Top Trades for Tue, 07 Apr 2020 10:10 – ALK

Good morning!

Top Trade Members should see today's post for another review of our Income Portfolio and notes about hedging. 

Keep in mind we do the same thing with our hedges that we do with our longs – take advantage when they are beaten up to improve our position…

We made an unexpected $23,000 in the Income Portfolio so we take about 1/2 of it to improve our hedges, locking in the other half and protecting the entire portfolio.  We'll do the same with the STP as well.

  • Carnival (CCL +24.0%) director Randall Weisenburger snapped up 1.25M shares.
  • Weisenburger now holds a total of 1.40M shares.
  • Carnival's pop today comes with the entire travel sector shooting higher on hopes for a lockdown end.
  • SEC Form 4

  • Shares of Luckin Coffee (NASDAQ:LK) have been halted for trading with news pending.
  • It's already been a very active week for


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Top Trades for Fri, 03 Apr 2020 13:30 – STZ

Also, for our Top Trade Alert Members – make sure you check out today's adjustments on the Earnings Portfolio – it's a well-hedged collection that is projected to make more than 50% per year:

Friday Market Workshop – Portfolio Repair Part 4 – Adjusting Our Goals to Reflect Reality

And our trade idea on STZ is:

Speaking of beer – liquor sales up about 40% and, since that's retail sales, it's way more profitable for STZ than when people drink in bars and restaurants.

In the LTP, we can sell 5 STZ 2022 $75 puts for $9 ($4,500) to net in for $66 and that's pretty much free money.  If they go lower, I'd be happy to sell more puts and set up a bull spread but, for now, nothing wrong with selling puts as we cleared out some of the original round already.





Top Trades for Thu, 02 Apr 2020 12:58 – CMCSA

I very much hope our Top Trade Members are keeping up with your hedges.  We can't have just bullish trades in our portfolio.  We did a Short-Term Portfolio Review yesterday morning and these are the hedges we use to protect our long positions at PSW:

https://www.philstockworld.com/2020/04/01/whipsaw-wednesday-only-down-700-points-not-a-big-deal/

I commented on the Oil move in Member chat this afternoon:

Well, I'm unable to confirm from anywhere but Trump's tweet that oil will be cut by 10Mb/d and, looking at the FACTS, that dosn't make a lot of sense with the Saudis and Russia at 22Mb/d so are they going to cut 50% of their production?

Again, math….

10Mb/Tangled – And that's math too.  We just saw a build of about 20Mb in a week in the US so consumption down 3Mb/d (15%) which means in an 80Mb/d global market, they need to cut 12Mbd – assuming it's consistent.  

My guess is (if we can assume there's even a grain of truth in what Trump said) that MBS said to Trump that THEY (including the US, all of OPEC and Russia) need to cut production by 10Mb/d to balance things out – not that the Saudis and Russia were offering to bite the bullet for the whole World.   

CMCSA/Tx – I think the last thing people will do in this crisis is cut their cable/internet but Comcast is victimized by their diversity (like DIS) as they also own theme parks and sports teams and arenas as well as DreamWorks, Universal Pictures, NBC Studios, Telumnudo and Sky Sports – which are horribly hurting at the moment.  About 1/2 their money comes from TV/Internet and the rest is in trouble.  Theymade $13Bn on $108Bn in revenues last year so, long-term, $34 ($155Bn) is a good deal but April 30th earnings are likely to be a shambles and too soon to predict an end to the nightmare so I'd be careful but still an opportunity to establish a 1/4 entry:

For the LTP:

  • Sell 5 CMCSA 2022 $30 puts for $5 ($2,500) 
  • Buy 15 CMCSA 2022 $30 calls for $8.25 ($12,375) 
  • Sell 15 CMCSA


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Top Trades for Fri, 27 Mar 2020 12:45 – T

Hedge Fund/Tangled – If we have enough interest, of course people can switch but the regular hedge fund is very likely to double up or better if we recover – I'm proposing a more conservative fund for people like me, who are having to help their parents whose monthly incomes no longer cover expenses from their standard retirement accounts.  It's a lot easier for me to put $250,000 into the following spread than give my Mom $30,000 a year to subsidize her expenses:

  • Buy 500 T 2022 $23 calls for $7.75 ($387,500) 
  • Sell 500 T 2022 $30 calls at $3.60 ($180,000) 
  • Sell 100 T 2022 $23 puts for $3 ($30,000) 
  • Sell 100 T June $30 puts for $2.30 ($23,000) 
  • Sell 50 T June $23 puts for $1 ($5,000) 

So that's net $149,500 out of pocket and my worst case is owning 10,000 shares of T for $23 ($230,000 – not counting the short-term puts) and I've got a $350,000 spread that's spitting out $28,000 in "dividends" for the Q so it should well cover the $7,500 my Mom needs while still a lovely investment for me that will hopefully pay 200% in 2 years.  

