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PhilStockWorld October Portfolio Review – Part 1

We are in month 2 of our cash out.

Our last Portfolio Reviews were back on September 16th and we had already lightened up back on August 17th ("Top of the Market Tuesday – Cashing Out While We Can") with the S&P 500 at 4,472.   On September 16th, we were at 4,495 but that just meant we had a whole month to wriggle out of our positions without any panic.  Now it's October 12th and the S&P finished the day yesterday at 4,361 – so down a bit, but not much overall.

Still, it's been a great month for our Short-Term Portfolio (STP), which is where we keep our hedges to protect our long-term positions as it's gone from $94,705 to $128,727 as of yesterday's close, a gain of $34,022 (35.9%) on just a 2.9% dip in the S&P 500.  Needless to say we are highly leveraged to the downside but we still need to be certain we are adequately covering our long positions (more on those later) for what could be a 20% correction in the indexes that is unlikely to spare any position.  

  • SKF – An ultra-short on the Financials we added since our last reveiw.  Between inflation, rate changes, lack of stimulus and China's property melt-down – I figured it was good to hedge in that sector (not that we're very invested in Financials).  These are just straight- up long calls looking for a quick gain – none so far.  If they pop to $10 the Delta is 0.75 so we should make 50% – that's our goal (+$1,500).

  • SQQQ – These are leftover short calls that will expire worthless and pay us $1,375 in 50 days.  
  • FXP – We cleverly shorted China back in June and, so far, so good.  We're at target for the full $40,000 and the current net is only $18,800 so $21,200 left to gain if China gets worse, which seems pretty likely.  Good for a new hedge with just 66 days to go and over 100% upside potential.

  • TZA – One of our major hedges.  It's a $400,000 spread that's at the money but we have to invest in rolling the Jan $30 calls out in time as the short calls won't expire for another year.  It did, however, make for a very cheap $400,000 spread as we had a net $13,000 credit to start.  We're waiting on earnings to see what happens.  Since we're at the money at $30, a 20% drop on this 3x ETF would take us up 60% to $48 and put us pretty much in the money so let's call this $250,000 worth of downside protection.  

  • TQQQ – Surprisingly the short Jan puts went into the money already but we have plenty of time to roll and it's a $60,000 spread, in the money at net $58,500 but the roll gives us a lot more potential so we'll keep it in play.  

  • CMG – Finally coming down a bit.  In fact, the shorts are 100% premium and, if they exprie worthless, we collect $62,025 and, if earnings disappoint, we might make up that January put money too.  

  • SCO – Well this turned ugly on us as we were trying to short oil but, fortunately, we sold a lot of calls and had a nearly net $0 cost – so no harm done.  It's a 2x Ultra-Short ETF so, if oil drops 20% to $65, this goes up 40% to $18.62 which means it's simply not worth keeping the longs, not even to "protect" the short calls but let's just cash the whole thing out and forget it.  

  • SQQQ – Our other major hedge is not so big anymore as it's just a $100,000 spread at net $7,300 but that's quite a bargian with $92,700 upside potential (though it wouold take a 30% drop to get there).  Realistically, a 20% drop in the Nasdaq would be a 60% gain in SQQQ from $8.55 to $13.68 so about $85,000 would be the target but still great for net $7,300, right?  Let's beef these up by buying 100 more 2023 $5 calls for $4.23 ($42,250) and selling 100 March $12 calls for $1.05 ($10,500) and rolling our 20 Jan $15 puts at $6.93 ($13,850) to 40 of the 2023 $10 puts at $4.30 ($17,200).  
  • So we've spent net $28,400 but now, at $12, we have $140,000 and the potential to roll the short March calls to higher strikes so a nice investment in more protection.  Call it $110,000 of downside protection.  

  • W – We cashed out the bear put spread last month and these are just the leftovers waiting to expire.  Hopefully it bounces a bit as we're already past goal on the short puts

So that's $444,725 in downside protection (likely) if the market drops 20%.  Since we've cut back on our longs – that seems very adequate but we'll get a better overall picture as we review our Long-Term Portfolio and other bullish Member Portfolios.  BALANCE is the key to navigating an uncertain market but we're finally going to get a look at Q3 earnings and guidance for Q4 and THEN we can see if we're in the mood to do more shopping.  






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  1. Good Morning.

  2. It's nice to see FB get kicked where it hurts most, a lower share price.

    Is a $220 share price possible?

  3. Pirate – We hoped for and received the Pfizer vaccine over Moderna, only because we had not heard of them.

    J&J with the lower efficacy rate was a none starter, though I understand that their booster gives them 94 percent efficacy.


