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Tuesday Market Workshop – Portfolio Protection Part 5 – Don’t Get Excited

Don't get excited!  

The Futures are up another 3.5% this morning, pre-market as China reports NO new cases of the virus and Trump touts his "miracle cure" that people have already died from taking.  Day after day, the salesman turned president has encouraged coronavirus patients to try hydroxychloroquine with all of the enthusiasm of a real estate developer. The passing reference he makes to the possible dangers is usually overwhelmed by the full-throated endorsement. “What do you have to lose?” he asked five times on Sunday. 

As it turns out, the real question is "What does Donald Trump have to gain?"  If hydroxychloroquine becomes an accepted treatment, several pharmaceutical companies stand to profit, including shareholders and senior executives with connections to the President.  Trump himself has a small personal financial interest in Sanofi (SNY), the French drugmaker that makes Plaquenil, the brand-name version of hydroxychloroquine.   

"Some associates of Mr. Trump's have financial interests in the issue. Sanofi's largest shareholders include Fisher Asset Management, the mutual fund company run by Ken Fisher, a major donor to Republicans, including Mr. Trump," said the report. "Another investor in both Sanofi and Mylan, another pharmaceutical firm, is Invesco, the fund previously run by Wilbur Ross, the commerce secretary. As of last year, Mr. Trump reported that his three family trusts each had investments in a Dodge & Cox mutual fund, whose largest holding was in Sanofi."

While China may have gone a day with no new cases of COVID-19, the US blasted up from 337,933 cases yesterday morning (4 times more than China, which has 5 times more people than the US does) to 368,449 (up 9%) this morning and we now have 10,943 deaths – the third highest count in the World behind Italy (16,523) and Spain (13,798), which are both openly considered disasters (and they got hit hard with infections 3 weeks before we did – so we may just be lagging on deaths as we have double their infections).  

How does America have 4 times more virus cases than China (1.44Bn people) and India (1.4Bn people) combined with 1/10th the combined population?  According to Donald Trump, it is Obama's fault.  Italy and Spain say it's Obama's fault too and Putin is blaming Obama as well since it seems to work for the Republicans – so why not?  

While I don't trust SNY and it's already popped a lot, 3M (MMM) is interesting as it's still around $140 and they have just agreed to sell 165M masks to the US right away and the company expects to double their capacity to 2Bn masks/year by the end of 2020, producing 100M masks a month (world-wide) right away with 50M masks a month earmarked for the US, 40% more than they currently produce.   

The masks are only $1 each and MMM is an $80Bn company with $32Bn in revenues and $5Bn in income so it's not actually very cheap at $140 but it is great publicity for them and they will be getting their foot in the door with pretty much every Government on the planet – so perhaps they will be able to sell some Scotch Tape and Post-It notes as well?

Year End 31st Dec 2014 2015 2016 2017 2018 2019 2020E 2021E CAGR / Avg
Total Revenue
$m

31,821 30,274 30,109 31,657 32,765 32,136 32,199 33,322 0.197%
Operating Profit
$m

7,135 6,946 7,027 7,788 7,207 6,102     -3.08%
Net Profit
$m

4,956 4,833 5,050 4,858 5,349 4,570 5,042 5,437 -1.61%
EPS Reported
$

7.49 7.58 8.16 9.17 9.18 7.81     0.852%
EPS Normalised
$

7.49 7.71 8.03 8.34 8.46 9.38 8.71 9.45 4.60%
EPS Growth
%

+11.5 +3.01 +4.17 +3.84 +1.40 +10.8 -7.11 +8.46  
PE Ratio
x

          15.0 16.2 14.9  
PEG
 

            1.91 2.69  
 

We can collect $12 for promising to buy 500 shares of MMM for $100 by selling 5 2022 $100 puts for $12 ($6,000) and that would net us in for $88 ($44,000) if assigned and that would use up $22,000 worth of ordinary margin so make sure you REALLY want to own MMM before selling puts but we have room in our Long-Term Portfolio so let's add that play as we also know that we can roll the short puts or, if assigned, we can sell 2022 calls (the $140s are $22) to further lower the basis so we're very confident we could end up with MMM below net $70 – a 50% discount to the current price.  

Looking at this morning's action – I think traders are getting ahead of themselves as the only reason the virus is under control in China is because they were locked down for 2 months and this has been only two weeks in the US and Earnings Reports come out next week and those will be ugly.  On Friday we made bullish adjustments to our Income Portfolio and that's gone from $132,078 on Friday morning to $155,148 at yesterday's close – up $23,070 (17.5%) in just two sessions and it should be up further this morning but that means it's time to lock in some of our gains – just in case we pull back again.

Smart Portfolio Management is all about BALANCE and we need to be aware of when we are making too much money as acutely as when we are losing too much money.  We did not expect a V-shaped recovery but we're getting the start of one with the S&P 500 back over 2,700 already this morning.  We are generally expecting 2,850 to be the top of our range so we need to now look at each of our positions and make sure we are comfortable and for sure we will be adjusting our SQQQ hedges to lock in these gains.

  • Aurora Cannabis (ACB) – Nothing to worry about here – stilll dead! 

  • Cleavland Cliffs (CLF) – Nice pop and we are naked long, which we hate to be as that makes us the sucker paying the premiums.  The 2022 $7 calls are 0.80 and I think we should ask for $1 as that would put $5,000 back in our pocket and take all of our cash for this trade off the table so we end up with a free $25,000 spread we can ignore for 2 years.  That's the kind of position I love to have in our portfolios!  

  • Hanesbrands (HBI) – Already a spread we have a lot of confidence in.  

  • H&R Block (HRB) – We added a new spread so clearly we're confident in the 2022 outlook but it would be a miracle if your July $20 calls get back in the money but simply not worth cashing in this low either.  

IMax (IMAX) – Once China starts going to the movies again, this stock will pop.  It's already a spread and already almost 100% in the money so I guess we were too conservative in our adjustment but it will pay $25,000 if IMAX is over $10 in December and we bought this spread for net $4,750 so we stand to make $22,250 (468%) by December and the net is currently $7,250 so up $2,500 (52.6%) in two days is a good start but still good for a new trade with all this upside remaining.  

As you can see, you don't have to swing for the fences to make great money trading option spreads.  It's not at all complicated (see Friday's post for long explanations of the strategies) and all we have to do is simply look for stocks that are clearly undervalued and put ourselves into reasonable positions we feel strongly will work out over time.  That's all we have to do!  

  • IRobot (IRBT) – Another spread we left alone as we were confident with our targets.  

  • Macy's (M) – This one we got more aggressive with, doubling down on the long 2022 $5 calls and now we're back over $5 but I think this one has a lot of room to run, so we're not going to cover until maybe $10 – at which point our long calls will be $25,000 in the money and we only spent net $4,550 on the adjusted spread.  

  • Nasdaq 3x Ultra-Short (SQQQ) Part 1 – Up at the top we have 100 June $25 calls and 50 short April $27 calls.   The April calls are toast and we took a big hit on the June $25s but it's insurance, not a bet – it's there to protect our long positions.  Fortunately, the positions we want to roll to have also gotten cheaper so we'll leave the short calls to expire worthless and roll our long calls at $22,250 to 40 of the Jan 2021 $15 calls at $6 ($24,000) so we're paying a very small amount of money ($1,750) to buy $20,000 worth of position and keep 1/2 our insurance for the whole year.  
  • Nasdaq 3x Ultra-Short (SQQQ) Part 2 - We're going to roll the 95 Jan 2021 $20 calls at $4.95 down to the Jan 2021 $15 calls at $6 spending $1.05 ($9,975) to pick up $47,500 in position (and additional protection).  The 15 short June $22 puts at $7.80 ($11,700) can be rolled to 20 of the Jan $17 puts at $6 ($12,000) and we will put a stop on 35 of the short June $35 calls at $2 and 30 more (the rest) at $3 – just in case things dive again.  

