Our 2017 target for CLF (per the rolls we made recently) is $15.  At that price, we make a bucket-full of money!  For example, 30 2017 $8/15 bull call spreads were $2.05 on 9/30 ($6,150) and we sold 30 2017 $10 puts for $4 to cover ($12,000) for a net credit of $5,850 in our Income Portfolio.  At $15, we'll put another $21,000 in our pockets.  

That spread is still a net credit of $3,000 (up $2,850 or 48% in less than a month) so I still like that one a lot as the total upside potential is 450% so this is just "on track."

RUT shot up and /TF hit 1,131.40, now 1,129.40 and now I really like the short below 1,130!  That's lining up with 16,842, 1,963.5 and 4,075.5.  See, I told you there was no resistance up to there…  These should be proper resistance (1,965 and 16,850) to verify the short positions.  

AAPL/Jomp – I like the 2017 $90/120s the best as I think it's an easy target to hit and, even at $12.50, the pay-off is fantastic and you are paying no premium for the position (AAPL $106 is $16 in the money).  Essentially, you are getting a position in AAPL which gives you up to $17.50 of upside (140%) in 2 years and you start off $3.50 in the money – where can you get a better deal than that? 

Speaking of shorting the Russell, time for TZA again as the Jan $15s are just $1.75 and the Nov $17s are 0.42 for net $1.33 on the spread.  Let's add 50 of them to our STP.  The logic is, if TZA goes lower, we can sell puts and roll the calls and sell more calls to cover and, if TZA goes higher, we can roll the short calls to a higher strike and our longs have a higher (0.57) delta than the short calls (0.28) with much more time to expire.  

$25KP/JPH – As we have nasty restrictions in the $25KP (noted in the review) and as we got stung a few times this year (we were nearly flat a few months ago), I'm trying not to take anymore risks as I'd really like to get us to $35K by the end of the year as our goal is $50K by the end of next year – at which point we can open up our playing style a bit.  So, I'm looking for good earnings plays but it's too early to tell who's getting an overreaction.  Ideally, I want to find quick in and out plays, not long-term holds, since we have to BUY premium – and we hate to do that…

I was thinking USO and now that CNBC is saying $70 and GS is lowering their outlook – it may be time for us to call a bottom as those guys are idiots.  We did buy USO in the STP and, as I often say, the best time to follow us on a trade is AFTER we lose money and decide to DD or roll – that way, you usually start with a 20% better position than we did.  

That being the case, I'm thinking, for the $25KP 10 USO April $28/32 bull call spreads at $2.30 is nice as $2,300 returns $4,000 for a nice $1,700 win (73%).  Now, before I decide to commit that much, I need to consider what I'll do if oil does drop 10% to $72.  That would send USO down 10% to $27.50(ish) and we can figure the April $28 calls will drop to the price of the $31 calls ($1.85).  

Since $1.85 is about the net of our spread, I don't mind that and we'd roll to July.  What July calls are $1.85?  At the moment, it's the $32s and, since we're considering a situation in which USO drops $3, then probably we could roll to the July $29s about even.  We test that premise by checking the current price of the April $28s ($3.75) and the current price of the July $29s ($3.30) and then certainly our expectations are in-line with reality.  

So, now we have a spread where ANYTHING higher makes us money and flat makes us money and down 10% we don't mind because, in reality, we'd probably be willing to add to that spread with oil at $70 betting into summer driving.  In conclusion – it's a good idea for the $25KP.  

In the STP, we already bought the 2016 $28/April $30 bull call spreads for $2.50 and the 2016 $28s are still $4.50 – so miles to go before there's any pressure there.  

GTATQ came in a 0.58 – that's OK because we're playing for $1. 

CAT/1020 – Well revenue was flat so it was stock buybacks and cost-cutting driving the gains.  Still, impressive job by management – that is what you want a company to do with your money.  They bought back $4.2Bn worth (4.2%) of stock this year alone AND pay a 3% dividend ($2.80) – that's like a 7.2% return from financial engineering alone.  They are projecting earnings over $6 next year, for a p/e of 16 – there's no reason not to own this stock for the long term.  

