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Monday Market Movement

Yet another chance to short oil at $43.50!  

What a great way to start the week and we had 3,500 on the S&P (/ES) and 12,000 on the Nasdaq (/NQ), 28,750 on the Dow (/YM) and 1,585 on the Russell (/RTY) this morning and the best way to short the indexes is to short the laggard.  In other words, wait for at least 2 of the indexes to cross below those major lines and then, as soon as the 3rd one crosses below, short that and STOP OUT IF ANY of the indexes goes back above their line.  If the 4th one confirms by crossing under – you are probably in great shape.  That limits your losses but not your gains – it's a money-management style of playing that can be very effective in the long run as a single win can cancel out many losses.

Tesla (TSLA) split 5:1 and Apple (AAPL) split 4:1 today so Tesla shares went from $2,213 to $442.60 and AAPL went from $499.23 to $124.80 and both are up slightly on that action but they've been bid up so much the past few weeks in anticipation of the split that I don't think there's much gas left in the tank but I did say that at $1,250 on TSLA and again at $1,950 (now $390) and so far, so wrong on that one.  

No matter how you split it, TSLA is a one-stock bubble and $450 is a market cap of $415Bn – more than the ENTIRE rest of the auto industry combined and they sell 100M cars per year and TSLA sells 400,000 or 1/250th as many.  So, unless those cars cost $10M each with a 15% profit margin – their valuation makes no sense at all.  You can't "grow into" that sort of valuation.  Even if TSLA were going to be the ONLY car company in the World with the best margins in the World (car companies generally make 10% or less) – how long would that take?   They are being priced like that now!  

Elon Musk puts his case for a multi-planet civilisation | Aeon EssaysYet people are paying it.  There's a sucker born every minute but now that they've done a stock split, 5 more suckers can afford their stock – that's the dream – the same dream that says Tesla will roll over the entire auto industry, wipe them out without a fight and figure out how to make a profit without government support, which averaged over $5,000 per vehicle last year.   If the World governments had to support the entire auto industry to that extent, it would cost $5Tn/year just to subsidize TSLA's World Domination scheme – no wonder Musk is going to Mars – he'll need a antoher planet after he bankrupts this one.

Yes, the stock market is very silly and we are very much in CASH!!! as this rally is very overdone.  It might go up more – that's what bubbles do – but it also might not and, if we can't tell which is which, it's safer to be cautious than not.  Just common sense.  Common sense that should also be applied to fighting the Corona Virus but we're giving up on that one too as my daughters went back to college this weekend and the little ones go back to school next week (Monday holiday first) and that's going to be a disaster of biblical proportions so yes, we're sitting this week out and waiting for the other shoe to drop as we "spike the curve" because 1,000 American Deaths per day are clearly not enough for the Death Cult that's now in charge of our country.

The world is a vampire, sent to drain

Secret destroyers, hold you up to the flames

And what do I get, for my pain?

Betrayed desires, and a piece of the game – Smashing Pumpkins 

It's not a very exciting data week, we only two scheduled Fed speakers and we'll have the Dallas Fed Report on Monday (10:30), PMI, ISM and Construction Spending (which should be strong) on Tuesday, Factory Orders and the Beige Book Wednesday, Productivity and PMI & ISM Services Thursday and the all-important Non-Farm Payroll Report Friday, which takes us into the holiday weekend.

It has, so far, taken the average college 2 weeks to change it's mind about having in-person classes as cases began spiking immediately.  I think it will take 2 weeks for Team Trump to begin denying there's a problem and they intend to keep ignoring it into the elections, still over 2 months from now.

Good night and good luck!


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  3. Phil,

    Would like your feelings on CTXS for a close stop, boredom trade (selling puts) with stock at 144 down from eps-related spike high of 173 with short term support – from those techie guys - at 135. 


  4. Good Morning.

  5. both TDAM and Schwab acting squirrely here

  6. Greetings all.

    Phil / re Rolling guidlines. 

    I read a comment here once about rolling "rules of thumb" and I cant recall what your advice was.

    Example:  I currently have 20 x Sep 30 2020,  SPY 325 Short calls. Credit recieved $17.05, Now $26.97. SPY currently $350.35. So there is only $1.62 in time value remaining and 30 days left. 

    Usually I wait to the last few days before expiry but is there a beter time to roll in this situation? 

    Thanks in advance. Still learning and nothing comes close to PSW for proper Options education. 

  7. Good morning!

    LOL, StJ! 

    And happy 6M cases, by the way!  Congratulations everyone – we did it!

    Was 4.6M on Aug 1st so up 30% in the month – super!  

    • July 1st was 2.6M so we are slowing down a bit.
    • June 1st 1.8M 
    • May 1st 1.1M
    • April 1st 190,000
    • March 1st:  30

    Whee on the indexes! 

    Don't be greedy – very dangerous times.

    CTXS/8800 – Wow, I haven't thought of those guys in years!  Income is down a bit but not too affected but 24x normal earnings ($6) is a bit steep for me.  They are in a good channel until it breaks but you'd better set those stops.

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  8. I love this guy!

  9. Phil hahahah – Kens White Flight Dream House.  Brilliant

  10. Phil / INTC – there are some naked calls in one of the portfolios – would this be good time to cover this?

  11. batman,

    INTC Even that the stock moved up today one dollar, I feel the stock still stands on the bottom of the ladder, selling calls now could limit very early your profit potential. I would wait still a bit.

  12. Rolling/Youngy – If you sold a call and it's getting away from you, you generally want to roll it while it is still 1/3 premium – not at all the case with SPY.    The point is to sell premium so I'd move to 30 short Nov $350 calls at $14.75 ($44,250) vs your current $54,000.   Hopefully you have something long covering these!

    INTC/Batman – Why cover?  Because of this itty bitty pop?  Too soon.

    And what Yodi said.

    Nas flying higher, keeping the rest up. TSLA almost $500 gains 10%, which is a whole GM today.

  13. Thought on PSA, 3/2021 200/240 BCS @ $16.70 currently $12 ITM.  Possibly sell 200 puts @ approx $15.  

  14. Phil – on the TSLA Calendar put spread, would you use a different strike price now (other than $400) for a new position?

  15. PHIl / Yodi – Thanks… I cover 1/4 of my $40 100 long calls at 55 for 6.4…. better safe than sorry… and still lots of room for more… will hold off on the rest.

  16. PSA/Nom – That's a good, solid company.  We used to play them when they were cheap (on our watch list, in fact) but $212 is not cheap at $37Bn when they only make $1.5Bn so 25xish.  They do pay an $8 dividend, which is nice but they don't have long-term options so we don't bother if they are not on sale.

    TSLA/Mito – Well sure, $500 now.  Same logic though.  That's insane – it was $400 only last week.  The stock split and people think it's on sale.

    Oil down at $42.80 – very nice.  /RB $1.22.

  17. Phil/ RB-

    What are your thoughts on shorting /rb here? It looks weak but shorting ahead of a holiday weekend could be a rough ride. Thx!

  18. No way!  

    If they have a nice run-up, maybe a short for the post-holiday but way too risky into the weekend at $1.23 as it could hit $1.35 on a good run.

    That spike was $1.40 into Memorial Day.  July 9th was $1.30.  Last Sept 15 was $1.76, up from $1.47 on Sept 1st – very painful if you were short!

    The way to play it is "IF we have a silly spike without a change in the underlying Fundamentals THEN I will consider shorting it."  Otherwise, no play!