WOW, glad I went bearish… Phil, thanks for the help on the QID calls yesterday, I turned it into a partial cover rolling down to the Feb 52s selling the 55s 1/2 covered. Sold 1/2 and now lowered my cost basis to $4.38 on the $52s (fully covered).
Texasmotion
Phil I have been telling you for a while how I feel like I am really understanding you now and thanking you. Well today may have been my most successful futures trading day since I began here and the week has been spectacular! It has just seemed so easy when you give us a range and I execute properly. Thanks once again for teaching me to fish. My portfolio gained over 10% this week which is just amazing.
Craiga620
Phil: Thank You!
Scaling, Scaling, and Scaling… then patience, patience, patience I'm 2 to 1 short and even on a day the broad market is up I had my largest one day gain in years. The last 6 weeks in fact have been great. I really feel I've learned to use some tools that will enable me to deal with the turbulence ahead. Selling short calls is definitely my preferred approach. Even allowed me to play golf this afternoon while the premium melted away and shoot a career low round. I owe you man!
Lincoln
Have been a member for about 6 months or there abouts. Signed up for a quarter at first and then for a year. To me, and it's only my opinion, it's an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect
DKGuy
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
Thanks, I managed to make 2k today so I am happy…and feel like I am finally getting it. New equipment and a quiet place to work helps a lot. I am happy for all the members that took your /NKD advice….that was fun I am sure! coke Take your vitamins…I don't know how you do all this! but, keep it up!
Coke
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
What a great post today, Phil. A veritable feast of ideas! I've been reading your posts for years and have modeled my whole trading style after yours. You should be taking 2 and 20 off of me at this point ????
Jablams
I have been with this site since the beginning and i have learned more the past 3 years than the previous 10. Information and great commentary are abound. The traders on the site are second to none and my portfolio has benefited greatly.
Kustomz
I don't post much, but I guess this morning has brought me out. This site has made me tens of thousands, every year since I have become a member. It took me nearly two years devoting 3 hours per day to get on the ball, and actually understand portion sizing, and which trades fit my personal trading style. Before that I spent at least two years working on Buffet style fundamental investing. (Intellegent Investor, Security Analysis, ect.). This site really will teach you amazing things if you just pay attention. Literally it has changed my day to day life, has allowed my family and I to move back to the U.S. from overseas with confidence even with a paycut at my day job, and literally put me in a different league financially. Seriously my life and my children's is better because of this site.
Knightpilot
Thanks Phil another great week of guiding us!
Steven Parker
Phil thanks. You never cease to amaze me with your thoughtful perspective on a myriad of different issues and challenges. It's kind of an embarrassment of riches since I joined this board a few years back. The ride from Dow 9,000 or was it 8,000? up to Dow 15,000 seems hard to believe. I wish I could have it all over again, except with the capital I have now.
Winston
The wonderful resource that Phil has created for us and nourished by its members is so powerful in what it can teach us going forward, but also what we can learn from the past. I never say it often enough, but Phil – thanks for all the work you do for us.
Winston
Phil - I LOVE these futures trades at random hours! I wasnt able to get in on the 612 part but if I had it wouldve been 130$ (2.6%) on a 5k contract in less than 30 minutes. I know you have to sleep, spend time with fam, ect but Im just letting you know that your posts after hours/late at night has made people who followed them a decent chunk of change. Thank you, we appreciate it!
Jromeha
It was a nice day thanks to your help! Made over $1100 shorting TF every time it came up near 1260 and even more by going long oil before inventory under $46 and then waited patiently for the spike up into the close where I shorted it at 47.70 or so. Phil you gave me a road map and I simply followed the signs along the way.
Craigsa620
Peace of mind / I have a portfolio mainly consisting of long term long calls, short term short calls and puts, and long term BCS. Three years, ago when I started my journey on this board I would be freaking out panicking as to what to do, as many of the short calls are ITM, Three years later (today) I look at the screen and serenely process the information. Three years ago, I inevitably made the wrong decisions which cost me a lot of money. Three years on I calmly roll the positions to whatever makes sense. No drama, no hair pulling, and a great cost saver. I guess they call that the power of education.
Winston
The virtuous trade / Phil throws out so many ideas, that understandably he rejects all calls for a running total of how all ""quoted"" ideas are performing – it would be unworkable. But without such a list, I think it behooves us to call out the trades that have made a difference. January 13 expiration is going to be a big month for me as a significant number of sold put positions will expire worthless. One example of the power of patience and leaving well alone:
VLO – sold Jan 13, 17.5 puts for $3.45 – and this trade was placed in August 2011. VLO is currently a tad over $35!
And as time went by, and I got more experienced – with the help of Phil and the contributions from board members, I started selling short term puts and calls around this position. Sometimes having to roll, sometimes doubling down but always knowing what I was getting into, and feeling very calm and focussed that whatever happened I could handle it. And if I couldn't then there was always Phil to lend a helping hand. All in all, my profits since August 2011 would qualify as a tidy addition to any earnings from the day job.
Thank you Sir.
Winston
Looking over your main themes last week, the "China may fall first" and "if you missed it previously, Thurs am gives you a second chance to short" were absolutely on target. I had to rely on stop-losses because of my schedule but just those two calls could have been worth a small fortune. Keep it up and I look forward to your new portfolio.