Note that we've spent $11,425 and now we have 135 Jan $15 calls with SQQQ at $17 so a 20% drop in the Nasdaq would pop SQQQ 60%, back to $27, which would make the $15s worth $12 or $114,000.  That's our protection on a 20% drop.  Since we know our positions will make $153,600 if all goes well (less the $23.070 they made this week, of course) we're not worried about losing the net $21,787 we have tied up in our hedges.  

We still have over $100,000 worth of cash to deploy but just making sure we stay on track will make us well over 50% per year so we're in no hurry to add positions here – just keeping this portfolio in balance is a worthwhile endeavor – especially if we can ride out choppy markets like this this one while maintaining nice gains! 

 


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  1. Good Morning.


  2. 6 more days like yesteday and we are back to the old highs and our lines from January lol


  3. Phil – what are your "fair" prices for CMG, TSLA and RH?


  4. It might turn out that the most expensive healthcare system in the world is also the least prepared to deal with pandemics like the current one. The number of uninsured people who don't see a doctor before it's too late, or people who can't miss work and go in sick because they don't have sick days is probably another factor in the USA as compared to Western Europe. At the end, these foolish policies who might saved us some money in good years will cost us trillions now in a bad year! And there might be more bad years ahead. I remember when we were told that we could not afford another $200B to insure everybody. Or that businesses can't afford to give employees sick days. We are now adding $2T to our debt and more to come… 


  5. Good morning!

    Keep in mind we do the same thing with our hedges that we do with our longs – take advantage when they are beaten up to improve our position…

    We made an unexpected $23,000 in the Income Portfolio so we take about 1/2 of it to improve our hedges, locking in the other half and protecting the entire portfolio.  We'll do the same with the STP as well.

    • Carnival (CCL +24.0%) director Randall Weisenburger snapped up 1.25M shares.
    • Weisenburger now holds a total of 1.40M shares.
    • Carnival's pop today comes with the entire travel sector shooting higher on hopes for a lockdown end.
    • SEC Form 4

    • Theme park stocks are gaining on optimism that stay-at-home orders could be lifted in four to eight weeks as suggested by Larry Kudlow this morning.
    • SeaWorld Entertainment (SEAS +12.3%), Cedar Fair (FUN +9.4%) and Six Flag Entertainment (SIX +19.4%) have been trading with at least some risk seemingly baked in that parks might not open at all this summer.

    4-8 weeks!!!  Geez, how low were expectations if 8 weeks is a relief?  

    • White House economic adviser Larry Kudlow hopes that four to eight weeks will be the maximum length of economic shutdowns to stop the spread of the coronavirus, he told Fox News.
    • “The president would like to reopen the economy as soon as he can and we are planning internally, we’re looking at a number — and, say, most of this is health and virus related metrics, but we also are looking at the economics of the story, how best to get us going,” he said.
    • So far the U.S. has issued $50B of loans to small businesses as of Monday night, representing ~178K loans from 300 lenders, Kudlow said. (Note: The CARES Act provides for $349B of loans under the payroll protection program.)
    • Still, the U.S. certainly will have at least a couple more weeks of bad economic numbers, Kudlow said.
    • In a fresh update, Mondelez International (NASDAQ:MDLZ) says it expect higher sales in some markets and channels (U.S., Europe, large grocery/retail chains) during the stay-at-home lockdown period as consumers significantly increase their current food purchasing decisions.
    • MDLZ also expects lower revenue in some of emerging market nations that have a higher concentration of traditional trade outlets (such as small family-run stores), as well as in the travel retail and foodservice businesses.
    • The net effect of the pandemic could be negative when additional costs are factored in.
    • Shares of MDLZ are up 1.55% in early action.
    • SEC Form 8-K
    • Total (NYSE:TOT) says it closed the sale of its interest in offshore Brunei to Royal Dutch Shell and that it would divest its marketing and services business in Liberia and Sierra Leone to Conex Oil & Gas Holdings, for a total value of more than $400M.
    • Total says it received approval from authorities to complete the sale of its wholly owned Brunei subsidiary, which holds a 86.95% interest in Block CA1, to Shell, and signed a deal to sell its network of 63 service stations, general trade fuel sales and petroleum products import and storage operations in Liberia and Sierra Leone.
    • Separately, Total says its two LNG-powered Very Large Crude Carriers, which can carry 300K tons of crude oil each, will be delivered in 2022 and join its time-chartered fleet.
    • The airline sector is flying higher on hopes for a COVID-19 slowdown that will ease anxiety over travel demand.
    • Today's big rally arrives even with airline pulling back capacity to as much as 90% in the near term and bleeding cash.
    • Premarket trading: American Airlines Group (NASDAQ:AAL+15.58%, Delta Air Lines (NYSE:DAL+14.65%, United Airlines (NASDAQ:UAL+18.15%, Southwest Airlines (NYSE:LUV+11.73% and JetBlue (NASDAQ:JBLU+14.62%.

    Well, you know ALK is my favorite and we can still sell the 2022 $22.50 puts for $6.50 so let's sell 10 of those ($6,500) and pick up 20 of the 2022 $25 ($13.50)/$35 ($9.50) bull call spreads for $4 ($8,000) so that's net $1,500 on the $20,000 spread for the LTP.  


  6. And still total chaos on supplies:

    https://www.nytimes.com/2020/04/06/us/politics/coronavirus-fema-medical-supplies.html

    For weeks, the Trump administration pushed states to procure their own ventilators and protective gear, like masks, gloves and face shields. But a new effort by the administration to create a hybrid system of distribution — divided between the federal government, local officials and private health care companies — has led to new confusion, bordering on disarray, and charges of confiscation.


  7. And question the investigators:

    https://www.vox.com/2020/4/6/21211345/trump-coronavirus-briefing-hhs-ig-report-jon-karl-kristin-fisher

    President Donald Trump was asked repeatedly during Monday’s White House coronavirus task force briefing about a new Department of Health and Human Services (HHS) inspector general report detailing the federal government’s failure to provide hospitals with the testing and equipment resources they need. His contemptuous responses spoke volumes about his disdain for oversight, as well as for any reporter who has the gall to ask him questions he doesn’t like.

    We are prolonging the crisis and simply not learning lessons for the next! Hard to be positive in this context. Not ready to go long or go out…


  8. Big Chart – Watch that 200 dma on NDX, we poked through it this morning and call it 8,200.  It's close to the Nas (/NQ) Futures but not an exact match.  Getting rejected at 200 or 50 dmas is a bad sign but only if you fail the strong retraces – that's what we were watching last week that told us things were getting more bullish.

    CMG/Coulter – $600 tops for CMG, their pricing is silly.  $450 was no surprise.  TSLA $150 is the value price and they are ridiculous too but, as I said last month when they were down there – $350 is a good bottom given sentiment and such.   RH I love:

    • RH is still $104, which is $2Bn which is a joke as they make $200M a year with strong growth and they cater to rich people so this bad Q will be a blip overall.  In the LTP, let's sell 5 RH 2022 $110 puts for $40 ($20,000) simply because we can and let's buy 20 $85 ($50)/125 ($35) bull call spreads for $15 ($30,000) and that's net $10,000 on the $80,000 spread with $70,000 (700%) upside at $125.  That will be enough for today – take care all!  cool

    Trillions/StJ – But the businesses don't pay the Trillions (not even in taxes) so they still save Billions and they'll lobby to keep it that way, no matter what the real costs of their profits are.  


