Took profit on QQQ 57 Puts, bot 40 at $0.07, sold 20 for $0.15 and 20 for $0.32. Thank, Phil
Bobhu
I thank you for the years of being my teacher, always took the time to answer my questions.
You are the BEST !
QCMike
This site, for me, is where I have learned how to use options & futures. It is also where I get a constant flow of new ideas. In addition, it's great to know that I have many sources, mostly Phil, if I get lost in a trade. I have been here for 8 years, and am grateful to PHIL and fellow members. I manage about half a million, and although I may not always achieve what Phil does, I am not complaining. I have learned so much. Thank you Phil!
DClark41
Phil - Another excellent teaching article - when you write like that it blows me away. Thank you!
I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure.
I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options.
You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.
Redfern1
AMZN ... thanks Phil; boy did they run a squeeze on everyone there ... made me sweat ... scaling helped! I think AMZN has an 85 handle tomorrow ... maybe lower.
Cap
Very nice in and out on those USO puts again, easy way to get the subscription covered in just a couple of hours.
Thanks again Phil and everyone here contributing to such intelligent and informative discussion! I have wasted countless hours reading "professional newsletters" and message board blather over the years. Have learned a great deal here in a very short time. I have sent out a number of invites to friends and family for stockworld!
Eyezz
Phil, I wanted to thank you for all of your teaching, advice, and guidance. Because of you I don't chase, don't worry about missed chances, and play things much more selectively. Yesterday's /ES and /TF and today /CL are my first futures plays of the month. Thanks Phil. (Out of /TF and /ES yesterday with a nice gain)
Japarikh
Well I want to thank P. Davis for his style and for the fact that he affirmed my thoughts for a correction. He was right and his confirmation of my bias saved me thousands. Mr. Davis is amoral when it comes to money. He realizes the poor are screwed but we must fight to win. A measure of sarcasm and dark humour and it is great reading. 100% right on the correction.
Chaffey
Phil - I celebrate today, having reached my goal for the year, trading in sync with your education and guidance, of 1 million in profit. I learned a lot, achieved much, and am profoundly grateful. To be honest, when I set the goal I thought it was daunting, as I have for many years been an investor in equities but did very little with options. Learning and doing has for me been a blast!
I reached my goal by following Phil's strategies - lots of Buy/Writes, covered calls on equities , naked put entries for income production. I did it with 2.5 mil and kept 600,000 in cash in case I got in trouble. I concentrated on stocks (many of my own choosing) that had decent dividends and wrote front month calls against (OTM) which has worked well in this market run. 25% of my gain is in dividends and premium selling, with the balance in appreciation.
Gel1
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
I must give kudos to Phil for changing my way of thinking. I'm a gambler by nature and used to just play the indexes with 3x etf's… well I still do, but the options give far better returns than I ever dreamed of. With these wild swings I've been catching 50-100% winners in days.
Mkucstars1
Phil, I was so impressed with the personal note in the comments that I went ahead and paid for a months trial of premium that I have been on the fence for awhile about. Just reading the comments makes me already glad for the purchase.
Smasher
Hello Phil,
Thanks for the heads up on the comming sell off on friday, and the bs job yesterday. your our guiding light!
Microflux
Here I have learned and look differently at things. Over the years being with PSW I have first of all learned and gained in knowledge of trading. This to me is one of the biggest gains. I still remember the play on Caesar Palace, paid my trip to Atlanta!
Yodi
Thanks Phil another great week of guiding us!
Steven Parker
Personally I admire and respect you disciplined approach to investing. My style is at the extreme side of aggressive and I have to learn how to be less that way. If I yell " Let it Ride" at my house, no one says a word so I can't use that to temper my behavior. Phil has done a pretty good job of knocking some of my potential moves and as a result, I have increased my portfolio value by almost 25% since late July.
DoubleD
Phil, I just wanted to say thanks for being there. The world needs more of you. Your site continues to positively change my life daily.
