next /VX futures contract, it will slowly increase to meet the current VIX price, as it gets closer to expiration. This slow rise will keep moving VXX up, and up, and up. This shouldn't be a big deal if things calm down and we get back into contango, but if the vix stays high, and we stay in backwardation, the VXX can continue to go up, even if the VIX doesn't keep going up much beyond 50.  This is the opposite of the decay that we typically see in the VXX.  Make sure you understand how this works.

    I rolled my March VIX calls at a decent gain, and moved them to April's.  They will protect me from a big spike, and I can use the proceeds to roll my VXX calls up, but if we stay in backwardation for a long time, the VXX can go much higher than 30-40, and my calls won't help much.  Fortunately, I'm holding big index hedges, and I'm levered long bonds and gold, which are offsetting my (hopefully) short term losses on VXX so the net result isn't so bad.  I have a hard time believing we will stay at such an elevated VIX without the market going down a lot further.

    This is shaping up to be a big test of our strategy.  So far my portfolio which is composed of diversified Etfs, leveraged long bonds/gold, my VXX/VIX play, and a large index hedge is down about 12% for the year, with about half of that loss coming from VXX, not a bad result at all.  But I'm getting a little worried about the backwardation, and am watching it very closely.  As VXX gets closer to our strike prices, the delta is going to increase considerably.

    I found this article interesting.

  58. Dividend portfolio update?

  59. What/Dano – You can tell from the way the Governments are reacting that this is bad but let's also keep in mind that measles were bad and polio was bad yet we did have stock markets and societies before the Salk vaccine in 1953 and before 1978 the measles were rampant yet, somehow, society did manage to survive.   We are simply pampered and easily spooked these days and yes, we have a ridiculous, antiquated, inadequate health care system for dealing with this sort of thing in the US – but that's not a surprise – the Democrats have been warning us about it for 40 years – maybe now people will finally realize what the cost of NOT having Socialized Medicine is.  

    FCX/Tangled – I only remember the LTP position above.  July $57.50 short put was TD in the Dividend Portfolio, right?

    TD/Wing – If you signed up for a full-year Membership during that period – then yes!  

    VIX/Palotay – Looks like an infection graph now:

    Dividend Portfolio/Tangled – We decided not to touch it as it was full though it might be a good time to start a new one.

    Of course, at -8%, this one is perfectly good as a new portfolio…

  60. 3,000 seems to be holding on /ES, 26,000 on /YM, 8,600 on /NQ and 1,460 on /RTY

    It's only Friday and Monday's lows – I don't know why people are freaking out (again).  It was yesterday's move up that was silly, not today's move back down.

    I was just explaining yesterday how the markets are manipulated for the benefit of the Top 0.01% so why would it be surprising that "THEY" jack up the Futures and the Indexes on no volume to reel in the suckers so they can dump shares on them all day long?  That's how the market works!

  61. VXX / Palotay – Was on a meeting the last 1.5 hours and we lost 600 points. So yes, backwardation is affecting the curve but still very good on margin. But might have to roll some calls although we have not touched 30 yet. But need to keep an eye on it. Plenty of places to roll to up and in time. So not worried. Looks bad on paper, but not just VXX :-)

  62. FCX / Tangled – the FCX position you have was a recommendation for the last moneytalk show…

  63. If you're looking for interesting well written articles I would highly recommend reading Heisenberg. He goes into great detail around Gamma and how negative/positive Gamma has been affecting the markets. You get a certain number of free articles.

  64. VXX / Palotay – I just checked and based on my calculations, VXX should be at 25 when the VIX is at 40. So we are about 5% higher most likely the result of backwardation. So 30 on VXX, more like 52 or so on the VIX rather than 55. Nothing dramatic but it looks like we could see 50 soon again. 

    Like you said, a good test of strategy and I am really happy to have kept the position relatively small.

  65. So I could move the Jan 21 30 calls to 2x the Jan 45 calls and cut my margin requirements by 40% or worse case scenario, straight (one for one) to the Jan 22 45 calls and cut my margin requirements by close to 70%. 

  66. RedIron, thanks.   So have to wait to see what to do with that one.

  67. Bloomberg to fund anti-Trump operation in 6 critical states

  68. Jumbo jets fly near empty as coronavirus wallops airlines

  69. Opec and Russia in crunch talks over oil output cut

  70. /CL – Now in 2 at net $45.03 in the brokerage account and 3 at net $45.31 in the IRA. Come on oil! Hoping this resistance around $43.75 is the bottom.