  9. 'hybrid system of distribution'

    This means the states will get help, but only if you kiss potus ass, will the Federal Government provide a small bit of assistance…. 


  10. Billions / Phil – How about no bailout money unless you provide some sick day coverage for your employees and also health insurance since we will pick up that tab anyway!


  11. tdump and his underlings are doing their best to re-write the past 2 months we lost due to their denials…


  12. Fox News is dry humping hydroxychloroquine for God knows why. The usual and customary explanation is it best helps fit some conspiracy theory that drives every message they promote. How to turn the man currently in power into some sort of victim. 

    Too bad they aren't looking at the BCG vaccine. Look at the (COVID) death rates for countries that still vaccinate for this. If you don't read Japanese just look at the first table.

    A vaccine would alienate much of their conspiracy theory-gobbling base though. So there goes that idea.


  13. Short-Term Portfolio Review (STP):   $533,406 is off the highs but still doing well and we are swimming in CASH!!! and the LTP is fairly flat (much improved) so we're over $1M already on the paired portfolios.  Volatility is like a roller coaster – it can make you sick while you are on it but then, afterwords, you just remember how exciting it was!

    We haven't touched the STP in a week other than adding CANE so interesting to see the April 1st version followed by this morning's:

    Not much of a move during that time:

    • CANE – Brand new.  Futures are much more exciting.

    • FAZ – Silly to risk this into earnings – even though it's miles out of the money.  Let's close it.  

    • AAPL – Fine.  
    • FXP – Kind of a hedge on China re-infecting but not worth the bother so let's kill it.  
    • JPM – Fine as it's small and we're happy to roll and DD to an LTP position. 
    • QQQ – That's a lot of profit to risk and too long a period and contrary to our hedges so let's kill it.  Remember – it was just the leftover leg of another spread, not a bet. 
    • TSLA – Oh yes, that's where my $350 target was. Let's put a stop at $25 as we already have nice gains to lock in

    • SQQQ Part 1 – We didn't pay much for this but do we want to pay more now?  We just did the math and $27 is our new 20% down target so it's an unrealistic spread which means we MUST move it or kill it.  Fortunately, we paid only net $10,500 and we can get $20,500 back from the June $25s so let's roll them to 40 of the 2021 $15 calls at $5.75 ($23,000) just like the Income Portfolio.  
    • SQQQ Part 2 – Same deal too, we'll roll the Jan $20s down to the $15s for about $1 ($6,500) as that's money well spent and we'll buy back the short April $32s to clear the slot but no need to adjust the short puts yet.  That leaves us with 105 longs that will pay $126,000 at $27 miles before we hit our short calls. 

    • SDS – We have a net credit on this spread but let's buy back the short May calls ($3,840) and roll the 80 Sept $30 calls at $4.15 ($33,200) to 100 Jan $25 ($6.50)/40 ($3.50) bull call spreads at $3 ($30,000) and let's buy back 1/2 the Sept $45 calls for $7,440 just to be responsible hedgers.  That gives us $150,000 worth of protection long before we owe 40 short Sept $45s any money back and we still haven't sold puts so there's another roll in our future to widen the spread by $50,000 if SPY goes higher.  

    • UNG  – On track 

    • USO – On track.

    So we've got about $276,000 worth of protection with SDS and SQQQ and that should be good for now as we're not too nervous and we have tons of cash to add protection if we do get worried again.  I'm more worried about the rally busting higher and the STP losing money faster than the LTP can gain it – that's why I've been adding some LTP positions.  


  14. BDC – You're right. The best thing to happen to tdump will be the narrative that he is just as much a 'victim' as anyone….  :(



  15. Trump’s Allies Know He Has Failed


  16. BCG / BDC – I guess good thing I got my vaccine when I was a kid then!





  17. I smell B.S…..

    https://www.foxnews.com/politics/gop-sounds-alarm-after-state-owned-chinese-outlet-crashes-coronavirus-press-briefing

    OANN no longer allowed due to a violation of the social distancing policy?  Yeah right…. 


  18. China will definitely be the 'fall guy' to rally the right this Fall….


  19. 1020 

      OANN was the main story on John Oliver last Sunday


  20. Hi stockbern – I saw that. All the more reason to doubt the 'Faux News' story.

    tdump needs those 'nice and not nasty' questions….


  21. I'm on board with this bounce now – we're now up from March 23rd, a solid two weeks. Looking to follow-through… but he real trick is to guess for how long? Certainly MM's need to shake out all the 4/17 puts, so that's practically guaranteed. Long through May though? April earnings won't be "that bad" because they only contain 1 month of the quarter with any bad data. Most people were still working as late as 3/15. Unlike now.* It will be the Q2 numbers that are ugly but we don't see those until July. Long through June expiration perhaps.

    Interesting that on March 1st we had 60 cases and 1 death and now we have 350k+ / 11k+. Every single scientist that used mathematical models, as opposed to "gut feel" (like, for example, someone who said on 3/1 we were  "at 15 cases [note: we were really at 60] and going to 0"), was RIGHT. Again, science and math was right. Again. Funny how that ALWAYS is the case. In my opinion the market has digested the "first wave" of coronavirus, the peak case count, the peak death, the peak timing, and the economic impact of the first wave's effects. I don't think Phase 2 has been priced in yet at all.

    Phase 2 = The virus has peaked, but now what? The scenario where we all pack back into Disney parks, airplanes and stadiums is certainly not what's going to happen. Do we start going back to work at local, state or federally-mandated pacing? Will spending return from consumers even if the "best case" were to occur? Are consumers going to remain stingy? Will Dump and his disaster administration of assholes all of sudden act competently, take responsibility for their actions, or attempt to ever put the welfare of one single american over their hunger for continued power?? (LOL!!! sorry for the this one, just a rhetorical question). We can look to China and especially Italy to get a feel for what Phase 2 is going to look like. But even then, how many more phases are there? Another viral wave? Another lockdown in October?

    The market is back to where it was only a couple of years ago. There's some insanity to this somewhere. A perfectly priced market peak (Feb 19th) that has now perfectly priced a once-in-a-century plague in less than a month. This is a tough pill to swallow.

    *thanks kgabor115 for posting this link


  22. This article churns my stomach to think of the collateral damage due to abusive family situations…

    https://www.msn.com/en-us/money/markets/michael-burry-of-the-big-short-slams-virus-lockdowns-in-tweetstorm/ar-BB12fxJu?li=BBnbfcL&ocid=DELLDHP17


  23. The Bug/BDC – well, John Snow took the handle off the Broad Street pump long after the outbreak peaked.



  24. Phil, just read in your BNN posting Mar 12 that you recommend selling TD puts for the LTP which I can't find .. thought they only have short term options?:

    "TD Bank (TD) – This is a very solid bank that is not as exposed to the energy sector as other Canadian banks. Testing $40 this morning is under $75Bn for a bank that made $8.5Bn last year and pays a 5% dividend ($2.37) but we're not paying that, we're just going to promise to buy 500 shares by selling 10 2022 $25 puts for $3 ($3,000) in the LTP to net in for $32 if assigned. $1,834 margin."

    I still have my TD positions which you suggested closing. Would you have any other thoughts at this level?

    + 15 TD Jul 50c  @ $5.70,

    + 20 TD Oct $45c @ $5.29
    -15 TD Jul $52.5p @ $5.58 
    -15 TD Jul $55c  @ $2.70.


  25. Numbers/BDC – The market is able to move forward when it sees the end of the tunnel.  Once cases peaked in China people assumed they'd peak in other places and we're seeing that pattern (which I discussed last week – even in America as Governors override Trump) but there's no actual cure and people are failing to take that into account as we may have another round of social distancing ahead of us.  

