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Falling Thursday – When Putin Attacks!


What is it good for?  Well it's great for commodities as Oil (/CL) has jumped up to test $100 per barrell and Gasoline (/RB) has popped over $3 and Natural Gas (/NG) is surprisingly lagging at $4.83 – but it will get there shortly (we played it long at $4.57 in yesterday's Live Member Chat Room).   Silver (/SI) which we've been playing over $24 since last week, hit $25.67 so our stop is now $25.50 for a massive short-term gain – something else we discussed in yesterday's Live Trading Webinar.   

As we discussed in yesterday's PSW Report (subscribe here if you want to know what's going to happen in the markets), war makes people nervous and nervous people tend to dump risky stocks in favor of commodities and CASH!!! and, as we discussed in last week's Portfolio Reviews (again, subscribe!), we have plenty of that in our Member Portfolios and plenty of hedges as well.   

Our Short-Term Portfolio, which we reviewed last Tuesday at $384,818 and contains our hedges, closed yesterday at $442,998 so up $58,180 for the week and today likely to be up another $50,000 on this dip and, of course, we begain with $200,000 so we've doubled up on our hedges during this downturn, which mitigates the losses our long positions are taking. 

Having good hedges allows us to ride out these downturns panic-free, without margin pressure of fear of losses and, more importantly, the cash inflow from our hedges gives us the OPPORTUNITY to take advantage of stocks as they go on sale.  For example, Apple (AAPL) is down to $153 this morning and I don't see how Putin invading the Ukrain is going to stop my daughter and her friends fron geting the newest 5G phones this year.  I mean, how can you show your support for Ukranians on TicTok without a new IPhone or the connection service provided by AT&T (T)?

In our Butterfly Portfolio, we sold the AAPL April $155 calls for $21.50 on Dec 22nd and we sold 40 of them for $86,000 to cover our long AAPL position.  Yesterday I said we were likely to buy them back as they were up almost 50% but today it's a certainty and we'll take the $43,000 profit off the table as a stop and hopefully do a bit better than that:

AAPL Long Call 2023 20-JAN 120.00 CALL [AAPL @ $160.07 $-4.25] 160 1/20/2021 (330) $448,000 $28.00 $19.30 $10.94     $47.30 $-2.46 $308,800 68.9% $756,800
AAPL Short Call 2023 20-JAN 150.00 CALL [AAPL @ $160.07 $-4.25] -160 1/21/2021 (330) $-360,000 $22.50 $2.75     $25.25 $-2.50 $-44,000 -12.2% $-404,000
AAPL Short Put 2023 20-JAN 125.00 PUT [AAPL @ $160.07 $-4.25] -40 9/20/2021 (330) $-42,000 $10.50 $-4.15     $6.35 $0.67 $16,600 39.5% $-25,400
AAPL Short Put 2024 19-JAN 120.00 PUT [AAPL @ $160.07 $-4.25] -20 10/15/2021 (694) $-25,500 $12.75 $-2.93     $9.83 $0.82 $5,850 22.9% $-19,650
AAPL Short Call 2022 14-APR 155.00 CALL [AAPL @ $160.07 $-4.25] -40 12/22/2021 (49) $-86,000 $21.50 $-10.53     $10.98 $-2.18 $42,100 49.0% $-43,900

As I often tell our Members, "You don't have to be clever, just patient."   Apple was around $175 on 12/22 and we sold the April $155 calls that were well in the money as INSURANCE – in case we had the downturn we were expecting.  Since then AAPL has had strong earnings and guidance and topped out at $182 in January so we are thrilled to actually hit our target, albeit a bit early, so it makes sense to take it off the table with a huge, early profit – we can always sell something else if $150 doesn't hold.  

The 1929 Stock Market Crash Caught Nearly Everyone Off Guard. Are We Headed  for a Similar Fate? | Barron'sThat is how we like to adjust our portfolios, by selling calls as insuranace that pays us and, when prudent, buying them back and PATIENTLY waiting for the next up cycle to sell again.  When looking over your positions, you have to think rationally and ask yourself how a war in the Ukraine is going to affect your stock?  Granted, if the whole market drops back and we head into recesssion, everyone will be affected and it may take time to recover but will it do long-term damage to T or AAPL's sales?  No.  In that case, if you are a long-term investor – Don't Panic!

This is the sell-off we've been expecting and perhaps NOW my Bounce Chart makes sense as we've been tracking the sell-off we expected this year, not the one that already happened and now reality is finally catching up with our predictions – the reason isn't all that important.

