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Fuggedaboutit Friday – What Virus, I Don’t See No Friggin’ Virus?

It's over. 

We can all go outside and go back to work and enjoy a ballgame.  I'm relieved, aren't you relieved?  President Trump declares all is well as the US passes the level of 1/500 citizens being infected and 1/10,000 dead from the virus (so far).  One in 500 infected means that, if you go to a football stadium with 50,000 people in it – 100 of those people has the corona virus and can pass it to you easily if they come within 6 feet of you.  I'm sure that will be fine.

Trump was enjoying the virus as long as it was giving him "ratings" but now that his approval numbers have dipped in the polls, he's done with it so he's declaring victory and moving on – shifting the responsibility and future blame onto the Governors (as I predicted he would) who will now each be clearly in charge of their own state's timelines and protocols (because there is absolutely no leadership at the Federal level).  

Well, there are "guidelines" but The guidelines don’t suggest specific reopening dates. Instead, they encourage States to base their decisions on data. The White House’s plan says States should move to the first phase of reopening after exhibiting a downward trend of documented cases or positive tests over a two-week period. States could move onto the other stages after showing that cases aren’t surging.

Under the first phase, movie theaters (WTF?), restaurants, sports venues (WTF?), places of worship, gyms (WTF?) and other venues could open with strict social-distancing guidelines in place, though bars would stay closed. Schools and day-care centers that are closed would remain shuttered. The plan recommends that vulnerable individuals remain at home during the first phase, and prohibits visits to nursing homes and hospitals. Some people could return to work in phases, though telework is still encouraged under the plan.

dolittleYep, I just can't wait to go to the gym and hold onto that bar that 100 people have been holding before me!  I guess we could practice social distancing in the movie theaters, I think they were already practicing it when I went to see Dr Dolittle – as it was just me and my daughters and one other family in the theater…  ;)   

Moving on to the second phase, nonessential travel could resume and bars could open with some restrictions. Schools and youth activities could reopen. Vulnerable individuals would still be told to stay home and visits to nursing homes and hospitals would still be barred. Telework would continue to be encouraged.

Matrix Reloaded Rave (Zion Dance Party) - Aphrodite Mix GIF | GfycatFor phase three, there would be no restrictions on workplaces and vulnerable people could resume social interactions, but should seek to follow social distancing. Visits to hospitals and nursing homes could resume, and bars could increase their standing-room capacity.  The President said some states could begin to open up as early as this morning – IT'S OVER!

Congratulations, we beat the virus!  Of course, Dr. Fauci, who has clearly been taken hostage at this point, did mention: "There may be some setbacks. Let’s face it.  We may have to pull back a little, and then go forward."  Clearly he is not on board with this plan but, like any hostage video, he has to stick to the script and just hope the people at home will get the message from his tone. 

Facuci, who almost got fired last week for disagreeing with Trump in public, has decided he's better off toeing the line than leaving America without an actual expert in Washington but I will tell him now that if he tells Trump to drop dead and quits – he will have 24/7 access to the media anyway.  Look how hard it is has been to get rid of Scaramucci! 

Testing is still key and the President did his best to encourage people to take tests:

“I was a victim of the first test, meaning I had to go through it and I didn’t like what was happening when they tell you that it goes up your nose and they hang a right at your eye and it goes right to your eye,” Mr. Trump said. “You’ve got to be kidding. I called it an operation, not a test.”

Cartoon: Please follow Trump's coronavirus instructionsKind of reminds me of when Matt Lauer encouraged people to get prostate exams, right?  We have, in fact, tested 3.4M Americans for the virus and currently testing 150,000 people per day so just 326M people (98.7%) left to test although letting them all go to a ballgame to see who spreads the most is also a good way to test, I suppose.  Doing it through "operations" will only take us 2,173 days to test everybody but, of course, the tests are unreliable so it won't prove much anyway.  

By the way, that virus count is already out of date as the official Hopkins Tracker shows 671,425 cases in the US as of 7:38 this morning and that's up 31,761 (4.7%) since yesterday morning.  Globally we have 2,172,031 (+96,000, 4.6%) cases and 146,071 (+8,000, 5.8%) deaths with deaths, so far, being 6.7% of infections yet you hear Fox news and Team Trump downplaying the death rate by trying to convince everyone who had the sniffles this year that they are uncounted coronavirus victims.  

The purpose of this deception is to make you more comfortable going back to work – as if the 20% hospitalization rate and long-term lung, heart and kidney damage caused by the disease is simply a mild side-effect – like one of those drugs they advertise on TV has (but at least you won't have to pee in the middle of the night or get heartburn from eating spicy food, right?).   After all, workers are disposable but losing Corporate Profits – THAT is what we call unacceptable losses!  

S&P 500 Earnings Growth by Sector Q1 2020Earnings for Q1 have not been that bad so far but no one is giving guidance for Q2 as we're starting it off (April, May, June) with a full lockdown while Q1 was only really affected in the last two weeks of March.  So, if we get everyone back to work by May 15th, the overall economic damage will be mild and Trump can redirect that $500Bn Jared is in charge of towards – well, you can guess where it will go….