    Keep in mind that there are always killer viruses.  Ebola still comes back and there's still no cure – we just react appropriately when we see it.  This is, unfortunately, how we have to react to this one – total shutdown of infected areas.  Could become a regular thing until 75% of the population is immune enough to prevent random spreads and that won't be until we all get it or they have a vaccine (which is the same thing as us all getting it).  

    Lockdowns/1020 – I think lockdowns are necessary if you are as unprepared as we are to contain the disease with PPE and cleanliness programs and, of course, mass testing.  The US has none of these things ready.  Spring break is a very good example of why this country needs to be locked down.  So sure, he has a point that Lockdowns are a bad policy – but it's not like we have the alternative sitting on a shelf.  I'm sure Burry is just pissed that we're bouncing so hard and fast.

    TD/Wing -   We have this TD spread in the LTP, we did sell the Oct $25 puts on the 12th but that was a separate thing to our LTP position, which was a bit like yours before we rolled it:

    Submitted on 2020/03/23 at 3:08 pm

    TD – We can roll the 10 short July $55 puts at $21.55 ($21,550) to 20 Oct $40 puts at $10.50 ($21,000) and our 25 Oct $45 calls at $1.55 ($3,875) can be rolled to 25 Oct $30 calls at $7.50 ($18,750).

    TD Short Call 2020 17-JUL 57.50 CALL [TD @ $43.58 $1.85] -15 12/16/2019 (101) $-1,800 $1.20 $-0.80 $18.50     $0.40 - $1,200 66.7% $-600
    TD Short Put 2020 16-OCT 25.00 PUT [TD @ $43.58 $1.85] -10 3/12/2020 (192) $-3,000 $3.00 $-2.13     $0.88 - $2,125 70.8% $-875
    TD Short Put 2020 16-OCT 40.00 PUT [TD @ $43.58 $1.85] -20 3/23/2020 (192) $-21,000 $10.50 $-6.85     $3.65 $-0.85 $13,700 65.2% $-7,300
    TD Long Call 2020 16-OCT 30.00 CALL [TD @ $43.58 $1.85] 25 3/23/2020 (192) $18,750 $7.50 $7.00     $14.50 - $17,500 93.3% $36,250

    Anyway, I like the spread we have now but already well in the money as we rolled into the lows while your "dear in the headlights" strategy has you still far out of the money.  I suggested closing based on what you seemed to be telling me was a situation in which you were unable to make the proper adjustments.  What I actually said was:

    Wingwalker Submitted on 2020/03/24 at 2:22 pm

    Appreciate pep talk today Phil. Made it back from HUX Mexico on last flight to Toronto on Sun, hopefully in good health, now in quarantine.

    Portfolio not so much ..  intermittent Internet with rapidly moving market turned some of my rolls into pancakes. Needs ventilator resuscitation, limited margin! Would like to REPOSITION (further) as suggested, limited brain cells:

    15 TD July $50calls ($2.68) rolled to Oct $45 ($5.29) calls but sell order on $50s not filled, still have them as well (now $.83).

    TD -15 July short $55puts rolled to 15 $52.5 puts but buy order on $55 puts not filled .. still have them also ($18.75)!

    -15 TD July $55calls (2.68)

    Phil Submitted on 2020/03/24 at 2:57 pm

    TD – Same thing with short puts but you can't double your exposure like that.  So you have 15 of each at $18ish and the $40 puts are $8.  ToS says $6,000 margin for 10 short $52.50 puts and $6,691 margin for 20 short $40 puts – that's why I like those rolls but it doesn't save margin, just costs not too much.  The problem with TD is you don't have a lot of time to turn around and you may be throwing good money after bad so maybe you are better off with more IBM at a much more realistic target to double your money on the spread.  

    Wingwalker Submitted on 2020/03/25 at 9:46 am

    (TD) I see what you mean about the mgn for 10 short $52.5 vs 20 short $40 puts and also the short timeline. In my case TD is holding $53k for the 15 $55puts and $49.4k for the $52.5ps. Are you thinking to bail out of TD completely ..  buy back all the puts and close all the positions?

    What about rolling the July $52.5puts to Oct $40s, maybe just buy back the $55s?

    The problem with TD is you don't have a lot of time to turn around and you may be throwing good money after bad so maybe you are better off with more IBM at a much more realistic target to double your money on the spread.  

    Thx

    "TD – Same thing with short puts but you can't double your exposure like that.  So you have 15 of each at $18ish and the $40 puts are $8.  ToS says $6,000 margin for 10 short $52.50 puts and $6,691 margin for 20 short $40 puts – that's why I like those rolls but it doesn't save margin, just costs not too much.  The problem with TD is you don't have a lot of time to turn around and you may be throwing good money after bad so maybe you are better off with more IBM at a much more realistic target to double your money on the spread.  "

    Understand about the TD timelines and the double exposure Phil. Still like TD longterm. Bought back the $55puts. What about a roll from 15 $52.5 Jul puts to 20 Oct 40p?   .. or do you still suggest cancel out everything?

    15 Jul $50c ($5.7) 

    -15 Jul $55c ($2.68)

    -15 Jul 52.5p  ($5.58)

    20 Oct $45c. ($5.3)

    THX

    Phil Submitted on 2020/03/26 at 1:25 pm

    TD/Wing – I'm saying TD is at $44 and you have Oct $45 calls for net $10,600 that are back to $10,000 and July $50 calls at $8,000 that are down to $1,700 less the short $55s ($4,000) and hopefully less the short $52.50 puts but down $7,500 at the moment.

    So, currently you are down about $10,000 and most of that would be made up by working the puts 

    I believe you said margin was an issue and TD doesn't have long-term options so I didn't like the adjustments – it's simply not an appropriate position if you are tight on margin.  The World is at 500,000 cases and both the US and Italy are going to pass China in number of cases next week so we could easily drop another 20% so you should be THRILLED for a chance to take risk off the table and leave yourself a little flexible rather than pressing positions you couldn't reposition the last time it was $10 cheaper than it is now and was a great time to do it.

    So if you keep asking while the price keeps changing and you keep holding me to something I said two weeks ago under different conditions – it makes it very hard to figure out what to say to you!  I don't know what you want me to say now.  You didn't do the roll I suggested and you didn't get out of that position and favor IBM to conserve margin.  If margin is no longer an issue, then it's a bit late to chase as TD bounces back so maybe just wait for earnings and see how things look.


  26. Hey, look who woke up:

    As I always say: "If you're not going to buy a stock when it's cheap – when are you going to buy it?"  


  27. https://gothamist.com/news/surge-number-new-yorkers-dying-home-officials-suspect-undercount-covid-19-related-deaths

    …But another 200 city residents are now dying at home each day, compared to 20 to 25 such deaths before the pandemic, said Aja Worthy-Davis, a spokeswoman for the medical examiner’s office. And an untold number of them are unconfirmed. 


  28. Oil starting to behave rationally again after the fake news trump pump. Who's driving and flying? Fundamentals always win given enough time. My USO puts behaving adequately for now.


  29. LABU May 30 calls for a pump ($2)


  30. Stocks and bonds now go up and down together. Totally normal.


  31. Home deaths- There is a general fear around here (NYC) of going to the hospital / urgent care right now for anything, covid related or not.  And most doctors offices are closed and not seeing patients except via Zoom.  Not a good time to get sick with anything.  


