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Monday Market Mania – Trump Cures Covid, Gets Fired!

Ding Dong The Witch Is Dead Wizard Of Oz GIF - DingDongTheWitchIsDead  WizardOfOz GIFs | Wizard of oz, Wizard of oz witch, The wonderful wizard of  ozIt's over!  

In more ways than one.  Everyone but Donald Trump decided Joe Biden will be our next President and you would have throught they killed the Wicked Witch of the West the way American cities were partying this weekend as swing state after swing state swung against President Trump

Better late than never and just as I predicted back on September 28th, Pfizer (PFE) has come up with a 90% effective vaccine for Covid!  That's about as good as it gets with a vaccine and it's more than enough to get things under control in the coming year so, if all goes well – this Christmas is still cancelled but, by next summer, things could be back to more or less normal and that is certainly worth celebrating.  

The markets are celebrarting with a 5% jump in the Dow, up 1,400 points to 29,683 and the S&P has flown up to 3,635 – up 133 (4%) points from Friday's close.  The already pumped up Nasdaq is red as people getting out of the house is not actually good for Amazon (AMZN), Alphabet (GOOGL), Netflix (NFLX) and all those other stocks that were benfitting from our long imprisonment.  

The small-cap Russell index is so happy that it's blasted up 7% (and got halted) this morning, breaking an all-time high as it looks like the shoppers will return to Main Street to eat, drink and be merry once again.  Ding-dong indeed!   Airlines are up 20% this morning – that's crazy!   Of course, I predicted that too, on October 8th, when we put the Airline ETF (JETS) in our Future is Now Portfolio, saying:

JETS is the US Global Jets ETF and it's got LUV, DAL, UAL, AAL, ALGT, CJT, AC, ALK, JBLU and ATSG as it's top holdings.  As we discussed in the Webinar yesterday, we're about a year away from herd immunity, vaccine or no vaccine and the airline industry is vital to our national security and JETS includes cargo carriers, who are actually doing OK at the moment, with all the shipping we're doing.  

So that makes a 2023 spread on JETS kind of interesting with Trump promising to save the airlines and the Democrats trying to save the airlines.  Eventually, hopefully, SOMEONE will actually save the airlines.  For a trade in our Future is Now Portfolo, I'd go for:

  • Sell 10 JETS 2023 $15 puts for $4.40 ($4,400) 
  • Buy 15 JETS 2023 $15 calls for $6.50 ($9,750) 
  • Sell 15 JETS 2023 $25 calls for $3.65 ($5,475) 

That's a net $125 credit on the $15,000 spread so, if all goes well, it will make $15,125 (12,100%) if JETS is back over $25 in 2023.  Worst case is owning 1,000 shares at $15 (less the $125 credit) and we can always sell calls to lower that risk if we lose confidence but it's a nice, optimistic bet on things getting back to normal – one day.  Ordinary margin requirements on ETFs are pretty low, just $841 for this one so it's a very margin-efficient trade as well!

Today's action should take the ETF well over $20 and we'll be well on our way to our expected 12,100% gain – aren't options fun?  Our two PFE trades were very conservative but should make 51% on the stock trade and 483% on the margin play for Pfizer, which only had a $37 target and selling a few billion doses of vaccine should put them well over the top on that one.

As I keep telling you, you don't have to swing for the fences to hit grand-slam home runs when trading options.  Even in a bear market, we can set up nice, conservative trades like this based on sound, Fundamental logic and make as much or more money as the people who run after all the momentum and fad stocks.

Fortunately, we did get more bearish in the last downturn and, on October 28th, we cashed in the Short-Term Portfolio (STP) as the market plunged, expecting a combination of more stimulus and less Trump and, at some point, an end to this nightmare – this morning we have 2 out of 3 and Biden is clearly interested in stimulating the economy so we'll be taking advantage of this rally to cash in some longs – stay tuned!  

We did press our hedges on Friday in case things went the other way this weekend and we'll get burned there but our Long-Term Portfolio (LTP) will more than make up for it with gains on most of our 31 long positions – and we haven't played much tech so the underperforming Nasdaq isn't going to be a problem either….

Oil and Gasoline are blasting 10% higher this morning as well but gold and silver are taking a 3% hit – who needs safe havens anymore?  That's not likely to be good for Bitcoin either.  

