Thanks for the oil tip Phil: Bot & sold the USO May 29 calls for net $125. Not bad for few minutes work.
JWick1981
Hey Phil, Your HOV suggestion about 3 months ago basically paid for my Philstockworld subscription for years to come. My average cost is about $1.
Ether
I would like to thank Phil and PSW crew for the insight and assistance (even the liberals).
In December I initiated long stock positions buying stock, writing calls and puts in AAPL, WFR and CHK (scaling in and out). Over the last week I have been trimming back my positions selling stock and taking out my callers and putters. I am now back to my initial 25% position that I started with in December. However this time, my cost basis on shares AAPL, WFR, and CHK is $0! With money to spare from those positions.
Texasmotion
Phil, I have the SRS 2011 $7.50 short puts you recommended awhile back. I sold them for $2.20 and now $1.51 (up 31%) although SRS has been down since inception. This was a nice mellow way to play it like you said, thanks.
Jomptien
Phil/BCS - Didn't realise they traded here. Should've known really. Thanks for the tip. managed to pick some up just before the close at a 15% discount to the UK closing price.
DB
Thanks for all the work you put into this site. I have looked at a few other option advisory or "mentoring" services this year, but no one offers even a fraction of the content or the level of services you provide at PSW!
Jelutuck
I am an investor, not a trader. The information at Phil's World is top-notch and always relevant. It is great to see your website thriving.
Prof
I have been here a year, and made most of my money back from the 14K fall. The people here are more than willing to help whe Phil cannot get to it. FWIW - This site is my brokerage firm, I was with Wells Fargo Portfolio and it was costing a fortune to trade, the costs here are more than offset with the data, trade ideas and profits you should make.. and I get a chuckle out of Cap and Phil's rantings on healtcare, guns, oh, yeah, and government….
Pharmboy
I've recently done exactly what Phil described. I upgraded my ability to trade the IRA acct. by transferring acct. from TDA to TOS. TDA would not allow spreads; TOS does. Neither will allow naked options. With spreads I am able to buy calls or puts several months out then sell front month calls or puts over and over. This allows me to collect premium, which is, of course, the goal. This wasn't an original idea. Phil put me onto it. Since the transfer I've substantially increased my performance in the IRA!
Iflantheman
Phil - I am 3 month follower and shout a big thanks for all the good advice and training. I read all the materials and posts as suggested. I am retired CFO and took over my investments 2 years ago from broker after frustration with returns. I followed some conservative advice for retirees and have 60% bonds currently in a 5m portfolio. I had been doing covered calls on my stocks to boost returns and slowly am getting more aggressive after following your site and my son who has been with you for 6 months. I allocated 1.5m to stocks and am scaling up from 30%. I did some of the trades suggested in early June using Aug & Oct buy/writes on CSCO, WMT, MON, WFR, DO in addition to calls on XOM, CVX, PEP, PG, WM, T that I owned. Most are doing very well (4-24%) in 60 days. My good problem is that instead of getting longer, I will be making 6% quickly (50% plus annualized) and getting called away on many positions. What would you advise for getting long again. Thanks again for such a great job advising all of us!
TXChili
Phil you are great, and not only is your market info spot on but you have the courage to call it like it is and write about it in a great tone.
Flanger
Phil - FAS - I dont know whether to be happier I averaged down and sold calls or that I got myself out of FAZ the other day…thanks for that help
BCFla
Don't expect to get rich quick here, but you can get easy 30 - 50 % per year, just by buying good stocks at discount (as we often discuss), selling monthly premiums of calls and puts.
Tchayipov
Hey Phil – I ignored your call to sell those AAPL $580s for $1 so not sure whether to thank you or not (just kidding) for my $5 winner. Actually I want to thank you from the bottom of my heart, that was an uncanny call.
TheChaser
Phil-
I would like to echo the sentiments of dclark41. Joining this site was the best thing I have ever done to aid my growth as a trader/investor. There are so many smart and experienced people here sharing their ideas that regardless what your investing style is you will learn something daily. Thank you and all the regular contributors for your generosity.
Acd54
Happy Thanksgiving Phil and to your family and associates. Also to all of the other fellow citizens of Phil's Stock World. I am particularly happy and thankful that I clicked on your article in Seeking Alpha a number of years ago. That opened the gate to Phil's Stock World and "being the house". My wallet thanks you as does my peace of mind in trading options, stocks and rarely futures. Your liberal views opened up my views—being a boot strapper (pulled myself out of a poor background) I was a CONSERVATIVE—cynical of others who weren't as driven. Now, I am much less so; you have taught me more than how to make money and manage risk. So, again I give thanks to you and the others of PSW!!