Of course it would be much better to have 20 diverse bets like that but it would all have to be actively manged and actively hedged so it's a case where you do want someone whose job it is to manage those trades full-time.  That's my logic to setting up a new fund – I talk to a lot of people who are trying to support their families and this is a nice solution to that problem.  

 





Top Trades for Mon, 23 Mar 2020 09:53 – TEVA, VAC and USO

TEVA/Pat – They lost $18.5Bn in 2017 and 2018 and this year maybe they make $3.5Bn and you can buy the whole company for $8Bn at $7.50 so worth a gamble but I think I'd play just a bull call spread like the 2022 $4 ($4.50)/$10 ($2.35) bull call spread at $2.15 as that pays almost 200% at $10 so why takes risks to be greedy?

By the way, note our Trade Idea in the morning post:

For our Long-Term Portfolio:

  • Sell 5 VAC October $30 puts for $8 ($4,000) 
  • Buy 10 VAC Nov $40 calls for $18 ($18,000)
  • Sell 10 VAC Nov $75 calls for $8 ($8,000) 

That's net $6,000 on the $35,000 spread that's $8,000 in the money to start so the upside potential at $75 is $29,000 (483%) and your worst case is being assigned 500 shares of VAC at $30 ($15,000) plus the $6,000 spent on the spread would be $21,000 or $42 per share – still 15% below the current price.  That's your WORST CASE!  

Oil/Tangled – Though it decays, USO is a reasonable way to play oil and the Jan $2 ($3.10)/$5 ($1.25) bull call spread is $1.85 and you can sell 5 VLO 2022 $25 puts for $7 ($3,500) to pay for 20 of the spreads ($3,700) for net $200 on the $6,000 spread so $5,800 (2,900%) upside potential and VLO is a vital industry and that still gives you 30% downside protection.

Criminal/StJ – It's not criminal if you have packed the courts with "your" judges.  

Subways/Dawg – How can our "leaders" be this stupid?  It's amazing!  





Top Trades for Wed, 18 Mar 2020 06:39 – Hedging for Disaster

Good morning?

Futures went limit down again, QE Infinity and $1.2Tn of stimulus wasn't enough, it seems….

Here's the problem – even if you give every man, woman and child in this country $2,000 a month ($600Bn) – where are they going to spend it?  

And, even if the US is that generous (we're not), what about the rest of the World?  If every country doesn't do something similar, we're still looking at a global Recession.  Recessions end when people goo back to work and things start getting back to normal.  The problem is, there's no "normal" in sight at the moment.  As I keep saying – you have to fix the crisis first – NOT the economy!

This is like firemen showing up at a house fire and painting the house – who cares about that?  

Bloomberg reporters are reporting from their homes – how's that for inspiring confidence!?  

Sadly, we'll have to add more hedges today, in case 2,400 breaks down and we head for 1,800.  Fortunately, that's down 25% so up 50% on SDS, which is already at $34 so $51 would be the target and the SDS May $35 ($7.50)/50 ($4.50) bull call spread is just $3 and pays $15 so 400% upside potential means we can get $100,000 back for each $25,000 and we just sold $81,000 worth of short puts in the LTP which pays for $300,000 worth of protection.

Of course we don't need to take it all at once but 80 of those for $24,000 pays $120,000 back at $50 and we certainly hope we lose the $24,000 but I'd rather have the insurance.  If 2,250 fails, we add another layer (maybe June) and another at 2,000 and, by the time you are adding at 2,000, the S&P is down 17% and that's 34% up on SDS to $45.56 and the May $24s ($10 in the money) are $12 so we'd already be able to cash in the original calls for $12 and leverage that to buy more long spreads, etc.  



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Top Trades for Tue, 17 Mar 2020 12:36 – MTN

By the way, Top Trade People, make sure you read today's special report with 10 Trade Ideas in this downturn (as well as last Wednesday as well):

2,400 Tuesday – S&P Tests the Bottom of our Target Range

Thursday Failure – Trump Shuts Travel, Provides No Solutions, No Stimulus – Market Tanks (again)

  • Vail Resorts (MTN -0.3%) to close all North American resorts and retail stores will remain closed for the 2019-20 winter ski season due to coronavirus.
  • The Company will consider reopening Breckenridge, Heavenly and Whistler Blackcomb dependent on the situation with COVID-19 and weather conditions.
  • Additionally, the Company's owned and operated lodging properties will close on Friday, March 20.
  • Epic Mountain Express, the Company's Colorado transportation service, will run through March 18.
  • Previously: Colorado governor orders closing of all ski resorts (March 15)

Oh, we are totally buying them!