BUT (and I like big buts), let's suppose for just a moment that Trump's magic wand does not work and today we gain another 5% and 5% on Saturday and 5% on Sunday – that will put us at 775,000(ish) infection on Monday morning and there are still two week's left to the month so we'll be well over 1M (1/100) infections by May 1st UNLESS, of course, letting people back into the clubs, restaurants, movies and stadiums is exactly what we do need to stop the spread of the virus (otherwise, why the F are we doing it?).  

If that is the case, we might want to short the Trump Believer's rally this morning and that certainly means playing the S&P 500 Futures (/ES) short on a cross below our 2,850 line but we can also push the hedges in our Short-Term Portfolio to better protect our long portfolios:

  • Mike Henderson (mikeshenderson) on PinterestSugar ETF (CANE) – Just a bet that sugar will bounce. 
  • Apple (AAPL) – Our worst case is having to buy 700 shares of AAPL for net $150.  Yes please!  
  • JP Mogan (JPM) – Never bet against these guys.
  • Tesla (TSLA) – They are now at the point where I'd rather short them so let's take the money and run on this one.  In fact, someone is willing to pay us $100 for the June $800 calls so let's sell 2 of those for $20,000 and buy 3 Jan $800 ($220)/June 800 ($152) bear put spreads for net $68 ($20,400) so we're in the spread for net $400 if all goes well and, if TSLA is below $800 in June, whatever premium value remains in Jan will be our profit.
  • S&P Ultra-Short (SDS) – SDS is a 2x short on the S&P and it's now at $25 so a 20% drop on the S&P will push it up 40% to $40 and that would be a $200,000 net and currently the spread is net $44,000 so we have $156,000 of downside protection in this position.
  • Nasdaq Ultra-Short (SQQQ) – The Nasdaq has been very strong and this is a 3x ultra-short so, even at $13, a 20% drop bumps us 60% to $21 and that would put our $10 calls $11 in the money for $115,500 and the current net is $10,625 so we have $104,875 of downside protection in this position but we can sell 100 June $25 calls for $1 ($10,000) and buy 100 June $13 calls for $2.25 ($22,500) and that will give us another $120,000 worth of protection and, if SQQQ does spike up, we can cash out the long calls quickly because the short calls will be covered by the 2022 $10s.  Not bad to add net $107,500 worth of protection for $12,500 – I know I will sleep better over the weekend!  

See how easy it is to hedge your portfolio?  Wouldn't it be foolish not to do it?

Have a great weekend, 

- Phil

 


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  1. /cl/Phil- Good Morning, when do you plan to switch to June contract? Thx



  2. People using facts and data – such a novel idea at the WH:

    https://techcrunch.com/2020/04/16/new-mit-machine-learning-model-shows-relaxing-quarantine-rules-will-spike-covid-19-cases/

    MIT has developed a new model of the spread of COVID-19 infection, based on publicly available data, combined with established epidemiological equations about outbreaks, and neural network-based inference. The model, described in a new report, proves accurate when trained on data spanning late January to early March in terms of anticipating the actual spread leading up to April 1 in different regions around the world, and it indicates that any immediate or near-term relaxation or reversal of quarantine measures currently in place would lead to an “exponential explosion” in the number of infections.

    Let's all go to the ballgame!


  3. In the meantime we have all the nutjobs out there egged on by Fox News people comparing governors who have to make the tough decisions because Trump won't make them, to Hitler and asking them re-open businesses because it's only like a bad cold and only old people will die anyway. 

    A man holding a sign incorrectly insisting the pandemic is just cold season in Virginia, April 16.A man holding a sign incorrectly insisting the pandemic is just cold season in Virginia, April 16.


  4. /Phil

    HI

    If one should open a new portfolio right now, what are in your opinion the 3/5 safest positions in your portfolios? What stocks would you select? May be is better to wait a bit for a retracement down?

    Total budget 50k

     30k to invest and 20k on the sideline to DD eventually?

    thanks


  5. Good Morning.


  6. I would not be surprised if the market 'celebrates' with a down day….


  7. Goldman says sell AAPL


  8. Oil has not shared the enthusiasm of the market….


  9. Is there some weird USO rolling also going on killing the current month (per seeking alpha)?


  10. BDC / BA — talk to me man!!


  11. Pharm / sorry!  / BA,   whats your plan?  still with the 100% 1/2 off?


  12. Out of 1/2 BA.  Letting some ride, and may re-enter.


  13. As the Wisconsin voters have shown, let the righties keep talking. The more they denigrate  "old people" the better. There is a huge bulge of the "greatest generation" and "boomers" and most of them vote. We are fortunate up in No Wisc to have very low infection rates, BUT there are basically no tests available. I did not hear one complaint from anyone about Gov Evers extending the stay at home order until May 26. Minnesota is doing the same. The states are coming up with some aid for people too, but the schools are closed for the rest of this school year. When they get that antibody test widely available it will be interesting who has actually had the virus & recovered. Everyone is wearing masks up here too.