    You might have heard that Merck has arrived to save the day for anti-vaxxers with this:


    A 'Pinch' or the PILL(S)?   Decisions, decisions…. ;)

  4. Comment content omitted because it is too long.

  5. Good morning!

    FB/1020 – $220 would be a hell of a fall but that's where they were to start the year.

    Still at $917Bn at $320 and they were making $20Bn before pandemic and $30Bn last year and $40Bn path this year so $1Tn not too terrible for $40Bn but still 25x and not good if it doesn't look like they will sustain it.  Regulations are baked in at this point but what if sentiment turns against FB in general – that can be a problem.  Still, there's no sign of that happening yet so we're just seeing the risk being baked into the price, coming down from a ridiculous 40x earnings that never should have happened.  

    Pills/1020 – A pill that cuts your risk of hospitalization by 50% AFTER you get Covid is not a substitute for a shot that 90% prevents you from getting it in the first place and ALSO cuts hospitalization by 90% if you do get it.  That's 99% less likely to be hospitalized vs 50% – what kind of idiot relies on that?  Oh yeah – MAGA!  

    Far-right extremists move from 'Stop the Steal' to stop the vaccine - The  Boston Globe

    Half a million COVID dead: Trump death cult meets shock doctrine – People's  World

    Napalm Girl, the Vietnam war, tragedy and her life story after the War

    Imagine living in a country where tragedies like this are allowed to happen….

  6. Phil=your comment was too long again.

  7. I was trying to post what 2,000 people a day dying looks like but the comment is too long – here's 200:








  8. 1020-With alternatives and choices it may make a difference. However, it doesn't help when you hear that those fully vaccinated still get ill and eventually die.  Believe it or not, even my Internist has it now.  This Delta variant is bad and if this sucker mutates again, it truly boggles the mind. Since you can't ascertain anything in a factual matter you  need a leap of faith and trust. It's the propylene glycol that I am allergic too and I thought  J&J didn't have that in it.  I am definately NOT an anti- vaccer just extremely allergic and cautious because of that.

  9. Pirate/allergies – I don't think there's any propylene glycol in any vaccines. You may be thinking of polyethylene glycol, and confusion ( is understandable. Anyway, here's ( recent, peer reviewed article on vaccine allergies. Whistle if you need clarification.

  10. The Korean company will reimburse General Motors because of manufacturing defects in battery modules that LG supplied, covering nearly all of the $2 billion cost of recalling roughly 142,000 Chevrolet Bolts. 2 min read

    The International Monetary Fund lowered its growth forecast for the world economy for this year, citing supply-chain disruptions in rich economies and global-health concerns caused by the spread of the contagious Covid-19 Delta variant.640 min ago 4 min read

    Curbs on property lending and worries about the financial health of China Evergrande and other developers are sidelining house buyers. 5 min read

    • Facebook (FB -1.1%) is recovering a bit but still hanging among the market's biggest losers today, overshadowing gains among smaller companies, as negative headlines around the company continue to metastasize.
    • A second potential whistleblower says she's ready to testify to Congress, according to the New York Post. Sophie Zhang was a data scientist there for nearly three years before being fired last fall, and now says she would fulfill a "civic duty" if Congress wanted to hear her testimony.
    • She says she's provided law enforcement with “detailed documentation regarding potential criminal violations."
    • Meanwhile, the Securities and Exchange Commission is under pressure to probe the company over securities fraud, based on some well-documented claims from first whistleblower Frances Haugen, but that represents a new test for the agency as the allegations don't resemble a typical fraud case.
    • Haugen's attorneys have been in touch with the SEC related to the story that Facebook is grappling internally with problems that it downplayed to the public, and that means the SEC is almost certainly pursuing some investigation.
    • But the claims in question don't obviously go to the current financial condition of the company or accounting, complicating the matter.
    • The SEC can allege that Facebook's disclosures were simply misleading, rather than being tied to financial trends, The Wall Street Journal notes – a tactic that has expanded the types of cases brought by the agency in recent years.
    • The agency is also increasingly sending a message about environmental, social and governance issues with its actions, the WSJ notes, citing the SEC's probe of Activision Blizzard over workplace sexual misconduct and harassment allegations.
    • Market strategist Nouriel Roubini predicted Tuesday that the economy will experience mild, persistent stagflation — a fact that would put pressure on central banks such as the Federal Reserve.
    • In an interview with Bloomberg TV, Roubini also said he saw a "significant risk" that oil prices would top $100 a barrel in the next few months.
    • Supporting his argument on stagflation, Roubini pointed to supply bottlenecks in places like materials, labor and energy, which will simultaneously push up prices and limit production.
    • The expert, who's chairman and CEO at Roubini Macro Associates, sees these stagflation dynamics "persisting for several quarters."
    • All in, Roubini forecasts U.S. inflation to remain above 3% for 2022.
    • Roubini said the higher prices and stymied growth will put policymakers in a tight spot, making it difficult to set a clear course through the challenges.
    • "If they care about growth, they should hold off on raising rates. But if they care about inflation, they should be tightening sooner, faster," he said. "It becomes a very tough dilemma for central banks."
    • Looking at the financial markets, Roubini noted that stocks and bonds often move in the same direction during inflationary spikes, meaning that investors could lose money in both markets at the same time.
    • To minimize that risk, he recommended that investors move into shorter-duration bonds, inflation-indexed bonds and commodities like oil and gold.
    • For more on how a stagflationary period could play out, look at some scenarios described in a recent note from Morgan Stanley.