  32. There's 1.6M new cancer diagnoses every year in the US. Some 4.4k per day. That's 4,400 people putting off seeing the doctor and living a day, a week, a month longer with a secret killer that may have responded to early treatment. It could be anybody, anytime, anywhere. That pain in your lower back, the mole on your neck… 


  33. BDC – Remind me to book you for our next motivational session at my company :-)


  34. someones playing with oil price


  35. StJ – if you are also blood type O (along with BGC vax) you're practically immune! Now that would be some good news!


  36. Phil/SQQQ

    Good morning!

    seeing your adjustments, I am wondering if it will help for me to adjust my 22/29 SQQQ June spread that I bought for net $1.1 on March 26th, now $2.62/1.82.

    I was thinking of rolling the 22's down to 17's for $1, but then that's a lot of money for 100 spreads. If I also sell the 22's, then I leave naked my 29's which could hurt me if SQQQ spikes through 22?
    also thought about selling the June 15 puts for $2.50…but don't know for sure.

    Thoughts?


  37. Oh no, what's happening to our rally?  

    This is why we religiously roll our hedges…

    Oil at $24.

    Nice, we'll be able to play /RB again.

    Honey badger don't care:

    LABU/BDC – You would think LABU would be doing well.  

    Interesting bond move today:

    Home deaths/Mike, BDC – Good point, there's the hidden cost of the virus of untreated ailments that will get far worse over time.  Not to mention how out of shape everyone is getting.  Michelle Obama would have had PSAs on eating and exercise.  Of course Melania has been more effective than Michelle as everyone has stopped bullying people now!  

    LOL StJ.  

    Going all in GIFs - Get the best GIF on GIPHY

    Adjustments/Maya – If it's a hedge, then it should be in a position to make money.  SQQQ is $17 and 1.6 x $17 is $27 so that's our target for a 20% drop.  The June $22s are $2.60 so your $1.1 is still there and the $29s are outside the range so I would roll to 2x the Sept $18 ($4.50)/27 ($3.50) bull call spread and then you have that $9 spread 1/2 covered by the short June $29 calls (now $1.85) and you can put a stop on half of those at $2.50 and it would only drive your cost of the longs up to $1.75 but I'd leave them as they can be rolled to Sept $40s ($2.50) or Jan $65s ($2.50) and, if things get that bad – who cares about the short calls?    Since that's all even, I wouldn't sell puts unless SQQQ falls further and then you can sell puts to pay for a roll down on the long calls.  

    • As part of a business update posted today, Darden Restaurants (NYSE:DRI) says it's preserving cash by significantly reducing expenses and deferred nearly all of our capital spending. The company also discloses that it took on a new term loan to provide further liquidity.
    • Darden also ripped off the Band-Aid by providing an early look at FQ4 results. Same-restaurant sales are down 39.1% QTD, including tailing off over 70% for each of the last three weeks. Those results aren't necessarily shocking, but Darden is one of the first operators to print a number.
    • DRI +10.68% premarket to $58.00 amid a broad market rally.
    • Source: Press Release
    • Redbook Johnson reports chain store sales increased 5.3% for the week ending April 4 to cool down from the 6.3% pace a week ago and 9.1% mark from two week ago.
    • "Retailers selling essential consumer goods noted that store traffic dropped compared with a few weeks ago, in part due to limiting customers traffic capacity, fewer panic-buyers and offering delivery or curbside pickup as people observed social distancing guidelines," notes Redbook Johnson.
    • March sales are expected to be up 7.8% Y/Y.
    • A new press release from AerCap (NYSE:AER) shows the company leased, purchased and sold 53 aircraft during the first quarter of 2020 and signed financing transactions for approximately $350M.
    • Concerns are still mounting for the aircraft lessor market as the coronavirus epidemic takes a bite out of air travel and plane production.
    • Aircraft leaser Avolon recently announced that 80% of customers have asked for relief on rental payments, while the company canceled or deferred 40% of its aircraft orders.
    • Related: GECAS (NYSE:GE), Air Lease (NYSE:AL), BOC Aviation (OTC:BCCVY).
    • JPMorgan reiterates an Overweight rating on Kraft Heinz (NASDAQ:KHC) after taking in the firm's sales update and says it sees 18% total shareholder return from now to the end of the year.
    • Analyst Ken Goldman reminds investors that expected Kraft's organic sales number to be even higher than the foodservice business (~15% of total) and business out of China were drags during part of the quarter.
    • JP bumps up its price target on KHC to $30 from $29. Looking even further out, Goldman says history tells us that food stocks that go from being perceived as "risky" to "less risky" can experience strong multiple expansion.
    • Shares of KHC are up 4.21% premarket to $27.00.
    • Previously: Kraft +3% after sales update (April 6)
    • JPMorgan lowers its estimates on Neutral-rated Beyond Meat (NASDAQ:BYND) as it sees the boost from higher retail sales as falling short of offsetting lower foodservice sales.
    • "We remain favorable in general to the BYND fundamentals over the long run, but we see too much near-term uncertainty to be constructive at this time, especially with 51% of 2019’s revenues going to foodservice," notes analyst Ken Goldman.
    • JP drops its price target to $77 from $108.
    • Shares of BYND are up 4.40% premarket to $68.80.
    • The plan – which has the support of high-ranking federal officials, MLB, and the player's union - would have all teams playing games with no fans at stadiums in the Phoenix area.
    • Key to making this work is a large increase in coronavirus tests with quick turnaround time, and sources believe that could be ready early next month.
    • Logistics – including the idea of separating players from their families for a period of months – would obviously be tricky, but all parties seem interested in making the push.
    • Interested parties: Disney (NYSE:DIS), Comcast (NASDAQ:CMCSA), Fox (FOXFOXA), Nike (NYSE:NKE), Under Armour (NYSE:UAA)
    • Honda Motor (NYSE:HMC) places 10K employees in the U.S. on temporary leave due to the manufacturing slowdown around the pandemic. Workers will only be paid until Sunday at which point they will be advised to apply for unemployment benefits.
    • The 10K workers represent about 50% of Honda's U.S. workforce.
    • The move affects five assembly factories in Ohio, Alabama and other states.
    • Honda suspended operation at U.S. plants on March 23. Some plants are scheduled to open again on May 1.
    • Shares of HMC are down 0.70% in premarket trading.
    • Now, people all across America are turning to us more for the content that comforts them and connects them to the outside world," NBCUniversal (NASDAQ:CMCSA) ad sales and partnerships chairman Linda Yaccarino wrote in a blog post.
    • "At the same time, some marketers across every industry have asked to pause their advertising plans or shift their messages, and they’re looking for ideas, tools, and strategies from their most trusted partners."
    • "In that same spirit, starting today, you will see MORE content from us, new ad innovations, and therefore LESS commercial time. In addition to more content, we're also providing free resources for marketers."
    • To facilitate lending to small businesses through the SBA's Paycheck Protection Program, the Fed will establish a facility to provide term financing backed by PPP loans.
    • The central bank said it will disclose more details about the facility later this week. It has been working with the Treasury Department on the program.
    • The banking industry has been urging the Trump administration for a program that would buy loans from the lenders who originate them, allowing the banks to free up balance sheets so they can make more loans.
    • Banks have been struggling to deal with the surge in demand for the loans after the PPP was launched on Friday.
    • As of Monday morning, the SBA processed 124,000 loans totaling $36B from more than 2,300 lenders, according to the Treasury; the CARES Act earmarks $349B for the PPP loans.
    • Exxon Mobil (NYSE:XOM) says it is cutting its 2020 capital spending by 30% to ~$23B from previous plans for $33B in response to weak commodity prices and demand destruction from the coronavirus.
    • Exxon also will reduce cash operating expenses by 15%, driven by deliberate actions to increase efficiencies and reduce costs, and includes expected lower energy costs.
    • The company says it will make the largest share of the capex cuts in the Permian Basin, where short-cycle investments can be more readily adjusted to respond to market conditions, while preserving value over the long term.
    • Current operations offshore Guyana are not affected, and startup of the second phase of field development remains on target for 2022, but a final investment decision for the Rovuma liquefied natural gas project in Mozambique that was expected later this year will be delayed.
    • Exxon says it still expects to meet its projected investment of $20B in U.S. Gulf Coast manufacturing facilities and expects to reach its proposed U.S. investment of $50B over five years that was announced in 2018.
    • XOM +5.4% pre-market.