  • Dow 36,000 to 28,800 would be a 7,200-point drop with 1,440 bounces to 30,240 (weak) and 31,680 (strong).   
  • S&P 4,800 is 20% above 4,000 and that makes it an 800-point drop with 160-point bounces so 4,160 (weak) and 4,320 (strong) is where we are this morning (again).
  • Nasdaq is using 13,500 as the base and we bottomed yesterday at 13,580.  14,100 is the weak bounce and 14,700 is strong.  
  • Russell 1,600, would be about an 800-point drop with 160-point bounces to 1,780 (weak) and 1,960 (strong).


All that's actually happened this week is that the Strong Bounce Lines on the Russell and the S&P have turned red – that is hardly a reason to throw our our strategy, is it?  I say the same things at the bottoms I say at the tops:  ONLY if this chart goes all red to we start to rethink our expected trading range – unless something fundamentally changes, of course.  War in Ukraine is not a fundamental reason to change – it's merely the catalyst that is forcing market participants to re-evaluate the ridiculous risks they've been taking.  

And this little CORRECTION is just that – it's stocks heading down to their CORRECT prices – we do not expect to get back to the highs, not this year at least.  That's why our main AAPL spread is $120/150, not $150/180.  That's why we sold $155 calls – we may love Apple but our love is not blind – we KNOW what it's worth and we set our trading ranges accordingly.  If the market wants to out-perform or under-perform for a period of time – we're happy to take advantage of it but we don't allow ourselves to get caught up in the hype – in either direction.

Q4 GDP's 2nd revision came in strong at 7% vs 6.9% in the first pass so the Fed is still on the table and, as I said, how much is Russia/Ukraine going to affect that?


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  1. Good Morning.

  2. Good morning! Phil, is there a level of membership that would get notified of trading decisions during the webinars? I'm rarely able to attend but would love to get the info.

  3. Phil / SQQQ
    With SQQQ at 52, would you suggest closing some of my long positions or should I sell some more calls to balance it out?

    265 Long Jan 2023 5.00 C [equivalent to 53 Long Jan 23 25.00 C]
    100 Short Jun 2022 10.00 C [equivalent to 20 Short Jun 2022 50.00 C]
    100 Short Jan 2023 15.00 C [equivalent to 20 Short Jan 2023 75.00 C]

  4. Russia launches attacks Ukraine as Putin warns countries who interfere, “consequences you have never seen”

  5. putin's ace up his sleeve is that he's crazy and we know it….. :(

  6. It also feels like the Ukrainians will put up the same 'fight' as the Afghans….apathy is a most difficult fight to win….

  7. adding to my PARA position today   ( old VIAC )

  8. Phil, in the LTP you cashed out the calls in HAL last week during the review.  I noticed that the call positions were both showing as long 40 contracts ($15 and $20 strike), both showing large profits.  Can you confirm that the $20 strike s/b short 40 contracts vs long 40 (which would make for a loss, not a gain for that position).  I believe this was a bull call spread initiated 09/21 and not 2 long positions.  Thank you.

  9. Hong Kong’s biggest builder warns of slowdown as profit dips

  10. SPWR   a little green today 

  11. "Maui is getting ready to move a major highway"    Phil I dont know how you find theses random news sources.. but..

    I was on that road in November and thought what a great place to jump in the ocean.  If you could find a spot to park , the water is right there. 

  12. Good morning!

    My impression is that, so far, Russia has fired a bunch of missiles at "strategic" targets like airports, but hasn't actually crossed over – other than the disputed areas to the East.  Of course our very lame response to this may encourage him to send in forces, but who knows?   On the whole, I'd say this 2.5% morning drop was a bit of an overreaction but, overall, it's still well within the bounds of what we were expecting the market to do in this correction.  

    Webinar Trades/Swamp – Sorry but it's just me talking and then, if I remember, I mention what we talked about in chat after the webinar – there's no secret key that unlocks some other level of service.  I don't often call for new trades during the webinar – just if something happens to catch my eye during a session.

    SQQQ/Jij – That we were talking about in the Webinar, but in regards to our unbalanced TZA spread.  In the STP, let's sell 50 of our 2023 $20 calls at $21.50 – as that's $107,500 and $100,000 was our goal and is our goal on the remaining 150 $20/40 positions:

    TZA Long Call

    2023 20-JAN 20.00 CALL [TZA @ $41.32 $2.34] 200 2/1/2022 (330) $337,000 $16.85 $4.65 $16.85     $21.50 $1.50 $93,000 27.6% $430,000
    TZA Short Call 2023 20-JAN 40.00 CALL [TZA @ $41.32 $2.34] -150 2/4/2022 (330) $-150,000 $10.00 $4.15     $14.15 $2.75 $-62,250 -41.5% $-212,250

    So the remaining 150 are net $110,250 despite being 100% in the money on the $300,000 spread.  Isn't that crazy?  So if the Russell doesn't go up from here, we make $189,750.

