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Thrilling Thursday – Learning to Love the Stimulus

U.S. Gross Domestic Product - forecast 2030 | StatistaUp and up we go.

I have to tell you, Biden's "restrained" $2.3Tn (it gets bigger by the hour) Infrastructure Bill really hit the sweet spot for the US economy.  It's "only" about $300Bn a year but it will actuall be paid for by our beloved Corporate Citizens, who will pay 7% more taxes than they aren't paying now.  THAT is how you grow an economy properly and this year, we'll grow 6%, to $22Tn and let's say we grow "just" 4% for the next 7 years, that's $29Tn and if we "only" add $1Tn of debt each year, that would "only" be $35Tn.

35/29 is 120% Debt to GDP vs our current 28/20.5 = 136% so, IN THEORY, Biden's current plan is going to shrink our Debt/GDP ration while growing the economy 25%, bringing tax collections up by about $1Tn per year – enough to cover the inflationary boost caused by the rising GDP.

As long as we have no emergencies and nothing else needs to be spent – things should be getting better…  Unfortunately, that's already baked into the marekt forecasts so it's a fragile rally but a rally nonetheless – as long as all the news stays good.  The news stays good for Pfizer, who have found their vaccine remains 91.3% effective after 6 months from their Phase 3 Trial and that's good news for all of us but mostly for PFE, who will have to give us Covid booster shots the way we get flu shots – annually.  

Our PFE trade is "only" up $1,745 (2,181%) since our net $80 entry back on October 7th (see me discussing the trade on BNN's Money Talk) and it's a $7,000 spread that's almost at goal ($37) but you can still buy it for net $1,525 – they are simply giving this money away!  That's a $5,475 (359%) profit potential from here if PFE can simply get over $37 by Jan of 2023.  Those are the kind of very simple trades we like to have in our Money Talk Portfolio, which is up 50% since that October show:

The only move we made since October was adding Intel (INTC), our Trade of the Year, on the December show – and that one is already at net $13,050 from our $2,075 entry – a gain of 628% on cash in less than 4 months!  Our obligation is to buy 1,000 shares of INTC at $45 and I bet now you know what I mean when I say sometimes I'd rather the stock goes down than up as we'd LOVE to own 1,000 shares of Intel for $45 but that ship has, apparently, sailed and we'll have to content ourselves with a $22,925 gain (1,105%) if the stock stays over $55.   Aren't options fun?

That trade will "only" make $11,950 (91.5%) if INTC holds $55 into Jan, 2023 and it's sitting right here in front of you to make but, at this point, it's a throw-away trade for our Members, who are used to much more exciting returns – especially from our Trades of the Year, right?  

Yesterday, in our Live Trading Webinar, we decided to look at some of our favorite Mortgage REITs again and we'll be adding those plays in today's Live Member Chat Room – so join us there to get in on the ground floor of some of our new trades.

 

 

 


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  1. GM all!  So, looks like Interactive Brokers can move the CHL shares to Hong Kong…anyone have a contact there?  We could all do a PSW combined move!


  2. Good Morning.


  3. Today I am looking to add some more plays to my present positions. 
    However following my yesterday’s comments in respect to my play with MRNA going back to my comments to the play about 2/2/21, I publish what I would do, and not what you should do, or I do not wish to incur ridge   you to follow my plays.  No one can see in the future, and one can only study and investigate what will happen.
    Coming back to MRNA, yesterday in Germany they announced that 39 people fell sick after receiving the vaccination with Astrazeneca and 9 people died. The usage was temporary stopped again. Here it can be assumed that the competition like Moderna will profit. See yesterday’s jump of some 12$.
    You may ask why are the producers of the corona vaccine are not going up further even dropping?
    Following Phil’s comment a while back, they do not make much money on the production. I bet you Viagra was much more profitable.
    After all this WPC I sell the Nov 21 75/65 Strangle for 5.95, Giving it some space above and below, and buying the Stock @ about 70.70. This gives my a combined return of 1.58 %. Not the greatest but more than 18 % per year is also nothing to sneeze at. The stock shows a very steady graph.
    AGNC with monthly div of .12 cents Sell the Jan22 17/15 strangle @ about 1.53 and buy the stock @ about 16.73. combined monthly return 1.64 %.
    As usual don’t bet the farm and DO YOUR OWN RESEARCH!!!