    • Bank of America is out with a detailed screen of S&P 500 stocks that it sees as most likely to beat consensus expectations. The firm used the criteria of its own estimates vs. consensus, last quarter's results (double beats) and fundamental bullish ratings.
    • The list of stocks making the "positive surprise" list includes Morgan Stanley (NYSE:MS), Occidental Petroleum (NYSE:OXY), MetLife (NYSE:MET), Honeywell International (NASDAQ:HON), CenterPoint Energy (NYSE:CNP), Discover Financial (NYSE:DFS), Raytheon Technologies (NYSE:RTX), Facebook (NASDAQ:FB) and NetApp (NASDAQ:NTAP).
    • An even more detailed BofA screen uses the same criteria as above, but also filters for stocks underowned by fund managers. That list of stocks, which could see even bigger pops on earnings day, includes Altria Group (NYSE:MO), Exxon Mobil (NYSE:XOM), Quest Diagnostics (NYSE:DGX), West Pharmaceutical Services (NYSE:WST), Cummins (NYSE:CMI) and ANSYS (NASDAQ:ANSS).
    • You can also run a detailed screen of your own on Seeking Alpha to find the top value stocks, top yield monsters, top small caps or top stocks by sector.
    • The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEARCA:LQD) is facing a slew of problems, from sinking in four of the last five sessions to leading all exchange traded funds in YTD investor outflows.
    • The broad U.S. investment-grade corporate-bond fund has seen investors redeem $13.63B of shares so far in 2021, as per That's $3B greater outflows than No.2 worst performer the SPDR Gold Shares (NYSEARCA:GLD) has seen.
    • And despite being up 0.28% of Tuesday morning, LQD has been mostly declining for weeks.
    • The ETF finds itself in the crosshairs with the U.S. 10-Year Treasury yield given that the two instruments trade inversely. (LQD) has recently struggled as the 10-Year yield has risen significantly since the beginning of August:

    • Short interest in (LQD) has also risen to 14.54%. And in other bad signs, the ETF is now trading -1.41% from its 200-day moving average and finds itself -4.76% YTD.
    • The Relative Strength Index technical indicator also shows that while the ETF dipped on Monday to 24.13 − well below the 30 reading that would indicate it's oversold − it turned back up to 31.71 Tuesday:

    • Contrarian investors may see this as a buying opportunity, while others may deem the fund still too risky for investing.

  11. FB trade I noticed today    1870 Jan23 $250 short puts were rolled to Jan24 $255 short puts for $30.50.   Net $224.50   

  12. Snow-Thanks again. Love these articles you post. Could be right, mistake the two. Anyways, scheduled for first shot at WBA today. Everyone asks where I get the info I have and I've given them recommendation of CIDRAP and any others that are posted by you. My days of struggling through my statistics courses in college sure come in handy now in trying to grasp the efficacy of drugs and info in general. Of course I hated the courses back then!

  13. Hi – anybody else writing puts on the weakness in T & VZ? 

  14. tshroyern / VZ -

    I sold 10X of the Jan  '24 $52.5 Puts for 8.5…..   This is a LT position that I've been scaling into I hold the Stock and have some covered calls as well


    .  On T I reduced my position last  and this year and only selling short calls until after the spinoff….. 

  15. troyer, thinking about it but still waiting for them to stop dropping 

  16. Seeing 2024 puts trade in MU today.  $50, 60, 62.5 and 65 strikes   h

  17. T/Tshroy – Wow, you would think they are Chinese property companies.

    Telecoms sink as Barclays trims targets for AT&T, Verizon

    The bank trimmed its price targets for AT&T (T -2.5%) and Verizon (VZ -2.2%), noting a lack of catalysts for a while.