    Now, back to Jij's SQQQ…  When you get a move like this, you want to lock in some of the gains.  You should be getting about $27.50 for Jan $25s so x 265 would be $728,750 so of course I'd want that cash.  You could move $250,000 to the TZA spread above and buy another $500,000 worth of upside if we simply fail to go higher from here.  I would also move the June $10s and the $50s are $11.50 so 20 would be $23,000 and I'd put them in 60 2024 $40 ($25.50)/$65 ($20) bull call spreads at net $4.50 ($27,000) so you are 3x covered on the short Jan $15s and hopefully they expire worthless.  

    Putin/1020 – Not at all crazy.  Very smart guy, plays the long game.  He will have Russia mired in a long-term war and I don't think he wants that to be his legacy BUT it might be a good excuse for him to keep the peace at home in a "state of emergency" where he can stifle opponents and declare his enemies "sympathizers" or "collaborators" so there may be some utility to him getting involved in a long-term conflict.  The Republicans did it with Vietnam as an extension of the "war on communism" that was such a successful purge for them at home in the 50s.  

    The 1972 show marked Hope’s ninth consecutive Christmas appearance in Vietnam. Hope endorsed President Nixon’s bombing of North Vietnam to force it to accept U.S. peace terms, and received South Vietnam’s highest civilian medal for his “anti-communist zeal.”

    Keep that in mind – we were at war most of the time until 1972 – we just happened to live through a very odd era of relative peace but inequality, resource scarcity and a changing environment may swing us back to a long-term war footing in the not too distant future.  Meanwhile, our economy and the markets kept growing throughout.  

    PARA/Stock – Finally got the charts working.

    HAL/Nom – You are right, that needs to be corrected but, overall, the position was cashed out.  

    SPWR/Stock – That's notable.  Bounced off that lower trend line – that means people are waiting to buy and have orders in to go long.

    Right there/Stock – Well that's the problem – too close now.  I love those roads.  

  13. /GC turned down so done with /SI.  The /SIH22 contracts are holding up but why chance it?  


  14. Phil/putin  I'm not sure what you see in Russia, but I see a man in complete control of the citizenry and now wants to cement his place in Russian lore….


    Where does it end?

  15. Big turnaround for the Nasdaq – that's why we aren't greedy and take those TZA profits when we hit our targets. 


    You could actually play /YM long at 32,500 since it's lagging on the bounce.

    Also, for $56, it's silly not to take a profit on 10 more of the TQQQ Jan $100 puts in the STP as that's $56,000 and the worst case is we get assigned long TZAs at $75 and they are $45 now so $30 of our $26 gone but it's a $25 spread so it's miles before we get behind.   The short $75 puts are $33.83 at the moment and the 2024 $65 puts are $30 and the $45 puts are $17, so a 2x roll to there if we have to.

  16. Don't forget 13,500 is the base of the Nasdaq on the lower bounce chart, so we'd BETTER be back there – at least.

    The big inflections are 1,960 on the Russell and 4,320 on the S&P, which are the strong bounce lines.  RUT is right there but /ES is threatening 4,160 – which is the weak bounce and that is no bueno.

    And, as usual, no one cares what the Dow does:

    AAPL bouncing and that drives the indexes but still down for the day.

    And I forgot to make it blue this morning but we're buying back the 40 short April $155 calls in the Butterfly Portfolio – now $10, so still lower than they were yesterday.

    So what's the strategy?

    1. AAPL goes up and eventually we sell higher-strike calls to cover/insure
    2. AAPL stays flat and we sell probably July $160s, which are now $12.45
    3. AAPL goes lower and we sell July $150s, which are now $18.25 and, since it's only a 1/4 cover, if AAPL fails $140, we sell $140 calls as well and put stops on the short $150 calls to make sure we don't get burned on the bounce.  

    We already made about $45,000 on the short April calls so selling $50,000 more of the July $160s would be great as it would be 100% premium and that premium WILL expire in 141 days – whether AAPL is at $130 or $180 and our net $334,000 bull call spread will be closer to it's full $480,000 – as long as we're over $150.  If we're not over $150, it will cost us $80,000 to roll the long 2023 $120 calls (now $45) to the $110 calls (now $53) – assuming the spread goes down to $5 (and, if it doesn't, we don't roll it).  The 2024 $110s are $59 and that's where I'd rather go, so we'd be spending $14 x 180 ($252,000) to buy another year to sell.  Since we can pick up $60,000 per quarter selling short calls – the whole thing will eventually be paid for by the extra time we're buying on the long calls.  