  14. I'm in Ohio been locked down for awhile no one wearing masks though


  15. And we have lift off!!!


  16. I think maybe trump made a deal with putin and saudis where he promised to have goldman sacks push oil down to achieve the extra ten million barrel production cuts to achieve the maybe 20 million barrel cuts he mentioned.it wouldnt be the first time he messed with oil market to get what he wants.


  17. Pharm—out of 1/2 BA—-thank you


  18. Good morning!

    I'm always happy when I find a cheap hedge…

    Note the TSLA play above and the SQQQ addition for the STP – it might not have been finished when you first viewed the post:

    • Tesla (TSLA) – They are now at the point where I'd rather short them so let's take the money and run on this one.  In fact, someone is willing to pay us $100 for the June $800 calls so let's sell 2 of those for $20,000 and buy 3 Jan $800 ($220)/June 800 ($152) bear put spreads for net $68 ($20,400) so we're in the spread for net $400 if all goes well and, if TSLA is below $800 in June, whatever premium value remains in Jan will be our profit.
    • Nasdaq Ultra-Short (SQQQ) – The Nasdaq has been very strong and this is a 3x ultra-short so, even at $13, a 20% drop bumps us 60% to $21 and that would put our $10 calls $11 in the money for $115,500 and the current net is $10,625 so we have $104,875 of downside protection in this position but we can sell 100 June $25 calls for $1 ($10,000) and buy 100 June $13 calls for $2.25 ($22,500) and that will give us another $120,000 worth of protection and, if SQQQ does spike up, we can cash out the long calls quickly because the short calls will be covered by the 2022 $10s.  Not bad to add net $107,500 worth of protection for $12,500 – I know I will sleep better over the weekend!  

    June $13s came in at $2.30 but the $25s are trading at 0.85 and that's not a compromise I'd make – I'd rather sell the $23s (now $1) than pay extra for a spread we hopefully don't need.  So my plan is to wait and see if we get the $1 for the $25s and, if not, then look at alternatives – which can include selling longer months, like 40 Jan $30s for $2.60 (still $10,000).

    TSLA June $800s are $108, so no worries there.  The $800 puts are $141 though and the Jan $800 puts are still $222 so yes to selling the short calls but waiting a bit on the others to see if we get better prices. 

    /CL/Ravi - I already bought June contracts (2 for $25) yesterday on the dip but still have 2 May contracts (now 4 as I added 2 more at $17.50 to average $19.50 – now happy to get out close to even if possible but out today) as I was greedy and waiting for $20.50, which never came so I'm down about $5K on those.  If $25 doesn't hold I'm out and I'll get back in on a cross back over or $22.50.

    /NG still flying and /RB paying us well.  I regret not flipping my /CLs to more /RB – it was a safer bet. 

    Big Chart – We need another index over the 50 dma to confirm a rally.


  19. /CL/Phil – Thanks


  20. Next week's $190 BA calls are ~1.02 as I am writing.  IF you really like to play an up move….those are a good way to roll the dice. I bought just a few to watch the game unfold.  


  21. Wuhan death toll now reported to be 50% higher than previously reported.

    (The Chinese authorities were waiting  to see if the 'borderline' dead people would come to life and after waiting for a couple of months, it did not seem likely- thus the revised numbers????????????????:):)my::


  22. Parm, thanks.  Just grabbed 30m worth


  23. Exponential explosion/StJ – Well no shit!  How is it that people still don't understand how viral transmission works after talking about it for 2 months?  

    “We must not be hasty,” Ms. Merkel said. “We must learn to live with the virus as long as there is no therapy and no vaccine. This is about the lives of people.”

    I was asked if I take back what I said about Trump yesterday in light of yesterday's actions and I said "Not at all – this is exactly the reason he is too dangerous to leave in office!"  This is not going to be a minor inconvenience – if this goes wrong (and we don't know for sure either way so why not error on the side of caution), this could completely wreck the country.  Putin wins again!  

    Trump's act of treason - Baltimore Sun

    Right now/Rag – Well I'd wait a good week to see what's really happening and, in our reviews, I already note things that are good for a new trade and I'm sure there were 5 yesterday and there will be 5 in the LTP review later, I'm sure.  

    Death toll/1020 – Amazing!

    Despite the United States suffering a staggering 4,500 deaths in the last 24 hours — taking the national toll to almost 33,000 — Trump proclaimed: "We're opening up our country."

    GS/Coulter – I guess they don't want a rally yet.  

    Oil/1020 – That's because oil tends to trade more on Fundamentals than BS. 

    USO/RN – Well USO has to dump their longs and roll to the next month as well because they are effectively traders who don't REALLY want to own the barrels, right? 

    Great call Pharm.  Not sure what the good of restarting production is when their customers are all closed but we'll see.

    Recovered/Pirate – That is the biggest load of crap Fox is peddling.  They are relentlessly convincing people that if they had a cold this winter it was really corona-virus, which then "proves" it was no big deal and all this is some liberal plot to force people to get vaccines and get tracked on their phones, etc.  It's really off the deep end but, down here in Florida, I'd say as many people believe it as don't. 