    Analyst Kannan Venkateshwar rates both the stocks Equal Weight, and cut the target for AT&T to $30 from $34, saying technicals are "challenging" in the near term due to "drag" from the equity performance at Discovery (NASDAQ:DISCA), with which AT&T is merging media businesses.

    Discovery shares are down 4% over the past month, and are a hefty 38% lower than six months ago.

    Barclays' $30 AT&T target still implies 15% upside, accounting for today's decline.

    As for Verizon, Venkateshwar trimmed the target to $55 from $56 after some tweaking of the model to account for expenses and closing the Yahoo deal. That target now implies 6% upside.

    And that stock's performance will be "more sideways till some of the new revenue sources kick in," he says.

    AT&T: Post-Deal Yield Of 5.7%, Future Looks Brighter Than Dismal Past Performance

    AT&T: Simplicity And Streaming Serve As Differentiators And Suggest Profitable Growth

    AT&T: Best Investment For Investors Seeking Value And Growth

    In the LTP, we have 100 2023 $25 calls at $100 we bought for net $3.20 (not counting the short put credit since they are currently underwater) and the calls are currently $2.17 with the stock at $25.50.

    T Short Call 2022 21-JAN 33.00 CALL [T @ $25.50 $-0.54] -75 9/3/2020 (101) $-10,500 $1.40 $-1.35 $-0.31     $0.06 $-0.01 $10,088 96.1% $-413
    T Short Put 2022 21-JAN 28.00 PUT [T @ $25.50 $-0.54] -25 9/3/2020 (101) $-8,125 $3.25 $-0.02     $3.23 $0.56 $63 0.8% $-8,063
    T Long Call 2023 20-JAN 25.00 CALL [T @ $25.50 $-0.54] 100 10/16/2020 (465) $42,500 $4.25 $-2.09     $2.17 $-0.23 $-20,850 -49.1% $21,650

    This is one of those cases where we REALLY don't mind owning the stock due to the dividend.  Nonetheless, the 2024 $25 puts are $4.50 and that's likely where we'll roll the Jan puts and the short calls will expire worthless and the 2024 $23 calls are $3.85 and we can pay for that net $1.68 roll ($16,800) by rolling the puts for a $3,187 credit and selling the 2024 $30 calls for $1.35 ($13,500) so we'll be taking essentially nothing out of pocket and rolling from a $25/33 bull call spread to a $23/30 bull call spread so $70,000 potential and we spent net $23,875 on the original spread. 

    This is why we don't worry about these things – unless T goes relentlessly lower, the longer-term options will wash away most of our market sins!  

    In the Dividend Portfolio, we have 1,000 shares of T we bought for $36.95 ($36,950) back on 10/25/19 and we have 20 short Jan $30 puts we sold for $5.15 ($10,100).  We never did sell calls because it kept going down but we collected 0.52 4 times so far ($2,800) in dividends.  So, at the moment, we are in 1,000 shares of T for net $24,050 or $24.05 per share so, although that's disappointing – it's not a loss. 

    This is the magic of investing in blue-chip, dividend stocks – it's very hard to lose money and very easy to make it.  We didn't even play this right as a cover would have saved us a World of hurt, right?   We actually sold the short puts for the same $5.15 they are now, so not even a loss there and we still think T will recover but why double down or do anything fancy when we can just sell those 2024 $25 puts for $4.50, so the worst we end up doing is buying 1,000 more T for net $20.50, which is fine with us.  

    But we already sold 20 and we have to roll them so we sell 30 of the 2024 $25 puts for $4.50 ($13.500) and buy back the Jan puts ($10,500) and, since we have 1,000 longs, we can't possibly be hurt by selling 10 of the 2024 $23 calls for $3.85 ($3,850) so now we're putting net $6,850 in pocket and we've dropped our cash outlay to $17,200 or $17.20/share so, if called away at $23, we're up $5.80 plus the rest of the dividends we collect and, if assigned 2,000 more shares at $25 ($50,000), that's $67,200 for 3,000 shares or $22.40 per share is our worst case (not including anticipated $4.16 in dividends over two years).  

    SO hard to lose when you play it correctly!  

  18. late day INTC trade   

    someone sold 1695 Jan24 $40 puts for $4.40.   lol, I had my order to sell 5 at $4.60 

  19. That was yet another bad finish. 


    Even the day charts are turning ugly:


  20. Pirate  :)