  4. US jobless claims rise to 719K as virus still forces layoffs



  5. wti doesnt seam to know what it wants to do very volitile


  6. The fourth wave is here


  7. All / Broker recommendations-

    A while ago there was some chat about the best brokers.  I heard (from here) that TOS is declining so that's not the go-to option anymore.  I had a serious issue with ETrade this morning and am looking to transfer.  What were the best brokers to look into?  Thanks all!




  8. Good morning!

    S&P at 3,400, /ES only 3,988 though as it's for June 30th and expectations are we're toppy.   Can't tell that to the Nasdaq, though….

    CHL/Pharm – 51 Hong Kong Dollars is $6.50 and you get 5 HK shares per 1 US ADR share so $32.50 is the current price.  We took a hit this month as the Dollar got stronger.

    WTI/Tommy – OPEC meeting this week and every comment moves the market.

    Brokers/EMike – IB seems to be the strong second choice.


  9. All/brokers I have used interactive brokers for years. never a problem. i do all trades from my iphone, borrow st cheap rates when i need, Also using tastyworks now, a little but not so easy to use, or maybe im not used to it yet,


  10. Been using IB for 7 years now and happy. If you're a software geek, you can write your own chart indicators. Hey Phil, maybe we implement your 5% rule indicator. 
     


  11. When I do the withdrawal to pay the IRS, and the May options expire, going to take the plunge and move it all to IBKR too. Had enough of TOS. 


  12. Pharm – CHL. Is the plan to move shares to HK then cash out?  Does IB move the money seamlessly to US account? I'm in with 1k shares and need to do something 


  13. I have heard that Interactive Brokers charges a small fee for cancelled orders, have you seen that> ? I frequently put in limit orders that do not get filled in a day.


  14. Phil

    We are to remind you to look at some mortgage REITS. I also like TWO, pretty smart group, CEO has  a PHD  in theoretical nuclear physics, some are from UBS other from the Cargill hedge fund Black River  Asset Mgmt. Their office is in the building next to where my wife works ( well, not these days).


  15. CHL

    I have naked call options in CHL… not shares

    Any ideas how I could unwind those?  


  16. Damn, TSMC upped intel's ante of 20B with 100B for R&D spending. I keep reading about China's Sabre rattling around a Taiwan takeover. Talk about a global chip shortage!


  17. 5% Rule/Jeddah – That would be fun.  Make sure you attribute it though.  Look at all the mileage Laffer gets off his father's work.

    So it turns out NLY sold their CRE to Slate for $2.3Bn as they think it's a good time to double down on RMF.  My whole premise on NLY over the years is like HOV – trust the management to know what they are doing and take advantage of the ups and downs.  $8.50/share for NLY is $12Bn and they should make $1.45Bn this year and distribute 90% of it (because they are a REIT) so 0.88 dividend makes perfect sense.  

    So, for the Dividend Portfolio, let's:

    • Buy 2,000 shares of NLY $8.63 ($17,260) 
    • Sell 10 NLY 2023 $10 puts for $2.75 ($2,750) 

    That's net $14,510 and we're not selling calls yet because the 2023 $7 calls are only $1.75 so we'd get called away for sure and I think we'll be able to get $1 for the $10 calls if we are patient.  If NLY drops to $7, we sell the $7 calls for $1 ($2,000) and our net drops to $12,510 ($6.255/share) and then we wait to see how things go until we are able to roll the short puts to 2024.  