Chasw
Phil- I am a former portfolio manager and now retired. I have been following you for about six months and I now know why you have so many followers you are very insightful and knowledgeable.
Mkozberg
Aapl/Phil
Thanks for your advice, always appreciated.
So, not so much a tax issue, but more to protect against a 5% or greater drop.
Here is what I did before their earnings…sold 25% of my stock at 147.50
Against the rest, I sold the June $140 calls for $8.25, protecting down to $140 if needed.
And just for fun, I bought the weekly $145 puts for $1.50( small price to pay if they bombed on earnings)
So, overall, I am happy with the insurance I was able to 'generate' for 1% of the price of stock.
Now, depending on what happens, I have the luxury of deciding and being in the driver's seat with respect to whether to sell and buy your spreads or not.
Having done all that meandering, I must say it was fun!
More important, I could not have done something like that 2 or 3 years ago and reading and thinking about your teachings has been a tremendous asset.
Thanks!
Maya1
Sold out my AAPL mar95 calls. Up over 100% today on them!
Singapore Steve
Thx Phil. Lightly moving in the bullish direction. Took PFE for $14.35 and sold the Jan 11 C/P for $2.85 giving me a net entry below Mar 09 low. And I bought back those calls on BTU and JPM I asked about the other day and am leaving them uncovered for now, so feeling better. Still just learning the rhythm.
In the three months I have been using your system, my little portfolio is up 9.9%, so not only am I learning, but I am APPLYING that knowledge, and it's paying off. Thanks.
Hoss
Thank you Phil for this site – the trade discussions on PSW are mind boggling. Future trading while learning to be a value investor. Priceless
Joseph
Phil// Cashing out of my LT holdings have been going on for over two weeks. However, I have elected not to cash all of the holdings including my AAPL, Jan 16 Short Puts at $470 and $480. Plus, I am being opportunistic in selectively putting on those positions for beat down stocks by selling 2016 Puts. That said, YTD harvested profits now stand at $135k on a current account balance of $683K or a 19.81% YTD return. Thanks for your expertise in teaching me how to be patient, be the banker, but also not being greedy, cashing out and harvesting profits.
IHS4GOD
Phil/Everyone here/Thank you - What everyone here with their insightful comments (including yourself) has helped me with is that I'm greatly increasing my ability to trade more psychologically neutral, although I've got a ways to go. Two years ago I'd wake up early and my heart would race if futures weren't pointing exactly how I wanted… I've noticed an exponential leap in my discipline skills especially over this past two weeks. The old me would have ran with that trade for profits without even asking. Now I know that there are ALWAYS more trades and that I have PLENTY of options to turn a bad trade even. Also, it's more logical and less emotionally draining which lets me focus my faculties on my wife, college, my job, and studying for the ol' Series 7. Would it be safe to say that one of the most important skills to develop is the ability to adjust? I'd love to get to the point where I can look at a bracket and know, for example, what I need to sell for cover in what month in order to get my desired results. Both COF and my past DMM venture have been excellent learning experiences. Thanks, everyone. I look forward to further lessons.
Skasiah
Phil, those OIH $80 p that you recommended last week for ~$1 are now worth $5.50!
Greg
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
I am struck by several things over the last few days. First is how level-headed we all are as Greece and China develop. Second is how very helpful it is to see the different trading styles we have, partly because of personal preference and partly because of different stages of development and education. It's very helpful. Well-done, Phil, to have developed this community.
Snow
By the way thank you Phil for the DNDN idea. 3x till this morning and will 4x my small investment by next OE THANKS !!!!
Microflux
Probably the best approach and method I have ever seen for the public and I have worked for some serious traders at the biggest houses doing research. Those guys all have various forms of inside info that you and I do not and cannot have. Davis simply has a great system based on a very deep understanding and experience that gives him market savvy that is very real. A very smart guy and he shares it for a fee. He knows how to use options to great advantage and make money trading.