As a new trade on CAT, I'd sell the 2017 $80 puts for $7.30 for a very nice $72.70 net entry.  That's more than the $5.60 dividend you'd make owning the stock for 2 years and a 26% discount if put to you.  That's great as a stand-alone play or it can be paired with the $100/115 bull call spread at $5.50 and you still have a net $1.80 credit (so net $78.20 entry – 20% off) but 100% of the upside over $100 for the next two years.  

That's going to be a Top Trade!  

SDRL/Yodi – Keep in mind this is a function of low oil prices, which come and go over time and not a particular flaw in the business.  I assume the short 2016 puts are the $30s and it looks to me like the 2017 $23 puts are $8.50 so I'd spend $3 of the $4.70 you collected to drop the strike 20%.  That leaves you with the stock at $35 less the short calls ($2?) and the $1.70 left from the short $30s is net $31.30/27.15 and, if you sell the $30s for $2.25, that drops you to net $29.05/26.03.  If they keep up their dividend ($4), it still makes for a nice hold as you're getting 13.7% while you wait.  You can be more aggressive on the call sale but the $25s are only about $1 more and I don't think it's worth it.  

Although, interestingly, as a new trade idea, since the SDRL 2017 $25 calls are $3.30 and the 2017 $30 calls are $2.25 –  I love buying 20 of those spreads for $1.05 ($2,100 but $1.25 would be fine) and selling 5 of the short 2017 $13 puts for $3.20 ($1,600) and then you are in $10,000 of long spreads for net $500 and your worst case is owning 500 shares of SDRL for net $14, which is 39% off this already low price.

What a fantastic way to profit from Yodi's pain! 

I'm looking at what's cheap and attractive (with a potential catalyst) on the Buy List:  

Gold prices may go up. 

IBM wants to move more to the cloud, these guys are already there.  

China and Japan trying to restart their economies, Europe getting in on the act and, as Ned Stark says: "Winter is coming."

I suppose I'd want to own the stock and, after they spin off PayPal – I'd dump the Ebay and keep the Paypal – that's like participating in a PayPal IPO.  

These guys are 10% gold, 40% oil and gas, 5% refining and 45% copper.  Their attempt to diversify over the past few years essentially led them to buy a lot of assets at the top and now they are getting hit on all fronts.  Earnings are 10/28 and I'm hoping they miss and get an irrational sell-off from here – but they are getting interesting as a LONG-TERM hold below $30. 

GSK is accidentally paying a 6% dividend at $2.59 with the stock down to $43.47.  They are a good, solid long-term hold and I'd do a buy/write on them, buying the stock for $43.47 and selling the 2017 $40 calls for $4.75 and the $35 puts at $3 for net $35.72/37.86 so the worst case is you are assigned 2x at $37.86 (13% off) and knock another $5 off for 2 years worth of dividends while you wait.  If you get called away on the 1x entry, you get $5 in dividends and $40 cash for $45 back on $35.72 between now and Jan 2017, which is a very respectable 26% back on your cash and over 50% return on margin.  Let's put 5 of these in the Income Portfolio and this will be our first official Top Trade Alert!   

If there is any sort of housing stimulus, they will fly.  We already have them in our LTP.  As a new entry I'd grab the 2017 $2/5 bull call spread at $1.50 and sell the $3 puts for 0.85 for net 0.65 on the $3 spread.  

Still cheap.  

HAS just had good earnings today and, as I've mentioned, MAT is simply transitioning Barbie to a wider offering (cannibalizing their own sales).  That's no reason to hate them and $29.30 is a great entry and I like selling the 2017 $25 puts for $3.85 and buying the 2017 $28/35 bull call spread for $2 for a net $1.85 credit.  So the worst case is owning MAT at net $23.15 (21% off) or, best case, making $8.85 at $35.  Let's get 10 of these for the LTP.

Another accidental big dividend payer ($1.04 = 6%) at $15.85 and we can buy 1,000 shares of the stock for the Income Portfolio and sell the 2016 $15 calls for $1.80 and the $15 puts for $2.55 for net $11.50/13.25 so worst case here is owning 2,000 shares for net $13.25 and, if the $1 dividend keeps up, then it's 8.7% of the $11.50 we lay out and, if we get called away at $15 (up $3.50), that's another $3.50 (30%) for a very nice one-year return.  

Those are good for a start – light commitments and we'll see how round one goes.