    CIM has way better premiums and the same management team as NLY.  They were stupidly cheap in the fall and now fairly priced at $12.70, which is $3Bn  for a company that made $88M last year but usually more like $400M and projecting $300M going forward:

    Year End 31st Dec 2015 2016 2017 2018 2019 2020 2021E 2022E CAGR / Avg
    Total Revenue
    $m

    950 952 1,148 1,271 1,381 1,197 498 513 4.74%
    Operating Profit
    $m

    250 552 525 412 414 89.0     -18.7%
    Net Profit
    $m

    250 552 525 412 414 88.9 317 327 -18.7%
    EPS Reported
    $

    1.25 2.92 2.61 1.96 1.81 0.067     -44.4%
    EPS Normalised
    $

    1.62 3.23 3.12 1.94 1.79 0.307 1.26 1.30 -28.3%
    EPS Growth
    %

    -45.1 +99.3 -3.37 -38.0 -7.87 -82.8 +311 +3.25  
    PE Ratio
    x

              41.4 10.1 9.75  
    PEG
     

              0.133 3.10    
     

    We're not going to play them for growth and we're more likely to have to DD on a dip than NLY so this will be for the LTP, where we have tons of cash:  

    • Buy 3,000 shares of CIM for $12.65 ($37,950)
    • Sell 20 CIM 2023 $12 puts for $12.75 ($2,550) 
    • Sell 30 CIM 2023 $10 calls for $3 ($9,000) 

    That's net $26,400 or $8.80 per share so if we're called away at $10 we don't care as $1.20 is a year's dividend.  We're in a small allocation block so we aggressively sold the $12 puts as we don't mind being assigned 2,000 more shares at net $9.25, do we?  This is another one of those times when we'd rather see the stock go lower and get to 5,000 at an average of $10.04 per share – that's our worst downside case – a 20% discount!   Meanwhile the dividends are $1.20 while we wait, $3,600 against $26,400 is 13.6% annually and another 13.6% if we're called away at $10.

    You have to think of the dividend plays in the very long-term:

    • 2021, we spend net $26,400 to buy 3,000 shares of CIM
    • 2022, we have collected $3,600 back.
    • 2023, another $3,600 back and we roll our short puts and calls and pick up another $5,000 (being conservative)

    Now our net cash outlay is down to $14,200 

    • 2024, we collect $3,600
    • 2025, we collect $3,600 
    • Jan 2026 we roll for another $5,000

    Now our net cash outlay is down to $2,000 on 3,000 shares of NLY

    • Jan 2027 – it's all profit from here on out.

    So, in Jan 2027, we begin another 6-year cycle with another stock using all the cash we got back.  We are still getting $3,600 x 6 from NLY ($21,600) without even selling more puts and calls and we'll get the same from our new stock AND the cash comes back so by 2034 we will have 2 sets of $25,000 stocks AND $50,000 cash to buy 2 more sets – all of which will pay us dividends so about 40% back annually on $50,000 starting in 2034.  That is how you build a dividend portfolio to retire on.


  18. /ES hit 4,000!

    TWO/Randers – Another one of my favorites but these are my most favorites, so we'll start here and see how earnings look before adding more. TWO was in the Dividend Portfolio since May, of course.

    You guys see these charts a lot in my picks.  Sectors go out of favor and I start bargain-hunting.  I guess it's all those days in my youth spent going trough hundreds of albums in the cut-out bin (remember those) that prepared me to be a stock picker.  There are real gems – if you just keep digging…

    We old ones, have seen two wars

    When you're sick and afraid

    And there's danger around

    Take a pick and a spade

    And cut into the ground

    Away from the light

    Away from the sound – Townshend


  19. Phil

     Do we have any XOM  positions?

    Good time to buy or wait

    Thank You


  20. Phil / Stu / Jed / Dawg // Brokers-

    Thank you for the recommendations, Im going to look into IB & Tastyworks.  It takes me a while to get used to new trading systems so I need to move somewhere that I can plan to stay with for years.