Newthugger
Phil/Eric/Cwan/Matt/Cap/etc.. - I've learned so much from all of you and want to thank you. I'm up 23% this month thanks to all of your advice - Thanks, guys!
Josiah
Speaking of the "Man Who Planted Trees", it really works. I bought BTU back in March at $49.87. I practically bought it at the tippy top. However, I soon afterward found this site, started learning Phil's methodology(and those in the strategy section) and began selling calls/puts regularly against my bad position. As of yesterday, I still own the original 100 shares, but have brought my basis down by over $11.00. Couldn't be happier, what started out as a really bad entry, I have managed to work down to a good basis. Had I not watched that video and learned your system, I would sold out of the position, and been kicking myself for making such a bad entry.
Hoss
Phil: well, often you say, just for FUN, great comment, TXS,
closed 2 SKF positions, one with 10 % , the other with 6 % gain,
RMM
Opt, I think the hardest thing is being disciplined enough to trade with you. Atleast now when I see something go in the red I know how much I'm going to loose and that I will profit somewhere else and have enough money left at the end of the day to trade again. Thanks for all your hard work! My stress levels are down 75% and I have even made a small profit in the short time I've been here
Mopar
A truly great website with a lot of information for investors. Whether you are a novice, seasoned, or a professional there is a lot to be gained about stock options and options trading from this very informative website.
ZKatkin
I thank you for the years of being my teacher, always took the time to answer my questions.
You are the BEST !
QCMike
Phil,
thank you for the thorough response(s). I joined this group last week to take my education to the next level. the school i am involved with very good at calling out levels but very little live trading and little help in managing a position going against you.
I like the combo of knowing where the major levels are coupled with your approach to getting in. learned a lot this week.
thank you!
DawnR
Thanks super helpful re: UGN example…..other inflation/market-correction-defensive-related play you threw out that has jammed UP in less than a month is TITN 6/14 $15 puts, up 40%. Excuse my enthusiasm but haven't had those types of gains in multiple plays in years let alone days doing it on my own…….maybe I should host the PSW infomercial!!!!
stevegeb200
Phil/CL-that play made a quick $500 per contract! Took all of 10 minutes! I want to thank you for helping me not just learn a bit about trading, but giving me some confidence and most of all a rewarding "hobby" to look forward to each day. I have had a few mistakes and losses along the way, but I have had some great wins too and I am now consistently making money trading futures and have even learned to go to sleep while holding a losing position knowing that tomorrow is always another opportunity to win again. So thanks again for your help and patience along the way.
Craigsa620
Phil - DIA 107 Calls. As suggested I am taking the money and running to home depot for some shelter supplies! This is the grand finale of several successful trades from you through this roller-coster and as you have further suggested it is time for me to sit back and relax in cash. May even be able to talk my wife into the premium membership after these intelligent trades in a stupid market.
DOStrade
I subscribed to Phils Stock World full service for a year or so and found that it was extremely helpful. Now I just get the Stock World Weekly summary, which I find invaluable.
Phil does not baby people and certainly can't make someone into a successful stock operator who does not make the effort on their own behalf, but he is extremely generous with his time in answering newbie questions.
Although I found it difficult to follow and implement all his trades in real time, what I did find was that once you got the hang of his methodology and way of thinking, you could work out your own trades and be quite successful. Even just using his patent Rule Number One* alone is worth its weight in gold. Rule Number Two is even better.
Rookie IRA Investor
Phil, those OIH $80 p that you recommended last week for ~$1 are now worth $5.50!
Greg
Hi Phil,
Thanks for the free disaster hedge ideas. I implemented variations of two of them on SDS bull call spreads and EEM bear put spreads (haven't done the TZA yet) and they really hedged my short term longs nicely today. Makes it seem a lot less like gambling.
You are the man (of the people)!
Howard Roake
Phil.... I remember back in March of '09, you stated " Unless you think the country is going to hell in a hand-basket, NOW is the time to do your buying". Do you remember ?
I took your advice, and bought leap $2.00 calls on F, approximately 200,000 shares using the options, for just pennies. Now that was the best Ford I ever owned.... made over $1 mil - thanks go to you Phil. I now drive a Mercedes but still "love" the Ford.
1,160 – That was the S&P close after yesterday’s wild action. A neat 160-point drop (12%) in 3 months for the World’s largest market kind of sucks, don’t you think? My commentary in June 30th’s "It’s the End of the Quarter as We Know It" post was:
We feel fine because we cashed out on the long side (shorter-term, unhedged positions) and we really don’t care what the market does today or tomorrow but we are betting this rally reverses and we will be taking some (more) short hedges today – hopefully selling into the last legs of this fairly fake-looking rally.