    View image on Twitter

    Image

    “The short-term crisis, the ones that we worried about so fervently in which pressure on hospitals grew so exponentially day by day, with no end in sight — that short-term crisis may have passed,” argued Fox News host Tucker Carlson on Tuesday. He added that “now it's time to look ahead” and begin discussing how to get Americans “back to work.”

    “Shouldn't this experience make us less willing to rely on the same experts to help determine when and how we should reopen our economy?” Laura Ingraham asked later that night, making air quotes with her fingers as she said the word “experts.”

    Fox’s prime-time programs are pushing three major flawed premises which together suggest to the network’s audience that the danger posed by coronavirus is relatively low and no longer justifies the measures government officials have taken to curtail its spread. 

    Top-rated Fox shows fixated Tuesday night on how recorded COVID-19 death totals are coming in lower than the initial projections and using that disparity to question the public health response to the coronavirus. According to Fox senior political analyst Brit Hume, the numbers suggest that “the disease turned out not to be quite as dangerous as we thought,” while Ingraham claimed that the numbers show the U.S. should have taken action “less damaging to the economy.” 

    Fox personalities also suggested that the recorded death tolls under discussion are themselves inflated. Hume honed in on how “all deaths from anyone who died with coronavirus is counted as if the person died from coronavirus,” claiming that this is not “an accurate count” of the “real death total.” Carlson responded by suggesting this was a deliberate effort by reporters to get an “inaccurate death count.”

    And of course, all three Fox prime-time shows continued the network’s rampant promotion of the use of the antimalarial drug hydroxychloroquine as a treatment for COVID-19. The hosts were particularly interested in denouncing media figures and doctors who questioned its effectiveness, with Ingraham openly laughing at a doctor who had said during an earlier Fox interview that the drug might have a “very mild effect” at best.

    ?The message Fox is sending its viewers is quite clear: Coronavirus isn’t as lethal as the experts originally said, the steps they called for in response are unnecessary, and if you do catch it you can just take some hydroxychloroquine and recover “like Lazarus.” This is putting them in real danger by suggesting that they don’t need to practice social distancing and other public health measures. That could have a calamitous effect — a top GOP pollster warned last month that Fox’s coverage was making the party’s base more likely to dismiss the virus and skip the steps needed to combat it.  

     

    At some point, the president is going to have to look at Drs. Fauci and Birx and say, we're opening on May 1. Give me your best guidance on protocols, but we cannot deny our people their basic freedoms any longer.

    Mel Gibson Freedom GIF - Find & Share on GIPHY


  24. So when is it time to close out RB? I find that I end up booking profits too soon… 

    SB turned out good too, up 4% since it hit that 10 cent line a couple of days ago… 


  25. Take back/Phil  Please don't feed the 'pigeons'…. ;)


  26. /Phil

    thanks Phil will wait, i was hoping for a bit of consolidation, but it seems FOMO is here again, with no real good news on Covid, I will see what you point out in next LTP review

    thx


  27. QQQ back to Jan 1 price of ~213 means nasdaq hasn't fallen this year at all.

    What virus?

    Perhaps May expiry will look more like March's, but April was all about the calls!


  28. Got into HYG May 76 puts for 1.09


  29. BDC – whats your thinking on HYG?

    thanks


  30. The narrative for Fox now is clear: get trump re-elected.  People start voting in 154 days. In 6.5 months it's all over. We're down to the last 1/8th of the time period between elections, so we're in the home stretch now. The narrative seems to be "get to the election and worry about what's really going on after." Blame Gates based on conspiracies, play down deaths, play down spread, show videos of foaming at the mouth protesters complete with pro-violence rifles. Do the usual and customary misinformation, division, neighbor against neighbor, lies, fact cover-ups.

    It'll work, it always does. Wasn't someone in here saying just a couple weeks ago we'd never get to  "a few hundred thousand cases?" I mean we hit that in the immediate future afterwards. It's just very weird.


  31. Potter, I was reading a fun manager talking about how a few weeks ago you couldn't find anyone to buy AAA gov't securities and now people are rushing into BBB- like it's got the stability of gold. I don't think the volatility is currently priced in correctly with all the default unknowns. Sure the gov't through trillions, but it was haphazard and mismanaged, a lot of money going to where it's needed least.

    I think all the rose-tinted glasses crap stops we'll start to see what really happens when unemployment goes from 200,000 to 17M in four weeks.


  32. Bertk-Masks are used here when you have to go out. Used in grocery stores, Drs offices. It's obvious  to most sane people not to take unnecessary risks concerning this virus. IF PEOPLE CHOOSE TO LIVE CARELESSLY then there is nothing we can do about it. Dream on BA-back in the air like booking a cruise. How damn dumb can people get.


  33. /RB/Rn – Already stopped out at 0.725 after testing 0.74 and failing – no point in holding them for the weekend.  /RBM20 is 0.75 but I don't want to risk the weekend as I already have the oil longs killing me.

    Same goes for /SB – that's good money, why risk it?  

    Berkshire/Pstas – Very smart.

    How dumb/Pirate:

    Think about how stupid the average person is, and then realize ...