  38. Phil/SQQQ

    THANKS!

    I guess I will have to wait to adjust for a better day since the market is taking a dive as we were discussing this.


  39. This is stuck in my head today – enjoy:

    I've been catching up on old movies and old music (usually at the same time).  

    • Per Johns Hopkins Case Tracker, global confirmed COVID-19 cases are now 1,407,123, up 7.5% from yesterday. Fatalities are up 11.2% to 80,759. Leaders:
    • U.S.: 383,256 (+10.4%)/12,021 (+17.6%).
    • Spain: 140,511 (+4.1%)/13,897 (+5.5%).
    • Italy: 135,586 (+2.2%)/17,127 (3.7%).
    • France: 110,043 (+17.3%)/10,343 (+15.9%).
    • Germany: 106,739 (+5.5%)/1,942 (+15.8%).
    • Cases and deaths appear to have finally peaked (al least preliminarily) both in New York and the U.S.
    • The declines are continuing in Italy and Spain while cases in France and the UK are ramping up. Germany appears to have peaked as well.
    You can't get there from here:  United makes deep cuts to California flights
    • United Airlines (UAL +1.4%plans a significant reduction in service out of Los Angeles and San Francisco on a temporary basis due to the collapse in demand amid the pandemic.
    • Starting on April 12, United will operate 13 daily flights from LAX to six destinations, down from 33 flights to 19 destinations previously. On the same date, United will begin flying 50 flights from SFO to 37 destinations, down from 65 flights to 40 destinations previously.
    • Parsley Energy (PE +2.0%) CEO Matt Gallagher says Texas production cuts of 20% may not be enough and his company is willing to cut its own output 20% if others do.
    • But the top U.S. oil producing state cannot be the only one curbing supply to solve a global problem of low crude prices, Gallagher tells Bloomberg.
    • "Canada, Norway, Mexico, Brazil and of course the Big Kahuna, OPEC+, need to come to an agreement," the CEO says, adding that without a globally coordinated cut, "the service sector would be absolutely crushed and devastated," leaving U.S. oilfield jobs to move abroad
    • Parsley is one of two shale drillers – the other is Pioneer Natural Resources (PXD -0.3%) – that have pushed Texas to coordinate a statewide cut among all producers.
    • Employees at Valero Energy's (VLO +5.0%) Port Arthur, Tex., refinery reportedly have expressed worries about the company's slow response to the coronavirus after two workers tested positive.
    • The workers say Valero started to cut non-essential work and related contractors only this week after starting temperature checks last week – much later than other major U.S. refiners – according to Reuters.
    • Unable to work from home, many Port Arthur refinery employees are indoors in shared control rooms and eat in common dining areas, placing them at greater risk of contracting Covid-19.
    • The refinery – which processes 335K bbl/day of crude but lately has been running at reduced rates due to weakened demand – employs more than 900 salaried and hourly workers, and ~750 contract workers are employed by third-party companies Valero hires to perform maintenance.
    • Freeport McMoRan (FCX +6.5%) is upgraded to Neutral from Underperform with an $8 price target at Credit Suisse, saying it sees "significant opportunities for alpha generation coming out of this pandemic driven recession."
    • Mining sector performance "now reflects [global financial crisis] level demand contraction, which presents the best buying opportunity in the sector in the past 20 years," analyst Curt Woodworth writes.
    • Freeport shares have lost nearly 50% of their value from a January peak.
    • Separately, the company says three employees at its Chino copper mine in New Mexico have tested positive for the coronavirus.
    • Operations at the mine have not been affected, although any employees that came into contact with the affected workers have been told to self-quarantine, the company says.
    • FCX's average Sell Side Rating, Seeking Alpha Authors' Rating and Quant Rating are all Bullish.