  21. Brokers/emailmike – be sure to post your impressions as a comparison shopper, please.


  22. XOM/QC – I think XOM is poorly positioned for transitioning to alt energy.  TOT has been our favorite. 

    • XOM is at $236Bn with $250Bn in sales and $14Bn in profit
    • TOT is at $122Bn with $184Bn in sales and $10.5Bn in profit. 

    So no-brainer that TOT is better bang for the buck AND they've been moving towards a clean-energy future for 10 years now.

    Total SE: The Energy Company That Got It Right

    Total: Solar Growth Is Unappreciated Opportunity

    Total SE: A Diversified Producer With A Near 7% Yield

    Total: Renewable Natural Gas Adds To Green Growth Engine

    Total: Going Green Creates Opportunity

    In the LTP:

    TOT Total SA ADR 1000 2/9/2021 51 $42,250 $42.25 $3.89 $42.25     $46.14 $-0.40 $3,890 9.2% $46,140
    TOT Short Call 2021 20-AUG 40.00 CALL [TOT @ $46.14 $-0.40] -10 2/10/2021 (141) $-4,800 $4.80 $2.35     $7.15 - $-2,350 -49.0% $-7,150
    TOT Short Put 2021 20-AUG 40.00 PUT [TOT @ $46.14 $-0.40] -10 2/10/2021 (141) $-3,800 $3.80 $-2.48     $1.33 $0.03 $2,475 65.1% $-1,325

    They haven't gotten away too badly as we bought them for $42.25 in Feb so clearly we don't mind selling the 2023 $45 puts for $8.50 to net in for $36.50, right?  

    So, in a 1/2 allocation, we would consider the $8.50 to be free money so, in a $100,000 portfolio with $200,000 in buying power our blocks would be $20,000 so we commit to owning $10,000 worth of TOT would be 250 shares so let's say we could be comfortable enough selling 3 puts so the entry would be:

    • Sell 3 TOT 2023 $45 puts for $8.50 ($2,550) 
    • Buy 10 TOT 2023 $40 calls for $8.50 ($8,500)
    • Sell 10 TOT 2023 $50 calls for $4.50 ($4,500) 

    That's net $1,450 on the $10,000 spread so $8,550 (589%) of upside potential at $50 and room to DD if they take a dive.  That's a nice way to get your feet wet on that one.


  23. And, of course, if we get assigned 300 shares of TOT at $45 ($13,500) plus the $1,450 we spent on the spread, what do we do?  We simply turn around and sell the 2024 or 2025 $40 calls for $8.50 ($2,550) and sell probably 3 more conservative 2025 $30 puts for $4.50 ($1,350) and now our net is $9,600 on 300 shares ($32/share) and we risk being assigned another 300 for $30 ($9,000) and our total exposure on 600 shares would be $18,600, $31/share and still not a full allocation block and still we could sell calls for probably $4-5 to knock our net down to $26/share ($15,600).

    So, if you don't want to own 600 shares of TOT for $26 (45% off), then DON'T sell 3 puts now but, if you think that would be great to own – then what risk is there in the above spread?  That's the key to setting up a bullet-proof portfolio – just pick situations where the worst case sounds pretty good to you!


  24. Here is the replay of yesterday's webinar

    https://youtu.be/wfXi59sdRnM


  25. Brokers-

    Since Ill have to learn a totally new trading system regardless of where I transfer to Im going to move to IB.  Tastyworks commissions & simplicity are appealing but they are relatively new to the scene.  Im hoping this will be my last broker move and am opting for stability (again, I hope!!)


  26. I had IB accounts years ago through a money manager. Apparently IB's target market is "pros" in the business as opposed to individuals so their system is geared to that segment. In any event, my recollection is their platform is not user friendly (i.e., not intuitive) plus their security protocols drove me nuts. May very well be better now. Keep us posted. 