  34. Thanks Phil- I've used that Carlin quote and I just laugh. Listening to him and his rants still make me think how right he was on so many things! Food bank went good yesterday. We have tons of supplies and people are picking up donations. They come to door and depending on number in family they get a box full of everything and we run down to the room to pull the meat and dairy they want. They are all so grateful for the help.


  35. And to this day, there has never been anyone that has realized that they are in the bottom half


  36. Dawg – I guess that's why 'self reflection' is not part of that 'half' as well…. :(


  37. Long-Term Portfolio (LTP) Review – Part 1:  $542,305 is up about $40,000 since Wednesday afternoon but down from its $600,000 peak on Tuesday.  Still, it's about the potential, not the day-to-day gyrations so we review our positions and make sure we still believe in the Fundamentals and the risk/reward of each one.  

    • AAPL – Opportunistic put selling (twice) and I'm not worried about owning AAPL.
    • ADP – I don't know when jobs will return and we have a nice gain so let's kill it.  
    • BA – Take the money and run.  
    • CAT – Up 50% in a month with two years left to go – kill it! 
    • CLX – That one I think people need no matter what.  Miles in the money – I'd even sell those now.  
    • ET – 20 short $10 puts sold for $4,400 obligates us into 2,000 shares at net $15,600.  Now they are $12,050.  If we roll to 30 of the 2022 $8 puts at $4.20, that's $12,600 (+$550 in pocket) and our obligation is to own 3,000 shares at net $19,050 so very little additional risk and we drop the strike 20%.

    • HBI – Even zombies need underwear.
    • IBM – And computers (brains!).
    • INTC – And chips for the computers.  
    • JO – And coffee.  
    • LMT – And fighter jets.
    • MDT – And medical devices 
    • MTN – Not sure if we still need to ski in a zombie apocalypse but it's a nice low-contact sport (except for the lodge) so I'm thinking I want to stick with Vale at this price (net $85.40).

    • STZ – Liquor should be doing well.  
    • THC – I'm a little worried short-term but net $10.50?  Not worried.  

    • SIX – Their summer is going to be shot and it's a small loss so let's kill it.
    • PAA – Ridiculous sell-off and we already doubled down so nothing to do but wait.  They are going to pay a 5% dividend (out of 20% annual) on 4/30 – about 0.32 so $2,560 off the table.  


  38. Dawg-Majority are single living on their own men and women. Many are disabled. Many have catastrophic medical problems. Many are caring for disabled individuals. Loads of extended families' grandparents with children, close family members, adults, living together. All varieties with needs. They can only come once a month, but now they can get some emergency help too if they are food challenged.


  39. Stupidity and The Bug – now you all see the primary problem with the US public health approach. It relies on individuals to follow some protocol or other, everything from preventing diabetes deaths by exercising and dieting, preventing measles deaths by vaccination, or covid19 deaths by masks and isolation. We could look and see what Asia did, and use that – but, no, China lies, they're far too authoritarian, we could never let government have that much control over us (although corporations having all our data is okay), and, okay, Korea isn't authoritarian, or is it, and aren't they poverty stricken and practically at war? https://medium.com/@NicosHadjicostis/coronavirus-the-arrogance-of-the-west-8a4dbb1bbe2d


  40. Arrogance is at the core of stupidity….


  41. Hi Phil:

    Today's trade idea on TSLA….am I right to say that it has unlimited risk on the upside?

    TH


  42. Long-Term Portfolio Review (LTP) – Part 2:  

    • ALK – I'm not happy with the scope of the airline bailout but it's a small position that puts us in for about $25 on 1,000 (1/4 allocation) so I'm willing to have ONE airline stock in the portfolio.
    • AMZN – I don't know why the puts are here instead of above.  Do we want to wait 2 years to collect 1/3 or move on?  I say take the money (and remove the risk) so we have room to sell on the next dip as I'd almost rather be short than long at $2,400 ($1.2Tn).  
    • AVGO – Boy did we time that well!   This is the problem when our 1/4 position goes too well at the beginning – we don't get a chance to add more…  Still, it's a fat, $120,000 spread we acquired for a $36,570 credit so we have $156,570 upside potential if AVGO hits $320 and it's currently $29,300 so up $65,870 in a month is only "on track" to our expected gain.  How crazy is that? 

    • BRK.B – Very happy to back Buffett in turbulent times.  10 years ago people were worried he would die – now I don't think they think it will ever happen…  
    • CMCSA – What a no-brainer this one was!  Again, only a 1/4 entry unfortunately but on track to $15,000 at net $6,537 is good for a new trade for normal investors who think making $8,463 (129%) in 20 months is a good trade.  You guys are just spoiled!  

    • CSCO – Another stock for the zombie apocalypse.  I see no need to cover this low.
    • DFS – I am not enthusiastic about the stock as I think consumers will be suffering for a long time but we got such a great price let's just buy back the short puts to reduce the risk and leave the $45,000 spread at net $21,300 (less the $1,060 profit) to hopefully give us a double.  If DFS goes lower, THEN we can sell puts again and roll (if we don't think the disaster will be long-lasting).  