We are fantastically positioned for this rally so there's no real need for our Members to do anything but reflect on what a rough year 2020 has been and be glad we are putting it all behind us – a deadly disease that has ravaged our society and came close to wiping out our country – as well as the Covid virus….

Happy Re-birth Day, America – we survived Trump together – we can get through anything!  

 

 


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  1. Phil/Markets..

    was the market up last week on the hope that Trump will come and keep the taxes low on corporations and also implement less rules on trading etc etc……now they are happy that biden is here….

    maybe it just depends who pumps up the market …whether it is democratic or republican. and then the news is changed accordingly….so if you portfolio is not balanced you are screwed……

    regards


  2. The world can breathe again one of the biggest assholes is now hiding in one of the smallest golf holes, to ashamed and too arrogant to congratulated the new president. I hope he will enter the wax museum as the yellow clown he is, to ashamed to put him in as the 45th president of the US. But what about the 70 million lunies, who actually voted for him? What a shame and insult he was for a great nation.


  3. Good Morning.



  4. I will be enjoying a good Pfizer conspiracy…. :)


  5. I love PFE ;-)


  6. The Biden boom has started!





  7. Hey Phil, any thoughts on what to do with these hedges i'm holding on to?

    Buy 15 Jan 21 SQQQ $25 Calls for $6.30 now at $1.17

    Sell 15 Jan 21  SQQQ $35 Calls for $4.30 now at $.575

    AND

    Buy 20 Mar 21 SDS $15 Calls for $3.55 now at $.95

    Sell 20 Mar 21 SDS $28 Calls for $1.00 now at $.23

    Any thoughts? 


  8. For Biden’s DOJ, a question looms: should Trump be prosecuted?



  9. Taking the pop today to sell some near term $8 calls on my M shares, missed the opportunity on the last such pop and think the enthusiasm will fizzle


  10. Phil – Could this be a good time to short the homebuilders? Thanks!


  11. Phil/Markets,

    What do you think about the direction of markets…zoom..zoom zoom ??

    regards


  12. Phil,

    Interested in your current thoughts on gold, per se (GOLD & WPM in particular) after today's sell-off. With inflation all but assured (Dems plans to provide more stimulus with pressure McConnell to cooperate) I was surprised by today's drop. 

    Thanks in advance


  13. GOOD morning!!!

    What a fantastic day – let's have fun! 

    Up/Pat – Hey, we're not all going to die is a good reason for exuberance, irrational though it may be as we're still 6 months from getting everyone vaccinated and infections and now deaths are climbing at an alarming rate – but at least there's an end in site, finally.

    Even the NYSE is blow-out at 13,776 – finally over the Must Hold line.

    Hedges/Swamp – I'd do nothing at the moment.  They are a bit close to expiry so you do want to rescue the Jan $25s for sure but I'd just double down on the March $15s so you maintain a hedge there, wait for the Jan $35s to expire and then sell more short calls and roll out to July or 2022.  It's an insurance policy and you didn't die – so you keep paying…

    Shorting/1020 – I wouldn't short (or long) anything at the moment.  When I see airlines go up 20% in a day I'm not chasing and I looked for restaurants but they are already too high so I'm not going to guess on builders.  Democrats love housing.  

    HOV is a bit overprices, TOL is still a good deal.

    Direction/Pat – I think we're pre-zoomed already.  Clearly a vaccine/cure was expected and stimulus was expected.  I'm almost tempted to "sell on the news" but we are well-hedged and miles ahead and we can afford to see where things end up this week.

    Gold/8800 – It's still an inflation hedge but the safe-haven hedge is gone now that Trump won't be around to destroy America anymore and things will start to normalize and the Dems, like they always do, will get spending under control after yet another Republican binge.  

    Dollar is down 10% from when Trump was elected. 

    Gold should level out around $1,600, $20 for /SI.

    Copper flying

    I forget how much I love this country!


  14. Phil/TQQQ

    I have 10 Jan21 125 Puts. currently down 40%. I guess I can roll them to 10 March21 140/110 Put spread at about even?

    regards


  15. Going to need new lines!


  16. TQQQ/Pat – Sure, the hedges just become long-term insurance plays and then we get to go bottom-fishing for rally laggards.  


  17. Spending / Phil – In fact what Dems have done in the past is not control spending as much as getting more revenues by reversing stupid tax cuts!