My top downside picks to play the sell-off were EDZ ($17.90 at the time, now $28, which is up 36% even without using options to make a spread) and TZA ($35.50 at the time, now $51.10 – up 44%). As I said in that morning post: "I didn’t think they could take the Dollar below 75 but they hit 74.54 last night and it remains to be seen if they can hold it down in real trading, especially with the Pound weakness (see this morning’s Alert) and the Yen’s unwanted strength. Something’s gotta give and we’re betting it’s this fake, Fake, FAKE rally…."
We were shorting oil futures (/CL) at $95 (now $80, up $15,000 per contract) as we thought the holiday weekend was the end of the run but we did keep heading up to $100 (down $5,000 per contract) before finally getting a drop to $75 (up $25,000 per contract) in early August.
One funny play from that June 30th Member Chat was the VIX Aug $15/17 bull call spread at $1.20, selling the $16 puts for .50 for net .70 on the $2 spread. That just seems so cute (and obvious) with the VIX at 38.84 now (it was 30 at the end of Aug for a full 185% gain on that hedge).
Other hedges we liked in that post were the TZA Oct $31/42 bull call spread at $3, selling RUT Aug $710 puts for $2.90. The RUT puts expired worthless so net .10 on the spread that is currently $20 in the money for pretty much the full…
Luxurious, avaricious, false, deceitful,
Sudden, malicious, smacking of every sin
That has a name; but there’s no bottom, none.
That’s the way the markets feel this week as we, like Henry V – head once more into the breach (or close the wall up with our EU dead!). I had said on Tuesday, that it was 1,200 or bust on the S&P (as usual) and we failed to hold 1,200 and we busted and then we failed to hold the bottom of the rising channel David Fry had drawn at the top of that post (117.5 on this chart) and so we tumble back down towards our much more reliable -5% line at 1,140, which I drew in red.
While tricky, it is not impossible to trade this kind of action. We are very fortunate to have been trading this exact range on our virtual $25,000 Portfolio and we just had our best 2 weeks of the year, despite the insanity, with a net $16,475 gain since 9/15. That’s 66% of $25,000 right there and we’re now at $97,400 and on track to hit our $100K goal for the year on Friday as long as the Russell doesn’t fail 645. If not, as with many trades this year – we’ll work it out!
That’s the whole point of this portfolio exercise – to illustrate the idea of balance, even in aggressive short-term trading. We are never all bullish or all bearish and sometimes we’re wrong but, generally, we simply do more shorting at the top of our range and more buying at the bottom of our range and then we simply sit back and wait for the winners to come in. Of course for almost every winner there’s a loser but then, a week later, the losers are winners too!
OK, so PATIENCE and BALANCE – that’s those are our two points! And taking profits off the table. Right, then our THREE points are patience and balance and taking profits off the table while not being greedy. So that’s FOUR points. Amongst our points are Patience and Balance, Taking Profits off the Table and Not Being Greedy.
As I often say to Members, if you wake up in the morning and you’re not sure if you want the markets to…
700 has been a tough nut to crack in our small-cap index.
Dollar weakness has hurt the companies that do most of their business in the US, collecting crappy dollars for their goods and services and having to pay through the nose for high-priced commodities and imported goods. Small caps don't have the muscle to hold down wages in overseas factories while they boost productivity to the point of suicide like our beloved Apple can. No, while our small caps may have a plentiful supply of US workers willing to work "cheap" – we're still not at the point where our Government forces students to work in the factories as "interns."
So, while we wait for those IPhone 5's to roll off the assembly line, we'll be keeping an eye on the Russell, which should benefit from the recent strength in the Dollar, which is is up over 5% in September – although probably topping out at 78 – which is good, as it will give the markets a nice boost on the way back down.
Don't worry, no one will be arresting Rupert Murdoch because – well, he's rich. Rich fixes everything, doesn't it? Rupert's pal, Chinese Premier Wen Jiabao (What? You didn't think he only buys Western politicians, did you?), says no one should rely on China to bail out the world economy. "Countries must first put their own houses in order," Wen said today. Asian stocks dropped following his comments, but European markets and futures have shaken the news off after the bank downgrades in a classic example of selling the rumor and buying the news.
Today the big rumor is bullish on news that Geithner is going to Europe to spread the religion of Easy Money in what will…
It's very sad when you can get your best financial advice from cartoon characters.