    • FCX – Long, slow road to recovery but maybe they do infrastructure spending.  I'm willing to commit to 40 long at a lower strike (net $6.65 so far on 20) so we can wait and see how it plays out.
    • GILD – I wish we'd bought more but it's only a $15,000 spread at net $6,675 so far so let's just double down for another $6,675 to make another $8,325 (124%) with no hassle.   

    • GM – Perfect entry on this one makes it hard to lose.  I think we can leave it as it's a $35,000 spread and just net $6,000 so $29,000 (483%) upside potential if GM can get over $25 in two years.  Good for a new trade?  Ya think???  

    • IMAX – DIS says they will release Mulan in July, which is when I predicted people would be back in the movies and DIS is not going to get PR that they killed children so, if they don't change that date – I think we can stick with the IMAX longs as it's a sign things will get back to normal.
    • LABU – Biotechs?  Duh!  I can't believe they went on sale in the middle of a virus crisis.  We're almost in the money already on our $40,000 spread that we bought for a net $13,000 credit and now it's net $14,700 so we're up $27,700 but still $25,300 left to gain so I think we'll keep it.  As a new trade, it's still got a 172% upside potential so good for a new trade if you like safe, boring ways to make 9% a month.

    • LB – I can't believe how much they want for those $22.50 calls!  Based on that alone we can't get out of the position as I would never pay that to close them.  It's a $75,000 spread at $22.50 and currently net $14,700 so $60,300 (410%) upside potential but I don't think we get to $22.50 very easily.  Still, risk/reward makes this good for a new trade.


  43. TSLA/Hicket – Yes, if TSLA goes to $2,000 you owe $240,000 on the 2 short calls!  

    Indexes holding up OK but, on the whole, it's a flat week:

    Less so for the Nas:



  44. PAA – Just took a poke at PAA as follows – bought shares at $7.05, sold May1 $7.50 calls for $0.35. Will have the shares on the ex-div date so +$0.18 there, if they get called away then profit of $1.03 on $6.70 cash outlay or 15.3% in two weeks and no margin required. Or, I'm stuck with the shares at $6.70 net and will have to sell more calls.


  45. Phil / AAPL

    i'm currently Apple'less in my portfolio.  Avoided chasing BCS at any point as i just wasn't in the right place at the right time. Oh well.   However - What do you think about selling some June 22 puts at this point?

    $200s are $19.50

    $150s are $8.50 – im leaning here.. 

    thanks


  46. Phil / IMAX – I have no position on this right now….. for a new position on this – would you go to the dec 10/15 w/ a 12 putter?  or start with Sept and keep Dec for a possible role?  Thanks, 


  47. I wonder if as president can be impeached for fomenting civil war (or at the least civil disobedience but we have pictures of armed goons in front of the governor's mansions):

    https://talkingpointsmemo.com/news/trump-call-liberate-michigan-virginia-minnesota-governors-protests-supporters

    President Donald Trump posted several bellicose tweets on Friday about the states where some people, including his supporters, are protesting their governors’ stay at home orders.

    Trump first tweeted “LIBERATE MINNESOTA,” followed by “LIBERATE MICHIGAN,” then “LIBERATE VIRGINIA.”

    “And save your great 2nd Amendment. It is under siege!” he added in his tweet about Virginia.

    I wonder what he will post if he loses the election! But still perfectly normal behavior.

    So we can worry about the markets – I will worry about where this will end!


  48. The antidote to mis-information from POTUS and the far right….  :)

    themarysue.com/steak-umm-twitter-account-coronavirus-truth-telling/

     

    https://twitter.com/steak_umm?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1247343900475490304&ref_url=https%3A%2F%2Fwww.themarysue.com%2Fsteak-umm-twitter-account-coronavirus-truth-telling%2F


  49. Pharm / BA

    holding through the weekend?

     

    thx


  50. PAA/Dawg – Good plan but you can sell the 2022 $8 calls for $1.85 so the one sale gives you a $1.50 lower basis (and better protection) and 0.50 more upside.  That's why I prefer to go out longer.  Less chance of being called away too.  You can also sell the 2022 $5 calls for $3.20 and that's net $3.85 so you could buy twice as many shares and still not care if you get called away. 

    AAPL/Potter – Well, you can sell the June 2022 $200 puts for $20 and that's net $180 so I consider that a freebie and then you have to decide what you are really willing to risk.  The $240 puts are $33 so net $207 by comparison and, as you note $8.50 for the $150s but you just have to decide how much AAPL you REALLY want to own.  I would rather sell half as many $200s as you can always roll them down 2x to a lower strike.  You could also wait for earnings and hope they miss or warn.

    IMAX/Batman – As noted above, I would not be too aggressive as it's not enough time to be sure.  The $10s are all premium so why would I buy those?  The $5s at $7 have just $1 of premium and then I can sell the $10s for $3.60 to some sucker willing to pay $2.60 in premium (can you imagine?!?) so it's net $3.40 on the $5 spread and sell the $7 puts for $1.60 to drop the net to $1.80 with a $3.20 (177%) upside potential which, I have heard, is considered a nice return for 8 months.  I get that profit before your spread breaks even.