DowntoEarthThinking
Greetings Phil,
I am an Economist at Harvard and some of my colleagues and I would like to let you know that we follow your posts on SA, and find your analysis refreshing, rigorous, and acute. Great work! Though many of us (including myself) have our work covered in the Wall St Journal, in many ways your macro commentary is more fearless and accurate than what is generally found in that venerable publication.
Kind regards,
Daniel
We all know the Federal Reserve is trying to herd investors into equities as they keep asset values “higher than they otherwise would be”, but how’s this for herding investors? One well known hedge fund manager has altered his entire strategy because of the Fed’s persistent actions (via the WSJ):
“A former hedge-fund manager who made a fortune shorting stocks has switched to the long side, and is raking in money in the process.
William von Mueffling surprised clients and competitors last June by announcing he would close his hedge funds and return $3.5 billion to investors. His firm, Cantillon Capital Management of New York, kept managing $1 billion in long-only assets, typically considered the unsexy piece of the business.
Now, the 42-year-old stock picker controls more money than he did before he closed his hedge funds. Cantillon has raised billions of dollars from pension funds in the U.S. and abroad, and from sovereign-wealth investors, according to clients and other people familiar with the matter.”
Von Mueffling couldn’t justify running the short end of the book as the Fed was priming the pump:
“After years of “long-short” investing, Mr. von Mueffling and his analysts and traders no longer short, or bet against, stocks at all. Instead, like a typical stock mutual fund, they stick to buying company shares they expect will rise. Mr. von Mueffling said the strategy is “the right long-term decision.”
“I’m not saying there aren’t overvalued stocks out there,” he said in an interview. “There are, but trying to short them when the government is printing money is a very, very challenging game,” he said, referring to, among other things, Federal Reserve programs to buy government bonds, which the Fed is widely expected to announce this week.”
That gives new meaning to “herding investors”. I think sellers play an important role in the price discovery process. After all, when the fundamentals of an asset are consistently in disequilibrium with its current valuation it makes the system that much more unstable. Selling, and thus lower prices, can actually make the system more stable in the long-term. This is just one more sign that nothing has really changed since the Greenspan Fed ended. And that was a Fed run by a man who admitted that his model was flawed….
Investors are exiting bearish bets on global equities, pushing bullish wagers on stocks to a two- year high versus short sales, according to Data Explorers.
The firm’s long-short ratio has risen to 9.5, having surged from 5.75 in September 2008 when Lehman Brothers Holdings Inc.’s collapse intensified the financial crisis, the London- and New York-based securities-research company said. The reading is the highest of the data that goes as far back as July 2008.
“Short sellers are now taking money off the table,” said Will Duff Gordon, a senior researcher at Data Explorers in London. “Perhaps the bears are going back into hibernation?”
Barton Biggs, the hedge fund manager who sold half his equity holdings at the start of July, said today that signs the U.S. economy will avoid a recession spurred him to build the stakes back up.
Whipsaw City
Many traders are getting whipsawed here. Chasing shorts lower and longs higher has certainly been the wrong approach most of this year.
Just a few brief comments on the market at the current levels. I was relatively optimistic about the equity markets coming into the beginning of the year. The themes that had dominated much of 2009 (better than expected earnings, accommodative Fed, continuing stimulus, etc) appeared to be largely intact. To my surprise, the rally ran a bit farther than I expected, but Greece and the downturn in China were game changers in my opinion. I was a few weeks early to lay my short positions, but the market ultimately came around to my thinking (better to be lucky than good). Where are we now? In my opinion, we have a global economy that ispre-Greece and a global economy that is post-Greece. The dominoes appear to be lining up in an eerie fashion at this point in time – there are now dozens of negative catalysts in the coming 12 months (which I will detail in a soon to be released report). Although the markets are once again oversold and at risk of a bounce the fundamentals are quickly deteriorating and my expectation of a weak second half appears to be right on cue. I would continue to approach this market with a great deal of caution despite the current oversold conditions.