I apologize for the language but this video pretty much says it all. As the man in green says: "Buy the f'ing dip, you f'ing idiot." That's the entirety of the market strategy we are being trained like Pavlov's dogs to follow. Also as the man says "Now, don't forget this only works if you go out and tell all your friends and family to do the same. That way, when they are buying more expensively than you, you can sell back to them and collect your money."
Of course it's a Ponzi scheme but it's a gigantic, legal one and the best thing about it is that the Government FORCES everyone to play so you never run out of suckers. When there is a lack of actual new sucker/investors to put money in, the Government steps in with stimulus or buys equities (QE1) or buy Treasuries from the banks so they can have free capital to buy equities with (QE2). They debase the currency and drive inflation higher while talking it up even more so and virtually penalizing people for saving money and not shopping. In this way, the US Government places a tax on every single citizen through a systemic devaluation of their lifetime accumulation of wealth as well as unfavorable savings and inflation conditions that are aimed to force money into equities and commodities.
What is the logic to this? Well, none if you are a government that actually cares about the long-term benefit of 310M people but we haven't had a government that was "for the people" since they put two in the back of Kennedy's neck so why complain about it now? What we should be doing is celebrating the sheer stupidity of the situation and enjoying the ride as this stock market roller coaster clacks up the tracks – towards a drop that is certain to have investors screaming all the way down but, for now, let's listen to what the Bernanke Bears have to say in their latest cartoon about the Bank America crisis with WikiLeaks as well as their advice on NFLX and CRM:
Now, what could be more simple than that? Just take all…
We were too bearish as I had expected a bogus commodity rally in last weekend's wrap-up but I didn't expect it to persist for a week, even as the dollar held it's ground above 80, a 10% pullback off the top, when oil was $40, copper was $1.50 and gold was $850. Now oil is $80 (up 100%), copper is $3.35 (up 123%) and gold is $1,135 (up 33%). Let's say gold is a true indicator of dollar weakness – that means that only 33% of oil and copper's move up can be attributed to the 10% drop in the dollar (not that even that makes sense but we'll give it to them). Can the rest be attributed to demand?
Certainly not with copper. Global copper consumption was down 1.9% in 2009 and Q1 2010 is lower than any quarter since Q1 2009 and even Barclays' very aggressive targets for China growth only bring global demand up 2.5% this year – whch would just about bring us back to 2007 levels of consumption. That, of course, also assumes a rebound in housing construction – something we are not seeing at the moment. Also, China spent $700Bn last year stimulating their economy and one of the ways they did this was to stockpile copper. As you can see from the chart – that too appears to be winding down and even Goldman Sachs has abandoned the bullish side of copper at this point.
Oil is just as silly. According to the EIA, global oil consumption is not expected to return to 2007 levels until late 2011 – and that is with some very rosey estimates of a global econonomic recovery – exactly the type of thing that can be derailed by high oil prices! Mighty China's consumption is projected to go from 8.66Mbd this year to 9.13Mbd in 2011, a 500,000 barrel increase. Last week, the US had a build in inventories of 4Mb – we just send those over to China and everyone is happy! I've already had my say on oil demand this this weekend, so let's just move on…
Let's just say I'm a little skeptical about any market moves that are…
Peter D has a long-running and very successful system of selling premiums on a regular basis that's well worth learning.
Investors selling a short strangle are expecting the underlying stock to not move much in either direction. The strategy is accomplished by selling a call option at a higher price than the current stock or ETF price and by selling a put option at a lower price than the current stock or ETF price. Both of the options will have the same expiration month. The investor in a short strangle benefits from the underlying moving within the spread between the call strike and the put strike.
There are two reasons we like this strategy a lot at PSW:
1) It's boring! Unless the market is MUCH more volatile than normal, taking sensible, NON-GREEDY, out-of-the-money short option positions is a fairly market-neutral way to place our bets. While the risk/reward ratio may seem inverted, statistically it's a winning play over time.
2) It's perfect for our "be the house, not the sucker" philosophy of trading. We are always looking to SELL volatility. The idea behind this trade is that front-month volatility is relatively expensive compared to historical long-term volatility and we take advantage of selling a very high cumulative volatility over the course of the year.
I keep a notebook (actually several) of all of my trading ideas including results from back testing from all of the various stocks, indexes, etf’s, futures, market statistics and yes, even planetary alignments, tides and lunar cycles. While reviewing all of my Blue Wave test results today, I stumbled upon a consistency heretofore completely unnoticed yet intriguing in it’s premise and applicability to trading, especially trend trading.