    Trump/StJ – Wow, that's just full-blown insane!  I've never heard of a President calling for the American people to overthrow a state government – or did I miss something in History Class?  


  51. Trump / Phil – And you will see people on the right making the usual excuses – it's just Trump, he says stuff I would not say, I have not seen the tweet, etc… And people will get hurt!



  52. PAA – I thought about doing the LEAPS, but this is a small account I'm experimenting with to see if I can knock out 5% a week. Doing short tems trades and futures only. Just for fun – it's only a $25,000 account. The real value of it is that it helps me sit on my hands on my other accounts instead of over-trading. I think of it as a $25,000 hedge against my own inability to sit quietly in a room alone.


  53. 1) Seems SLV would be a good butterfly candidate.  Over the past few days, I legged into the Jan 21 12P and 18C with the short July 15s for a net $1.45 debit.

    2) TSLA June 300P for $6 seems like a reasonable bet.  The $400s are currently $12.10 so a $100 pullback would be a double up.  I think you'd have to get out before earnings though.


  54. I was looking for a cheap hedge against my short TSLA 2022 $1200 calls ($141)

    There aren't any!

    TSLA 2022 $1800 calls are $70 (and that only cuts loss to $52,900 per spread)

    WTF


  55. Pretty good move happening in bonds… are we about to get Mr. Stick into the close? 

    Pharm – I've been playing CCL call weeklies the way you're proposing with BA. Total gamble, only risking about 25% of my gains from a longer-term position. Two weeks were full losses, and two weeks were average 12x winners. I'll take it :)


  56. Long-Term Portfolio (LTP) Review – Part 3:  

    • M – We repositioned and doing a little better but nothing exciting so far.
    • MIDD – I'm very confident in this one coming back over time and the new spread is conservative. 
    • MJ – We're in the money on the news spread with lots of room to grow.

    • MO – $75,000 spread already at net $31,425 with another $43,575 (138%) left to gain is good for a new trade if you don't mind "only" making 138% (we started at net $0 last month). 

    • RH – Still has that new trade small but already up $19,000 in it's first week.  They went down for a stupid reason so we bought them – not complicated.  It's an $80,000 spread that's 100% in the money at net $20,525 so I'd call that good for new trade, wouldn't you?  

    • SKT – Well I would buy a lot more if we hadn't been so burned on FTR, which I also did not think would actually go BK.  So we'll leave this alone for now.
    • SPWR – I love these guys and certainly good for a new trade.  
    • TD – I'm nervous about them as the oil is killing Canada so let's kill this spread.  Options are too short-term to afford a mistake and we have a nice profit to lock in.

    • TOL – Also not worth the risk in this environment and we have a nice profit, so kill it.  
    • TXT – Here I see value and it's a $68,750 spread currently net $14,138 so good for a new trade but I'd sell the $35 calls for $4.25 to net in for $8,513 on the $43,750 spread instead.  

    • VALE – Hoping there will be an infrastructure bill at some point. 
    • VIAC – Seems crazy cheap to me and we're 100% in the money on the bull spread which is $50,000 and it's at net $4,925 so $45,075 (915%) left to gain if Viacom/CBS is over $17 in 20 months.  May as well sell everything else and put it all on this one!  

    • WBA – On trace and we're very aggressive only 1/2 covered which is nice because now we can sell 30  2022 $52.50 calls for $4.50 ($13,500) to help pay for 20 more 2022 $40 calls at $9.50 ($19,000) so for net $5,500 we bought 20 $12.50 spreads ($25,000).
    • XOM – This is a tough one.  I think the puts are low enough and the spread was net $0 (ish) so it's a free $22,500 spread that's $18,000 in the money but it's net $25,280 already due to crazy option pricing so we're taking the bull call spread money and running!  The short puts we can leave as they'll pay us another $11,925 if XOM stays over $27.50.  

    Well, I didn't do an official count but we have around $700,000 of upside potential in this portfolio and we have some very nice hedges in the STP and we just took a considerable amount of risk off the table so all is well in the LTP into the weekend!  


  57. LOL 1020.  

    And what John Mulaney said, StJ!  

    Here's my favorite philosopher of our time (Ricky Gervais is 2nd):

    Ah, discipline, Dawg.  That's a good idea. 

    SLV/JPH – Doesn't pay very well in the front months but it certainly channels the way we like.  TSLA puts a good idea in case reality strikes.  

    TSLA/Coulter – Impossible to hedge with those ridiculous premiums.

    Bonds/Ati – Just choppy nonsense


  58. VIAC 2.X PE


  59. Gotta love Eddie Izzard! Have a good weekend everyone.


  60. VIAC/Kustomz – They survived the Great Depression and WWII but people think they can't survive a virus.  

    Mr Stick rides into the close!  All is well.  2,850 – who'd have thunk it?  