What do the Germans know? This short selling ban is very desperate looking. I hate to speculate, but my gut tells me that they are beginning to realize how bad the situation is over there. They now understand that the problems in the Euro cannot be solved through intra-country debt issuance and bailouts. The short ban looks like one more act of desperation from a group of nations that have severely underestimated the problems they confront. Unfortunately, I still don’t think they’ve realized that this is a currency crisis and not a solvency crisis. That means they’ll continue to kick the can down the road and markets will battle with the turbulence. This truly does have a very Bear Stearns feel to it.
Will we scare ourselves into a double dip or even a second great depression? Everyone and their mother appears to be in the same camp regarding all the very scary “money printing”. I’ve never in my life heard the drumbeat so loud for fiscal austerity. In fact,
Allan’s newly launched newsletter, “Trend Following Trading Model,” goes with the trend-following trading system he’s been working on for years. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount.Click here. For a more detailed introduction to the Trend Following Trading Model newsletter and trading system, read this introductory article.
p.s. Market Club sent out three videos yesterday on Apple, Oil and Gold.
Once again a series of videos is making the rounds touting how evil short sellers destroyed Bear Stearns. I was asked to comment on this.
The video makes a bunch of assumptions
1. That whoever bought way out of the money Bear Stearns PUTs "knew" something and illegally acted on it.
2. The same institution that bought the PUTs was illegally shorting shares.
3. There is a conspiracy to protect those evil doers.
How The System Really Works
Fact #1: When someone buys PUTs the market maker or counterparty who sold them is short those PUTs. This is a mathematical statement of fact.
Fact #2: The market maker who sold the PUTs, shorts stocks as a hedge against those short PUTs.
Fact #3: The lower the share price, the more shares the market maker has to short to stay delta neutral.
Fact #4: Market Makers are not governed by naked shorting rules
The video alleges that it was the person buying way out of the money PUTs that was doing the shorting. The reality is the market makers who sold PUTs were most likely those doing the allegedly "illegal" naked shorting.
To stay delta neutral, the market makers were forced to short more shares the lower the price dropped. Also remember this happened with every PUT at every strike all the way down, not just on that batch of way out of the money PUTs.
It should not take a genius to figure out how easily this could spiral out of control.
Who Was Shorting?
It was probably Goldman Sachs, Citigroup, Morgan Stanley, Merrill Lynch or whoever sold the PUTs. Moreover, those market makers probably lost money shorting because of how quickly the stock plunged.
The irony is everyone blames the naked sellers for making a fortune by short selling when the PUT sellers lost more on the PUTs they were short than they gained shorting the shares.
Did Someone Know Something?
The video alleges that someone "knew something". Well someone did know something, and that something is what we all knew: Bear Stearns was not only the most leveraged of the large institutions, but also held the highest concentration of subprime mortgage garbage.
Also other institutions could see or at least feared a run on the bank at Bear…
I did my usual routine yesterday, going through all my charts. I found 100 new opportunities, but it is still decidedly lop-sided. 73 of them are bearish, and 27 of them are bullish. And, I’ve got to say, the bearish ones tend to be large, widely-traded outfits whereas the bullish ones are these weird little firms no one has ever heard of. So, frankly, I’m not sure what components of the indexes keep finding the strength to rise. The real strength is in all the lame, scummy stocks – – not the quality end of the spectrum.
I did notice that there are several instances of sectors that Slopers were trying to short for a long time and, finally, just gave up on in disgust. The "casual dining" sector is a perfect example of this. Some here will remember how during the Spring we kept trying to short the likes of DIN, EAT, and other eating establishments, all while the stocks kept exploding higher. (The basic theory was that people were depressed about the state of things and wanted to shove low-cost, high-calorie food into their mouths; why else would anyone elect to go to a place like the International House of Pancakes?)