  27. I demo'd IB years ago and did not like their platform system either.  But Ive been having so many issues with ETrade since MS took over that, to me, its now worth the pain of learning the IB platform.


  28. I have spoken to both TDA and Schwab "Global Investment Services" about possible solutions to the CHL situation. Essentially told , you are on your own. Rather disappointing given the size and scope of these operations. If anyone is interested, I gave some very negative "feedback" through TDA's website (https://www.tdameritrade.com/home.page). You have to scroll all the way to the bottom under "services" and click on "feedback" and vent away if so inclined. I told them I will switch all my account to whoever can solve this problem for me. 


  29. Hey, did you guys know the markets were closed tomorrow?


  30. Phil:  I have the SQQQ Jan '22 $10-25 BCS and it is back to my entry price.  I am losing my mind watching this market moving up to new highs as I feel we are overdue for a pullback.  Thus I am thinking of increasing my hedge.  Would you recommend adding to this or should we set sights on another instrument?  Thanks!


  31. pstas…I agree. TD should be able to make things happen on this front.  I have opened an acct. at IB, as they said they would take the ADRs and then move them over to HK.


  32. yes it is closed so I'm waiting for this balloon to pop. Going to stay flying over a 3 day weekend? Hmmm. TD has been  so reliable for so many years it is hard to believe how fast they have hit the skids. They must be covering shortfalls from margin accounts when stocks tank. Something is causing this.


  33. Expe is deficient in their listing and they have taken a heavy hit. Only $ they have is borrowed with a growing short interest. Good short I think?


  34. Sometimes one has the feeling you work with crooks.

    Here my position with CHL 2100 shares value 0. However 5 short Jan23 30 calls with a market value of .50. 5 short Jan 23 25 puts with a market value of 50.92.

    In Feb. I was called for the Mar 21 2x short 30 calls and I received 6000.00 from 200 shares which were deducted of my stock holding. 

    CHL230120P25 20-Jan-23 25 -5 PUT 3.73 50.925 -1265.28%

    CHL230120C30 20-Jan-23 30 -5 CALL 3.62 0.5 86.19%

     

    I leave the commentary to you.

    We should put all our forces together and go against TDA


  35. One question to people which changed to IB what about your preferred margin position. do you have to go through all the tests which I did have to go through at TDA???


  36. So, BNY is the depositor of the CHL ADRs….they cannot do the reverse conversion. Go figure that one out!


  37. Pharm- CHL- did you talk to IB about any options?


  38. All / Brokers: Have both IB and Fidelity. I like the Fidelity (with the active trader pro download) and find it more user friendly then IB. IB is more powerful, but as noted above, is not that user friendly. Options Trading levels and Margin are easy with Fidelity; good margin, low cost transactions, and stable platform (even w/ all the outages you hear about I've never had Fidelity go down on me). 


  39. SQQQ/Hicket – $10/25 is a very wide spread and SQQQ is at $12.55 so a 20% drop in the market will pop it 60% to $20 so $25 is aiming a bit high.  2022 $10s are $4.25 and the $25s are $1.75 and the June $15s are $1 so, let's say you have a 50/50 spread of the 2022 $10/25s, I'd sell 40 of the June $15s for $1 ($4,000) and buy 20 more of the Jan $10s for $8,500 so you're only spending $4,500 more to have about $20,000 more protection (assuming rolls) and you can do that for Aug and October too and start making back some of what you spent while still keeping a good hedge.

    TD/Pirate – Schwab bought them and has no interest in maintaining the platform, they just want the customers.  