    Clearly no one is worried:

    Have a great weekend folks,

    - Phil


  61. /ES 2879 is a must


  62. Wow! CHK had a 1:200 split on 4/15.



  63. Trump tweets warnings at governors who are taking his own advice. Imagine that.



  64. Bill Gates, at Odds With Trump on Virus, Becomes a Right-Wing Target




  65. Pro-Trump protesters push back on stay-at-home orders





  66. G7 backing for WHO leaves Trump isolated at virtual summit


  67. White House moves to weaken EPA rule on toxic compounds




  68. Phil/USO

    What do you think of this? Contango in the oil market leading to a drop in USO as shut ins cause the contract rolls to push the June contracts down. 
     

    If You're Betting On Higher Oil Prices, USO Is Not The Right Vehicle
    https://flip.it/wnNTor


  69. I think that's a valid point, USO may have a huge rollover issue that is crushing it and obviously has crushed it the past two weeks.  Still, it's not the "wrong" vehicle as clearly US went from $4 to $6 (our July goal) between 4/1 (when oil was $20) and 4/3 (when oil was $29) and now oil is $25 and USO is $4.21 but that's because this is a new contract and USO tracks more of a blended average.

    Over the longer- haul, USO pretty accurately tracks WTI's longer-term trends so getting chases out by a guy who bases his premise on looking at the hourly chart during the rollover MIGHT not give you the clearest picture of it's prospects:

    There's also a sentiment factor to USO and, if enough people believe HFI Research and dump it – it will get cheaper and that will force USO to dump oil as money flows out of the fund and it's a self-fulfilling prophesy but then bargain hunters who never heard of HFI (and probably include HFI) come in and buy USO which forces USO to buy oil contracts and that forces the price of WTI to shoot higher and then you go "WTF?  Who is buying oil like crazy and driving the price up?"  

    The Global Oil Scam: 50 Times Bigger than Madoff | Seeking Alpha


  70. a close up of a graph

    a close up picture of a cup

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    a close up of a graph

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    You're not hungry. You're bored. Shut the damn door | Something To ...



  71. Trump tweeted "YOUR great 2nd amendment," not "OUR great second amendment."

    Kind of a freudian slip but it's interesting because that's what's really going on with him: there's the elite rulers (trump and his family) and then there is his minion base. The little people have their own things.


  72. Carlin was technically discussing median stupidity, not average stupidity, but you'd need to be in the top half to understand that anyhow, I suppose.


  73. a close up of a graph

    Nasdaq 100 Green YTD, EPS expectations freefalling... | The Market Ear

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    a close up of text on a white background

    https://realeconomy.rsmus.com/bending-the-curve-and-determining-when-to-reopen-business/

    The administration throughout the day on April 16 released information to the media on what appears to be a schedule to stimulate public comments and discussion on a staggered reopening of the economy. The incremental opening will likely proceed as follows:

    • May 1, 2020: Nationwide campaign to communicate plan
    • May 1, 2020: Staged reopening for low-risk areas
    • May 15, 2020: Leverage testing capabilities
    • June: Controlled relaxing for moderate-risk areas

    According to a recent poll by Gallup, only 20% of the public is ready to immediately return to normal activities, while 71% prefer to wait to see what happens and 10% are willing to continue to limit contact and social activities indefinitely.

    This data implies that the federal government has a significant policy challenge ahead to convince the public and private sectors to quickly return to normal social interaction.

    Essentially the data implies that roughly 12 weeks after the exit from quarantine of workers, the economy will boom. However, the resurgence will likely be truncated via a second wave of the virus and a recession unleased by a higher death rate and reduced labor productivity. This is analogous to what occurred during the Spanish flu pandemic of 1918-1919. In the United States, when politicians and the public grew impatient with the quarantine policies of the time, politicians lifted the social constraints, setting the stage for a much more deadly epidemic and more costly depression.

    ?

    a close up of a graph


  74. I wonder where valuations will be once we get numbers from Q2!


  75. That’s what happened in 2008, when the earnings were revised everybody realize that all the forward projections were total bullshit and the PE ratio’s skyrocketed.   


  76. This is the reason I still gotta be careful about going long. We are going to have the biggest multiple expansion in the last 90 years or markets will correct again. It has the potential to be worse than 2008 as this is affecting a lot more businesses and people.


  77. USO does a much better job of tracking oil when we aren’t in super-contango, but there is a much larger tracking error due to high roll cost.  Evidence of this can been seen by looking at the term structure of /cl futures.  I also saw someone pointing out that there is evidence that a ton of retail money (like us) has piled into USO, and there is speculation that many will dump when they realize that the contango condition screws up their play. It might make more sense to take the other side of the trade. If we have really depressed oil usage for the next few months, USO will get demolished, because of the substantial monthly roll cost. I’m kicking myself for not taking profits on that BS spike when Trump announced the production cut. I sold on Friday for a small loss. another way to play oil is to buy a basket of oil tanker stocks, which should benefit from the dwindling amount of storage.



  78. We have protests in Delray Beach too.  
     

    In case anyone is interested, the news posted under the review – because it's the latest post.  


  79. 1020

    No one knows what to think of my Encinitas Surfboards license plate frame in Minnesota.