  18. Yodi/yellow clown

    yes, a big sigh of relief.

    BUT…the damage done by him will take a decade or more to repair! I could make that case for you after hours.

    as an example, even now, while COVID cases keep rising, along with deaths, he continues to impede efforts to facilitate transition. That is not clownish anymore. It is criminal! I hope someone recognizes this and takes some punitive action against 'clown' after Jan 20.


  19. Maya1

    I do not have any more nice words for him.


  20. That Pfizer vaccine would not be that easy to distribute it seems. Even in developed countries. Not unsurmountable but a challenge for sure.

    https://www.vox.com/21556359/pfizer-vaccine-covid-19-biontech-trial-results-coronavirus

    Pfizer and BioNTech’s BNT162b2 vaccine requires storage as low as -80°C. That may be a logistical nightmare for distributing the vaccine as thousands of costly, new ultra-cold freezers would be needed. Pfizer is also developing a custom box that can keep the vaccine cold in transit. The question is whether this can be scaled up to vaccinate hundreds of millions of people across the US, and possibly billions around the world.

    Another complication is that this is a two-dose vaccine. Recipients will have to get two shots spaced about three weeks apart in order to get protection. That means the company would have to produce twice as many doses as they would need for a one-dose vaccine, and clinics would have to keep track of recipients and make sure they come back at the right time for their second jab.


  21. Are there any publically traded ultra-cold freezer companies we should be looking at?


  22. Spending/StJ – True.  It's not about not spending, just balancing the budget.  Getting the military under control does help a bit.

    Vaccine/StJ – That seems very low.  They'll have to give the formula to other countries, too crazy to air ship it like that.  

    Cold-chain Suppliers/Crs – CTLT, ARCT, TBIO, BTNX and MRNA (working on a higher-temp vaccine).  


  23. COLD  Americold Realty Trust   Mostly food storage, dont know know if its ultra cold.  Down today 


  24. Stg Vaccine -80 degrees C Obviously the news has hit the news channels here in Germany as well. With interviews from experts. No one mentioned -80 degrees C. Only all mentioned the vaccine would not be available until Spring to summer next year.


  25. WHR ? We had a heck of a time buying a freezer, it was months before it was delivered..



  26. Phil, what do you mean by rescue the Jan $25s? "Hedges/Swamp – I'd do nothing at the moment.  They are a bit close to expiry so you do want to rescue the Jan $25s for sure but I'd just double down on the March $15s so you maintain a hedge there, wait for the Jan $35s to expire and then sell more short calls and roll out to July or 2022.  It's an insurance policy and you didn't die – so you keep paying…"


  27. Rescue/Swamp – I mean if you paid net $2 for them and you can recover $1.17 ish then you sell those long calls, roll to a lower strike that has more time and then, when the short calls expire, you can sell more short calls to start getting your 0.83 back.


  28. LTP up 135% now so $200,000 since last week would make up for a complete wipeout of the STP.


  29. Phil/Market,

    Will it be a wait and watch week?? Do you think markets wouldn't dive much as they see light at end of tunnel? cases are rising by the end….around 50% up per day in the last couple of weeks.

    if markets keep moving higher….LABU and FAS could zoom…advise?

    regards


  30. Well that's not watching and waiting at all, is it?  

    LABU is back at the top of the range and FAS is at new highs.  What is your premise for them breaking up to all-time highs that you would rather chase them then buy IMAX or M or F or 

    Well, too late for IMAX – sorry if my 1,000x banging the table didn't sink in….

    M still cheap

    Why do you think the LTP is up 20% today?  Because I DO LISTEN when I bang the table on these value stocks and I DON"T CHASE overpriced crap.  This is not hard people…


  31. Bravo phil.  Bravo.


  32. I grabbed most of the stocks you were banging the table on, Phil. Good stuff! WBA is having a good day but I'd sure love for it to see $50 again.


  33. Phil

    Since Oct 30th low, I am up 35% today. 

    It was painful to see INTC, IBM, WBA, PFE down last few weeks. Also, got out of my ROKU last week based on your advice. 

    Thank You.


  34. Wow, only a 100 point reversal in /ES. You don't see that every day. 



  35. Pseudo-Wealth and Consumption Fluctuations


  36. ARNA – ouch! Pharm, send the faithful some comfort!







  37. ARNA has earnings and had a huge miss on revenue