    As we get closer to Jan, the $150s will be either in the money and we could roll them (right now the 2024 $170s are an even roll) or out of the money and expire worthless and then we could sell the 2024 $140s and still have the same $480,000 spread with all our outlays back in our pocket and another year to sell premium.  

    In a perfect world though, we roll the 2023 $150s to the 2024 $170s and then we have 160 $110/170 spreads with a potential of $960,000.  That's how this AAPL spread got so big in the first place – we started small but all our rolls worked out and we added a few more each time they dipped.  

    LOL, that's the original from July 2018!   AAPL split, that's one reason we have so many as well.

    So originally it was net $7,250 and now we're talking $960,000!  

  17. Phil/SQQQ

    I bought 50 Jan 2024 $5 SQQQ for $3.88. Thoughts here? Close it and take the profit? Sell calls against it? 

  18. SPX back to green with the sanction clarifications mitigating uncertainty. Seems the proffered sanction bazooka will now be a BB gun as:

     that’s not the position that the rest of Europe wishes to take,” Biden said when asked why SWIFT sanctions weren’t included in the new package. 

    So, the initial crisis is passed we can get on with the oil, gas and minerals continuing to move as there will be backchannel deals and financial workarounds that no doubt will be annoying but business is business. The poor suckers left holding the bag will be the citizens of Ukraine who will find themselves once again as a Russian client state. Sad but true as our EU betters have now passed judgement and who are we to quibble? 

  19. Wow, massive turnaround on Nasdaq now – I guess the war is now good for stocks?

    Russia’s Invasion of Ukraine Forces Military Reckoning in Eastern Europe

    We’re tracking the Russian invasion of Ukraine.

    Sure, we worried about it for almost a full day – that's plenty….

    SQQQ/Swamp – As I said earlier, of course take profit on an overdone move like this.  Our bottom target was 13,500 so, when we hit 13,500 – why the hell would you have unovered naked calls?  Either cover them or cash them out.  It's not really a profit if all you do is sit there and look at the digital numbers dancing around – LEARN TO TAKE THE PROFITS!!!!  

    Especially in the case of the old 2024 $5 calls – any chance you have to sell them for a good price – be grateful.  

    "Truckin', like the do-dah man

    Once told me, "You've got to play your hand"

    Sometimes the cards ain't worth a dime

    If you don't lay 'em down" 

    Ah, drugs….

    And what Pstas said – such a joke when they pretend to care.  




  20. Care/pstas/Phil    …and Biden does not think it's time to sanction putin himself…wtf?

  21. Holy crap, speaking of taking profits!  



    Biden/1020 – He said he wanted tougher sanctions but this is NATO's call and Europe is too tied in to Russia economically to hit them hard without spinning into a recession.  At the time, everyone's economy is too stressed out for sanctions or war (or more debt) so Putin timed it well.  This is just like 2014 when we all squawked about Crimea for a few days and then started printing textbooks that showed it as part of Russia.  

    Look at China with Taiwan – we actually let China force people to not treat them like a country.  What do you think we'll do when China sends 1,000 ships to surround them and begins marching troops in to "secure the peace".  

    Even the Peacemaker has to bow to China!

  22. Phil/Profits – how did I know i was going to get scolded for the naked calls?! Lol. Even if it was deservedly so!

  23. I don't want to go to war, but slapping Russia with a wet noodle is incredibly disheartening.  I'm really disappointed that long on the indexes was the move for today.

  24. Patton was right about the Russians. This definitely emboldens China to take Taiwan. And the market rallies.

  25. seer,  That is why TSM, who could do no harm with the chip shortage,  was down 10% at one point today 

  26. Stock – Would you believe today was a day I was tied up all day and the market had rallied by the time I broke free? All these pullbacks have a short  life that you miss if you blink or sneeze. 

  27. In Private, Bankers Talk Nuclear War and Russian Trading Risk

  28. Would you pay $6 for one strawberry? This N.J. farm is banking on it.

  29. Russia’s Yearslong Quest to Quit Dollar Eases Impact of Sanctions

  30. Is Taiwan Next?

  31. LABU up 27.5% from it's 12.63 open to finish at 16.10

  32. Profits/Swamp – You can't take a scolding personally.  It's an educational site and you gave a good example of what not to do.  wink

    Sorry you missed it seer but there wasn't much to do but watch – exactly because the Bounce Chart was still iffy.  That's why they are so useful – we knew in the morning it was going to be an iffy day – despite the sell-off.  That's why we made only slight bullish adjustments in the STP.  The key is to be balanced so, at worst, you might miss taking advantage but generally you don't get killed by a day like yesterday.

  33. is there a chat room for today? am i missing out?

  34. Sorry, my bad, I thought I hit publish and I did not.