The funny thing is that, after people gave up on them, they did indeed start to fall. In fact, they peaked way back in April! Just take a look at this one:
The graph may not look that dramatic, but the stock lost 43% of its value over the past four months. That’s the kind of "performance" I’d like to see from my shorts.
The point is that the vast majority of my shorts and my potential shorts look exactly like this stock did in April. What’s agonizing and frustrating is waiting for the damned things to actually break.
Adapted from a post by Timothy Sykes on Tue 21st of July, with a timely update. – Ilene
That’s what I do for a living, check out a recent guest blog post at INO.com.
"We ALL get the emails, “UOMO is going up big, buy today” , “If you’re looking for 3000% gains go long XYZ”…the dreded penny stock pump and dump! The pump and dump often plagues new traders looking for huge returns and veterans trying to play them along with the “pumper”. But it’s often very risky and millions are lost everytime the “pump” is on. But there’s one person I personally know (I was able to have a nice sushi lunch in NY with him) who trades the “pump and dump’s” and makes a KILLING doing it! You’ve all heard about him and his name is Tim Sykes. Love him or hate him, he’s one of, if not the best person out there for penny stock info and trading." Brad of INO, MarketClub.
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Timothy: People often ask me what I do for a living and I love to see the look on their face when I say, “I short sell and write about hyped up and manipulated Penny Stocks”
When I first started blogging in 2007, Investopedia said it was not possible to short sell Penny Stocks. They have since changed their minds now that my big mouth has been shouting at the top of my lungs, you can short stocks under $5, it’s not as risky as you might assume, but only if you know what you’re doing.
The key to my survival and success in a decade-long career in this greatly misunderstood niche has been to be wary of everyone and every company. Most people buy Penny Stocks thinking that they have a shot at turning a few hundred or thousand dollars into millions. Certain financial websites that title articles “The Next Million Dollar Penny Stock” look to take advantage of that.
I take it one step further, looking to take advantage of those gullible suckers as they fail to realize the odds of a $1 stock becoming a $100 stock, let alone a $5 or $10 stock, are horrific. Mainly due to the fact that ALL stocks trading under $5 are flawed in some way (that’s why their stock…
Gold & Silver have been hot of late! Is Doc Copper about to do the same? Possible says Joe Friday.
This chart looks at Copper Futures over the past 27-years. Copper has spent the majority of that time inside of rising channel (1).
The decline over the past year has Doc Copper testing 18-year rising support and lows of the past 8-months at (2).
Joe Friday Just The Facts Ma’am- Copper is attempting to rally off of long-term support at (3). As Copper is testing the bottom of this support channel, smart money hedgers are making a bi...
For American International Group Inc (NYSE: AIG), William Blair upgraded the previous rating of Market Perform to the current rating Outperform. American International Gr earned $1.58 in the first quarter, compared to $1.04 in the year-ago quarter. American International Gr's market-cap stands at $48,358,299,270. At the moment, the stock has a 52-week-high of $56.49 and a 52-week-low of $36.16. American International Gr c...
The magic of support and resistance channel lines and how they direct price. Here are some chart disclosed to members via the RTT Plus service. All charts are a few weeks old.
XAU bound by parallel channel lines.
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Newmont Mining support from Gann Angles.
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Following further selling pressure overnight, someone (or more than one) has decided to buy-the-dip in cryptos this morning, sending Bitcoin (and most of the altcoins) soaring...
ValueWalk’s Q&A session with Professor Shubha Ghosh, a professor of law and the director of the Syracuse Intellectual Property Law Institute. In this interview, Professor Ghosh discusses his background, the Human Genome Project, the current state of gene editing, 3D printing for organ operations, and gene editing regulation.
For most people, the purpose of investing is to build up enough wealth to allow you to retire. In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.
Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives. A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.
Still, the stock market has been better over the last 10 (7%) an...
The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.
This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.
In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.
This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.
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...
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Adapted from a post by 
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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. She manages the site