    • UBS sizes up the balance sheets of the cruise line operators after factoring in the latest cash-preservation moves by Norwegian Cruise Line Holdings (NCLH +7.5%) and Royal Caribbean (RCL +12.5%), as well as the capital raise by Carnival (CCL +12.0%).
    • Analyst Robin Farley: "CCL's capital raise last week gives it the longest runway of liquidity to stay afloat in a zero-revenue scenario, at about 12-13 months with potential for another 2 months based on prolonged layups, and more beyond that (as we detail below.) That puts CCL further ahead of RCL, which we believe has ~10 months of liquidity in a zero-rev scenario, and NCLH which we believe has ~7-8 months of liquidity in such a scenario."
    • UBS has a 12-month Buy rating on Royal Caribbean and Neutral ratings on Carnival and Norwegian.
    • If Goldman Sachs (GS +4.6%) achieves its target to raise a $5B-$10B fund, it plans to invest in cash-strapped companies through debt-like instruments that rank higher on the capital structure than equity, Bloomberg reports.
    • The fund won't look to gain control of companies.
    • It plans to invest a few hundred million dollars or more per firm, said Julian Salisbury, head of Goldman's investing unit.
    • "There’s a long list of companies looking for capital, and we want to be the solution provider,” he said.
    • The fund's investing will be headed by Tom Connolly and Greg Olafson as Goldman's private credit business teams up with the bank's special-situations group.
    • About 30% of more than 1,000 small businesses surveyed didn't pay any rent or mortgage payments at all in April and 20% made a partial payment, the Wall Street Journal reports, citing a poll by Alignable, a small business social networking company.
    • The early findings the COVID-19 pandemic's disruption to small businesses can set off a chain reaction hitting landlords, lenders, and mortgage servicers and investors.
    • “I think this shows the time-sensitive need for the policy response to get liquidity in the hands of small businesses,” said Michael Feroli, chief U.S. economist at JPMorgan, told the WSJ.
    • He noted that half of all small business have cash buffers that would last 15 days or less.
    • The SBA Paycheck Protection Program under the CARES Act is intended to help small businesses get the cash they need to keep employees on the payroll and pay rent.
    • As of last night, only $50B of the $349B earmarked for the program have been processed since it launched on Friday.
    • As unemployment rises due to efforts to slow the spread of the coronavirus, the number of homeowners appealing to mortgage companies for more time to pay has soared in recent weeks, according to data from the Mortgage Bankers Association.
    • Forbearance requests jumped by 1,270% between the week of March 2 and the week of March 16 then skyrocketed 1,896% between the week of March 16 and the week of March 30.
    • "MBA's survey highlights the immediate relief consumers are seeking as they navigate the economic hardships brought forth by the mitigation efforts to stop the spread of COVID-19," said Mike Fratantoni, MBA's senior vice president and chief economist. 
    • That, of course, is stressing servicer call centers. Hold times increased to 17.5 minutes from less than 2 minutes three weeks earlier. Hang-up rates jumped to 25% from 5%.
    • The MBA urges the government to step in like it has with other markets.
    • "It is incumbent upon the government to provide a lending facility to support the mortgage forbearance burdens placed on single-family and multifamily servicers, as they still need to forward principal and interest payments to investors," Fratantoni added.
    • Total loans in forbearance for the March 2-April 1 period increased to 2.66% from 0.25%.
    • Mortgage servicers: Mr. Cooper (COOP +8.4%), PennyMac Financial (PFSI +4.9%), Ocwen Financial (OCN +9.0%), Walker & Dunlop (WD +18.4%)
    • Loop Capital turns bullish on Lowe's (LOW +5.2%) on its view the home improvement retailer could top estimates even as macroeconomic factors weigh on the top line.
    • "Our F2020 sales estimate is cut by $2 billion, as we reflect the impact of a recession. Lowe’s faces its most difficult SSS comparison in F1Q, but we think there may be upside to our estimate of +1% if only because Lowe's is one of the few open retailers in much of the US."
    • The firm slides Lowe's to a Buy rating from Hold. The average sell-side rating on Lowe's is still Bullish.
    • A look by Comscore at TV ratings indicates viewing is still on the rise as many Americans start their second month indoors.
    • Overall in the top 25 markets, viewing rose 13% in the week of March 16 vs. the prior week (up 33% year-over-year).
    • The gains are broadly distributed across demographics, showing it's not only news that's drawing viewers to the TV. The 18-34 demographic is up 38%, and age 35-54 is up 35%, Comscore says.
    • Households with adults ages 50-plus saw an increase of 12% from week of March 9 to week of March 16, and up 29% year-over-year.
    • Year-over-year, middle-earning households (yearly income of $75,000-$99,999) showed the biggest jump, up 50%.
    • Regions hit hard and early by the COVID-19 pandemic – Seattle and New York – showed smaller gains from already elevated viewing. The March 16 week brought the most dramatic viewing increases in San Francisco, Dallas, and other Midwest metro areas.
    • Viewing among Hispanic households is up 42%, and viewing in Asian households up 62%.
    • Wells Fargo hikes its rating on Marriott International (MAR +10.4%) to Overweight from Equalweight.
    • "We believe the implied valuation on 2022E is attractive vs. peers, it has underperformed Hilton by over 1000bps this year, and at comparable multiples to HLT, we believe MAR could achieve ~20% share price appreciation over the next 12 months, the second highest appreciation expectation in our coverage universe."
    • WF assigns a price target of $85 to Marriott.
    • Shares of Marriott are up sharply today amid a broad rally in the travel sector.
    • The state of New York says the number of new coronavirus cases declined declined for a third straight day to 8,147 on Tuesday vs. 8,658 on Monday.
    • The increase in ICU admissions related to coronavirus also decreased for the third day.
    • However, the number of coronavirus deaths rose by 731 yesterday, the single-business daily jump in virus deaths since the outbreak began, Governor Andrew Cuomo said.
    • At the White House coronavirus briefings, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, has explained that the peak of death will generally lags the apex of hospitalizations.
    • New York City Mayor Bill de Blasio said the number of COVID-19 patients being placed on ventilators has been better than expected in recent days.
    • FuelCell Energy (FCEL +3.8%) reached an agreement in principle with SEC staff to settle a proposed proceeding related to certain sales of common stock in the open market, according to an SEC filing.
    • FuelCell says the SEC is not seeking penalty or disgorgement, but it may be subject to actions for rescission or damages in connection with such sales.
    • The company is not admitting or denying the SEC's proposed findings under the agreement in principle.
    • Company update
    • Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer are working together for additional funding for the small business loans, Senator Marco Rubio writes in a tweet.
    • They hope to approve the additional funding on Thursday, April 9, via a voice vote.
    • "We will need at least another $200-$250 billion for #PPPloan," Rubio said.
    • In previous comments, President Trump said he'd go back to Congress for more money if the the small business loan program needed it.
    • Separately, House Speaker Nancy Pelosi is looking to put together a $1T+ follow-up bill to the CARES Act that was signed into law last month.
    • Previously: Mnuchin says 'there will be money' for SBA's PPP loans – Fox Business (April 7)
    • Congress's next coronavirus economic relief bill will add at least $1T to previous stimulus bills, House Speaker Nancy Pelosi told Democrats on a private conference call, Bloomberg reports, citing people who were on the call.
    • Much of the next package would be adding more funds to programs created in the bill signed into law last month, with additional direct payments to individuals, extended unemployment insurance, and more funds for the Payroll Protection Program.
    • She also wants the bill to help state and local governments, she said, especially for smaller municipalities.
    • Pelosi said she hopes the next relief bill is passed this month; the House isn't scheduled to be back in session until at least April 20, but it can pass legislation with most members out of town if no one objects.

    • Wynn Resorts Finance, LLC and its subsidiary Wynn Resorts Capital Corp., each an indirect wholly-owned subsidiary of Wynn Resorts (WYNN +9.0%) are offering $350M of Senior unsecured Notes due 2025 in a private offering.
    • Wynn Resorts Finance plans to use the net proceeds from the offering for general corporate purposes and to pay related fees and expenses.
    • Four tankers carrying U.S. liquefied natural gas are on their way to China after the Beijing government started granting tax waivers to some importers, Reuters reports, citing shipping and trade sources.
    • It is the first time since March 2019 that shipments have resumed after the trade war during which China raised tariffs on LNG imports from the U.S. to 25%.
    • The tankers reportedly are heading to Tianjin, where Cnooc (NYSE:CEO) and Sinopec (NYSE:SNP) operate LNG terminals; two of the tankers reportedly loaded from Cheniere Energy's (NYSEMKT:LNG) Sabine Pass, La., terminal, and one loaded from Sempra Energy's (NYSE:SRE) Cameron LNG plant in Louisiana.
    • Asian LNG prices dropped to a record low last week as demand plunged in several key importers, including India, where lockdowns to fight the coronavirus have restricted industrial output; demand is recovering in China as people return to work, and LNG shipments are expected to rise.
    • Apparel stocks continue to trade with volatility off COVID-19 developments, today to the upside as case growth appears to be peaking in parts of the U.S. and some improving trends continue to be reported out of Europe.
    • Of course, apparel has a long way to go to fully recover from the sell-off that began when China starting shutting down factories early in the year and pulling back on spending.
    • Notable gainers include Caleres (CAL +38.4%), Tapestry (TPR +7.7%), Foot Locker (FL +7.1%), Wolverine World Wide (WWW +4.8%), Kohl's (KSS +20.9%), Guess (GES +14.5%), Nordstrom (JWN +11.7%), Chico's FAS (CHS +10.0%), Steven Madden (SHOO +4.2%), G-III Apparel (GIII +26.3%), Capri (CPRI +23.4%), PVH (PVH +13.2%), Kontoor Brands (KTB +7.4%), Ralph Lauren (RL +8.6%), Levi Strauss (LEVI +5.2%), Oxford Industries (OXM +10.1%), Hanesbrands (HBI +4.7%), Gildan Activewear (GIII +26.3%), American Eagle Outfitters (AEO +10.4%) and Gap (GPS +6.8%).

    • With small businesses swamping banks with requests for payroll loans that were launched on Friday, Treasury Secretary Steven Mnuchin told Fox Business Network's Maria Bartiromo, "If you can't get the loan today or tomorrow, don't worry… there will be money."
    • "If we run out of money, we'll go back for more," he added.
    • Under the new SBA Payroll Protection Program, the loans are forgiven if 75% of the loans go to pay employees.
    • And he emphasizes that the money is meant to pay employees even if the businesses aren't allowed to open yet due to stay-at-home orders from states.
    • "All these small businesses need to do is pay their employees. If they're closed and there's no work to do, they don't have to come in," Mnuchin said.
    • The Treasury is also working with the Fed to get set up a Main Street lending facility. "We hope to have that up running quickly," he said.
    • Mnuchin said he's pleased that "corporate bond markets appear to be open." The Treasury is working on other programs there as well as a municipal program.
    • President Trump will hold a video-conference call with CEOs of Goldman Sachs (GS +3.2%), Bank of America (BAC +2.3%), Wells Fargo (WFC +2.8%), Citibank (C +4.3%), Visa (V +2.4%), and other financial firms to discuss the $350M relief package for small businesses, Bloomberg reports, citing an administration official.
    • As of Monday night, $50B of the loans have been issued, representing ~178K loans from 300 lenders.