Ocelli
I am not a user of phil's site now, but was for a couple years. His advice and information is excellent. Perhaps even better, you get access to real-time trades of additional traders on his site (OptTrader, etc) and the other members who post what they are buying and selling. Overall, its a very valuable information tool. Expensive, but paid for itself many times over. I did not renew my membership because I switched jobs and did not have time to trade nearly as much.
XRTrader
Its been a "perfect" month. Every stock I wrote calls against looks like it will be called away next week, every put I wrote will expire worthless. Thanks Phil, now I need some new buy/write candidates, or the new 100K portfolio….
Barfinger
I have followed a lot of Phil's picks over the last several years and made money using the exact option strategies he outlines. Of all the contributors on SA, he offers the most actual and ready to implement advice that has put money in my account. Many of us on SA actually are sad when we don't see Phil's postings for an extended period.
Brenteaz
Phil: I cleaned up today. A rather stark contrast to my untutored performance April/May 2009, after I had written to you to explain how wrong-headed your bearishness was. Many thanks.
I ran into someone once who played on the Bulls with Jordan for quite a few years. He was asked what he had learned from playing with MJ for so long. He smiled and said "Give him the ball."
Zeroxzero
Thanks Phil for helping make this a much, much better year this year than last. Your tutelage has been so very helpful. Don't think I can say Thanks enough. And I thanks all the members here who were work hard in helping us all to become better traders, and I would say better people as well. The support many of you offered when we evacuated during the fire this past year helped me immeasurably.
Happy New Years to you all!
JBur
Phil: That NFLX call was awesome. The speed at which NFLX options decayed was precipitous. The blow out spike that allowed me to double and roll my callers to 190(!) and the ridiculous 170 weeklies @3.50 a day away from Op-Ex. The gains I realized in that trade floored me when I took a long at my portfolio value on Friday. What a great way to start the 3rd Quarter.
Kinkistyle
Phil/thankyou. Phil, I went over the recording of last weeks webinar. I liked it a lot and wanted to thank you. I thought the case studies (company reviews) were detailed, I learned more about selling puts process and also what happens if stock continues to go down after that, I liked the fact that we discuss so many different avenues like stocks, optiond, futures, oil, commodities etc… I replayed portions of it multiple times to make sure I was grasping it but wanted to say good job. Thanks…
Nramanuja
Just closed out my V put for 50% in 24 hours thanks Phil!
Humvee
Wishing Phil and all fellow PSW members a Happy, Healthy and Prosperous New Year 2017! Thanks to all of you for your insights and comments which help make me a better investor every day. Wishing everybody the best of luck for 2017
Learner
Oxen (directly) and Wilkinson (indirectly) are making me a great day trader! Props to Andrew for another little nugget last night: HIG. $20 Dec calls paid 6% quickly this morning. And helloooo STJ - a few days, but nice pick nonetheless - esp with early cover premium.
Dstillwe
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
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.
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…
It’s no secret that the growth of U.S. shale oil has been a thorn in the sides of both Saudi Arabia and Russia. They have seen their market shares erode as the shale boom made the U.S. the world’s largest producer of crude oil. But Saudi Arabia’s national oil company, Saudi Aramco, is a single entity that produces 13 percent of the world’s oil and controls 17 percent of the world’s proved reserves. That puts them in a very p...
Is the S&P starting out a new month and quarter at a very important price point? This chart would say YES!
This chart looks at the S&P 500 on a weekly basis over the past 12-years, reflecting that it has spent the majority of the past 9-years “inside of this rising channel and above its 200-week moving average!”
The weakness in March saw the S&P break below the bottom of the channel and its 200-week ma line for the first time in 9-years.
The small counter-trend rally last week has the S&...
As the world reacts to the global economic slowdown because of the COVID-19 virus event and the massive stimulus programs and central bank efforts to support the global economy, investors still expect weakness in the US and foreign markets. We believe this expected weakness will not subside until news of a proper resolution to this virus event is rooted in the minds of investors and global markets.
Hong Kong and China are currently concerned about experiencing a “third wave” of the COVID-19 virus within their society. As the economies open back up to somewhat normal, people are very concerned that a renewed wave of new infections will suddenly appear and potenti...
The Federal Reserve had a precursor before it became the lender of last resort. It wasn’t an institution or a government department. It was a single, solitary man named J. Pierpont Morgan. Mr. Morgan, he was called in the newspapers, and you didn’t need to go any further – everyone knew to whom you were referring.
Stock market panics were common in the early 1900’s because of the agrarian nature of the economy. Each summer, the local banks that catered to farmers throughout the country began calling their money back from the banks in New York City and Chicago so they could raise enough capital to bring in the h...
NanoVibronix (NASDAQ: NAOV) shares are trading higher on Wednesday.
The company announced it has received reimbursement approval from the U.S. Centers for Medicare & Medicaid Services for its PainShield.
NanoVibronix focuses on the manufacturing and sale of noninvasive biological response-activating devices that target biofilm prevention, wound healing, and pain therapy. Its principal products include UroShield, an ultrasound-based product to prevent bacterial colonization and biofilm in urinary catheters, enhance antibiotic efficacy,...
Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...
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...
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.