    EXPE/Pirate – What are you referring to?  We did short them a week ago: https://www.philstockworld.com/2021/03/23/turn-back-tuesday-europe-goes-back-on-lockdown/

    Expedia (EXPE) is also silly at $172, which is just under $25Bn for a company that makes $500M in a good year so 50 times earnings in the best case, which is unlikely.  Let's play EXPE short in our Short-Term Portfolio with the following:

    • Buy 10 EXPE July $190 puts at $28.50 ($28,500)
    • Sell 10 EXPE July $165 puts at $14.50 ($14,500) 
    • Sell 5 EXPE July $190 calls for $10 ($5,000) 

    That's net $9,000 on the $25,000 spread that's $20,000 in the money to start so we only lose money if EXPE can get back over $180 into the summer.  In a Portfolio Margin account (and you shouldn't be doing naked short calls in an ordinary account), it only requires $6,663.40, so it's actually an efficient way to make $16,000 – hopefully.  

    TDA/Yodi – I'm sure there will be lawsuits if they fail to resolve it.  They can't just do nothing.  Just keep a paper trail of all your conversations.

    Fidelity/Rick – I used to use them but the fills were not great.  I often got the feeling they were front-running my trades – too often so I left.


  40. Yodi-yours trades are similar to mine. It seems only the short options are their target. Although with the FIT it was also 18 long which was supposedly assigned although there was NO stock to assign. I was charged for an assignment though on the longs and 10 short which they changed to 18. Obviously I am further scrutinizing all my trades, Amazing. 


  41. Also the March statements are not available yet. Wonder why?


  42. I would be interested how many on this board hold stock or options with TDA for CHL. We then can form a letter to TDA explaining we are a group of xyz people and we want some answers.


  43. I chatted with IB about transferring CHL ADRs to IB, then converting to shares. The chat person said they could do it. That's the premise. I will let you know how it goes. 


  44. Pharm, thanks . Perhaps my post was a bit muddled. I am curious if you discussed option positions in addition to ADR's/stock?


  45. Another avenue here is to lobby your Congressperson to have Biden reverse the order. Doesn't need a phone, just a pen. I just sent an email to my rep. 

    A long shot indeed as the current Harris/Sanders administration is not too fond of actual citizen taxpayers right now but perhaps someone can catch old Joe when he wakes up from a nap and get a signature. :)


  46. Pstas…Sorry, I did not as I don't have any options positions. I got rid of those b'f the delisting.


  47. Smart move. File under woulda, coulda, shoulda :(




  48. Britain’s Slow Return to Travel at Risk in Europe’s Covid Surge



  49. Fidelity/Rick/Mike – Issue with Fidelity is ATP is not available for mobile. The regular mobile app makes it really clunky to trade spreads. Also there have been times when I could not sell short puts in my IRA and other times I could. They changed their policy on that at least once while I had an account there. It was really aggravating. I'm of a similar mind to Mike in that I've gotten where I'm willing to invest the time to learn IBKR's platform and hopefully be done trying to find a place that has a platform that has the features I need and doesn't have the hassles of TOS. Too many times I've had to call them to find out WTF and too many days where I was afraid to enter day trades because I wasn't sure I could keep a connection to their server long enough to get out of it. 


  50. Looks like the S&P will finish over 4,000 – very impressive!  

    Oil popped back up to $61.50 – I guess because OPEC will only gradually reduce production cuts into the summer and "see how it goes".

    No market tomorrow but I'm not going anywhere so we'll watch the NFP Report in the morning.

    Unemployment claims shot up today – not the best sign.

    For those of you who have better things to do – Happy Holiday!

    - Phil

    Pesach - Part Two: The Songs - The Jewish Mother


  51. Yes everyone enjoy Spring. Anyone heard of the butterfly effect? Could be this Archego blowup is only the tip of the iceberg. They did "derivative" trades like the housing market did b4 blowup. What, besides hedge funds is holding up this market? And is it still with borrowed money from banks? Wow I've got a bad feeling.



  52. on ib dont use trader work station, too hard. mobile app on iphone is all you need. Easy. i can flip between poweropt, ib and psw. if you like those funny greek things tws would be ok but too hard. 


  53. Inside the 144-hour scramble to free the giant ship stuck in the Suez Canal