    • General Electric (GE +1.9%) says the Trump administration has granted it a license to supply engines for China's new COMAC C919 passenger jet.
    • The U.S. had earlier considered denying GE's license request to provide the CFM LEAP-1C engine for the narrow-body jet, which is expected to go into service next year.
    • UBS turns bullish on Constellation Brands (STZ +7.6%) on its view that the long-term opportunity outweighs the near-term risks.
    • "We see STZ as well positioned through the on-premise slowdown due to limited exposure (15%), and recognized brands to weather a period where consumers buy what they know. After restrictions are lifted, we do however expect a more lasting behavioral shift to favor outdoor social gatherings over bar/resto traffic, which favors the STZ Brands," advises analyst Sean King.
    • UBS assigns a price target of $180 to STZ, which is 18X P/E and 14X EBITDA. The PT reps 18% upside potential for shares.
    • A general sense that lockdown orders can end in the U.S in four to eight weeks is giving a lift to the beat-up travel sector. While working out when business and vacation travel will actually pick back up is still a big wildcard, investors have been looking for a peak pandemic turning point.
    • Cruise liners: Royal Caribbean (RCL +23.7%), Norwegian Cruise Line Holdings (NCLH +18.2%), Carnival (CCL +16.6%).
    • Hotels: Hyatt Hotels (H +8.6%), Marriott International (MAR +10.3%), Choice Hotels International (CHH +9.2%) and InterContinental Hotels Group (IHG +8.3%).
    • Casinos/resorts: Eldorado Resorts (ERI +12.5%), Century Casinos (CNTY +10.3%), OneSpaWorld Holdings (OSW +5.8%), Golden Entertainment (GDEN +7.3%) and Boyd Gaming (BYD +7.8%).
    • Airlines: Mesa Air (MESA +12.7%), Spirit Airlines (SAVE +21.8%), SkyWest (SKYW +12.1%), Alaska Air Group (ALK +11.9%) and Allegiant Travel (ALGT +10.5%).
    • Online sites: Booking Holdings (BKNG +3.3%), Expedia (EXPE +8.5%), TripAdvisor (TRIP +6.1%) and Trip.com (TCOM +5.8%).
    • Some employees at JPMorgan Chase (JPM +1.4%) and other banks say they're caught between managers telling them to come into offices and government officials urging workers to stay at home to stem the spread of the coronavirus.
    • With billions of dollars at stake, firms are trying to keep enough on-site staffing to ensure rapid trading, Bloomberg reports.
    • On April 2, JPMorgan employees were sent an e-mail saying that "the trading desk will be in the office unless they have a medical condition with a dr's note."
    • A company spokesman says that anyone "who doesn't  feel comfortable coming into the office doesn’t have to."
    • Other banks are vaunting their work-from-home policies. Goldman Sachs (GS +3.1%) says about one in every 50 workers is on site and Bank of America (BAC +2.7%) has about one in 20 in the office.
    • At JPMorgan, one in five in trading is on site.
    • At BGC Partners (BGCP -2.0%), though, memo notified employees that their offices remain open and "driving to offices and using mass transit are permitted in order to travel to an from our office."
    • Still, one person who became ill at BGC credited managers for sending the entire desk home after the first of two people got sick.
    • "We haven't seen anything like what we're experiencing today," Exxon Mobil (XOM +4.9%) CEO Darren Woods said in a conference call after the company detailed spending cuts, the last of the oil majors to do so.
    • Exxon's 30% cut in capital spending exceeds those of BP, Chevron, Royal Dutch Shell and Saudi Aramco, which have made 20%-25% reductions.
    • The company sets 2020 capital spending at $23B – and could go lower if required – after spending $26B last year and previously expecting to spend up to $33B this year; $30B-$35B had been planned for the next several years, but Woods says 2021 spending could come down as well.
    • Exxon expects to reduce Permian Basin production by ~15K boe/day this year but by 100K-150K boe/day in 2021; the Permian accounts for the largest share of the company's capex cuts.
    • The company does not detail its Permian spending cuts, but RBC analyst Biraj Borkhataria estimates the company was spending $5B-$6B per year in the play, "and we see no reason why capex and the rig count cannot be reduced by 50% at a minimum in 2020."
    • The dividend remains a high priority but "will be a function of how long this plays out," Woods tells CNBC. "If we haven't seen a recovery next year, you know it will be a different environment that we're in."
    • Exxon expects world oil demand to tumble 25%-30% in the short term, but Woods reiterates the company's belief that global demand for oil will grow: "The economy will rebound despite the shocks from the pandemic."
    • Tesla (TSLA +5.8%) trades at its highest level since Alameda County ordered the automaker's production line to shut down.
    • The gain in Tesla today coincides with a broad market rally on rising hopes for a lockdown end. COVID-19 cases in Alameda County were still rising this week and it's unclear when the stay-at-home orders could be lifted there.

  40. S&P red!


  41. Thanks for your time Phil .. have actually made several adjustments to the original TD setup, half rolling the $55puts to the $52.50s and the $55 calls to the Oct $45s (maybe an iguana in Mexico approach ;)  In the BNN post for TD you said you sold " .. 10 2022 $25 puts for $3 ($3,000) in the LTP .. "  but you're also saying TD doesn't have long term options and I certainly couldn't find them? 

    I'm quite ready to hear (again) that it's still best to sell out my TD position but want to be sure that there isn't a better way to make something of it with the change in market direction. Been working on adjustments all day every day since my return and have made many changes based on your comments (I did buy/roll to 24 of the IBM '22 $90/120 bcs). For some reason, I'm finding TD the most difficult to resolve (along with regular SQQQ angst :)

    So, while waiting for earnings (when?), should I still try to roll the the Jul $55ps to 2xOct$40s (I lent myself some $$ on my line of credit) if I can get good prices with the swings?  I could also complete the half roll of the $50/45 calls if TD keeps moving up, so I'd end up with 15 Oct $45c, -15 Jul $55c, -30 Oct 40puts. (This doesn't look that great even to my eyes)

    THX for helping us to stay objective .. .


  42. figures now that I added some calls the market is red. Will probably go down for the next 7 straight business days! I agree with most of this.


  43. TD/Wing – I think I meant Oct – the longest options.  All the rest were 2022 that day so I think I just forgot TD didn't go that far.  You can still make the adjustments we made – your issue before was you didn't have the margin to make the rolls.  If you have it now, you can now make the rolls but you missed the best opportunity to adjust so it's a little chasey now.  This is why iguana's get run over by trucks crossing the road – too slow!  

    I don't know when earnings are but probably May as Q4 was Feb for them.  My point about IBM was that, if you had to choose, IBM has far less issues than TD – as we still have no idea what kind of impact the virus will have vs. how much of a bailout the banks get and what kind of strings will be attached.  The put roll makes sense as long as the price is right and rolling down $10 for less than $5 is a good idea on any stock you intend to keep. 

    “Youth must be wanton, youth must be quick,

    Dance to the candle while lasteth the wick,



    Youth must be foolish and mirthful and blind,

    Gaze not before and glance not behind,



    Mark not the shadow that darkens the way-

    Regret not the glitter of any lost day,



    But laugh with no reason except the red wine,

    For youth must be youthful and foolish and blind!”



    Tennessee Williams, The Night of the Iguana


  44. What about KSS as a survivor in retail.  Budget shopper 


  45. NLY up $1 after hours.






  46. The Magic of Empty Streets