It appears from my testing that one particular trading vehicle consistently generated better results, sometimes much better results, then any other. What I found was that the Russell 2000 index (RUT) did better in my myriad of testing then any other index, including SPX, OEX, QQQQ, SPY and DIA.
Naturally, I Goggled this phenomenon and found a number of similar observations, best summed up here:
The Russell 2000, while not as popular as the S&P 500 or the Nasdaq, is actually much easier to trade. The broadness of the Russell’s index causes it to trend better than the Nasdaq and the S&P. The breadth of the 2000-stock-index tends to filter out the noise in the market, which makes it a more efficient market to trade. The brokerage houses tend to tout the S&P and Nasdaq markets because they are best know to the public. The Russell 2000, however, is utilized a great deal by institutional players because it trends so well.
And then this:
However, there is another market also catching the eye of many day traders — E-mini Russell futures. A quick glance at the top trading systems we ranked across seven different statistical measures at the end of 2004 showed something extraordinary — several E-mini Russell trading systems occupying spots at the top of the list.
So let’s take a look at the RUT, which coincidentally is the base index for four of the highest leveraged ETF’s: TNA, TZA, BGU and BGZ.
Above is our big picture Weekly chart of the Russell 2000 index. A week ago it flipped from LONG
Is the Aussie Dollarabout to jump higher and signal that Commodities and interest rates are about to do the same? Possible!
This chart looks at the Aussie Dollar on a monthly basis over the past 16-years.
The AU$ created a bottoming pattern over several months in late 2008/early 2009 at (1). While creating the bottom, a couple of monthly bullish reversal patterns formed. What did commodities and yields do following the bottoming process in the AU$? Both were creating bottoms as well!
The 9-year decline in the AU$ has it testing triple support a...
The 2020 Atlantic hurricane season officially begins on Monday. A tropical depression or storm is expected to form in the western Gulf of Mexico later this week.
The Weather Channel is monitoring an area in the tropics that is currently experiencing a disturbance near the Guatemala-Yucatan border.
Already, Arthur and Bertha were two pre-season storms, making this the sixth Atlantic hurricane...
You don’t need a crystal ball — or an economics degree — to notice the pandemic is having a historic impact on the stock market and commodities.
Gold initially went down (like all assets) in the mid-March meltdown, but is up 14% YTD. Oil bid negative, for the first time ever, as May futures traders dumped contracts to avoid taking delivery amid a lack of storage. It has since rebounded partially due to production cuts and the lifting of lockdowns. Orange juice is up over 26% YTD on adverse weather than impacted Brazil’s crop and increased consumer demand.
By Jacob Wolinsky. Originally published at ValueWalk.
Thank you to Michael Robertson of The Strategy Chain podcast for interviewing me. See below for the episode timestamps and the full audio. TX – Jacob Wolinsky
Jacob Wolinsky worked in investing and financial journalism before founding ValueWalk, a site that curates information about investing, hedge funds, asset management, and the broader world of finance. We explore Jacob’s journey as an investor and an entrepreneur. This episode was a real treat for me because our guest was (and continues to be) instrumental to my growth as a value investor. Jacob gave us a ton ...
We have billions of them in our bodies with a combined weight of about 100 grams, or about the weight of a bar of soap. If there are so many antibodies inside our b...
Fundamentals are important, but they must show up in the chart. And when they do and if they may matter, it is a good sign if price and volume waves show a change of character.
The Point and Figure chart below is readtheticker.com version of PnF chart format, it is designed to highlight price and volume waves clearly (notice the Volume Hills chart).
Silver ETF volume is screaming at us! The price volatility along with volume tells us those who have not cared, are starting to, those who are wrong are adjusting, and those who are correct are loading up. Soon the kettle will blow and the price of silver will be over $20.
Normally silver suffers in a recession, maybe this time with trillions of paper money being creat...
The number of new COVID 19 cases has been falling in the Northeast, but the South is not having the same experience. The number of new cases per day in each Southern state has been rangebound for the past month.
And that’s assuming that the numbers haven’t been manipulated. We know that in Georgia’s case at least, they have been. And there are suspicions about Florida as well, as the State now engages in a smear campaign against the fired employee who built its much praised COVID19 database and dashboar...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
1,320 – That was the S&P close on June 30th.
Other hedges we liked in that post were the TZA Oct $31/42 bull call spread at $3, selling RUT Aug $710 puts for $2.90. The RUT puts expired worthless so net .10 on the spread that is currently $20 in the money for pretty much the full…
MacDuff once said: 
700 has been a tough nut to crack in our small-cap index.
It's very sad when you can get your best financial advice from cartoon characters.
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This whole week did not feel right to me.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.