 

 

Damn, I forgot the reason we don't play MTN is because they don't have long-term options but they do have December and we can sell 10 MTN Dec $100 puts for $11 ($11,000) in the LTP because people don't understand that the 2019-2020 ski season ends in April anyway – not as bad as it sounds.  

I'd love to also buy the $140 ($48.50)/$180 ($28.50) bull call spread for $20 but we are collecting money ($150,000 in two weeks) for the LTP, not spending it unless necessary (roll downs).





Top Trades for Tue, 10 Mar 2020 13:27 – SIX and AAPL

I very much doubt these daily (intraday!) 1,000-point swings in the Dow are going to end in a good way – very possible we get a major capitulation event down the road.  

 

SIX/Jeddah – I used to go there with my kids and considered at the time what a toxic nightmare that place is – especially the water park, where you are taking a bath with 10,000 people!  Nonetheless, my kids have their season passes (90 mins from my NJ house) and intend to get their money's worth this year.  They are likely way oversold but parks may be ordered closed next month if the virus is spreading so where's the bottom then?  

I guess I would not sell puts but I would take the SIX 2022 $15 ($8.50)/$22.50 ($5.50) bull call spread at $3 and, if they go lower, THEN you could sell the $10 puts (now $2.50) and roll the $15s to the $10s.  Let's do 40 of those in the LTP and see how it goes

 

Have to sell 5 AAPL 2022 $230 puts for $30 ($15,000) in the LTP.  Very happy to DD if they go lower and, of course, build a bullish spread around them if they don't.





Top Trades for Mon, 02 Mar 2020 15:27 – WBA

We are going back to the well on an old favorite, Walgreens (WBA) as they are now too cheap to resist:

WBA/Coulter – I love them down here.  We already have them.

WBA/Winston – I think this might be a chance for us to add them in the new portfolios. The "disappointment" is $1.37/share vs $1.41 expected though 2020 guidance remains at $5.93 per $55 share with Retail Pharmacy Sales up 1.6%.  Though Gross Profit is down 5.2% from last year in a tougher environment, it's already been offset by cost savings so Net Profit is overall flat. 

I think $60 is the right target for WBA so we'll let them find a floor and then make a post-earnings play though I'm keeping an eye on the 2022 $50 puts as they are almost $6 for a net $44 entry, which would put the p/e below 8.

WBA definitely belongs back in the LTP so let's:

  • Sell 10 WBA 2022 $45 puts for $7 ($7,000) 
  • Buy 20 WBA 2022 $40 calls for $9.65 ($19,300)
  • Sell 10 WBA 2022 $55 calls for $4.50 ($4,500)

That's net $7,800 on the $30,000 spread so the upside is $22,200 (284%) but lots of room to sell calls on a bounce or, if things do get worse, we can sell more calls and roll the $40s lower.  Lots of options.

Untradeable/Bert – Best to watch and wait on a bounce day like this.  I know it feels like we're missing out but so many times these are just head-fakes.   

A lot of volume today (174M) but only 1/2 of Friday so don't want to read too much into the bounce.  





Top Trades for Thu, 13 Feb 2020 11:28 – SPWR and Futures Shorts

SPWR/Batman – The reaction is a little harsh, I think.  

SunPower (NASDAQ:SPWR): Q4 Non-GAAP EPS of $0.23 in-line; GAAP EPS of $0.03 beats by $0.15.

Revenue of $607M (+15.5% Y/Y) misses by $7.98M.

Press Release

SunPower (NASDAQ:SPWR-5.8% after-hours after slightly missing expectations for both Q4 earnings and revenues and issuing in-line guidance for FY 2020 revenues.

Q4 residential revenue rose to a record with 27% MW growth vs. the year-ago quarter, and global shipment volumes gained more than 80% Y/Y to a record.

SunPower sees full-year revenues of $2.1B-$2.3B vs. $2.28B analyst consensus estimate; for Q1, the company forecasts revenues of $435M-$470M vs. $409M consensus, as well as gross margin of 9%-12%, adjusted EBITDA flat to negative 15M and MW deployed of 520-570 MW.

As a result of the restructuring of its commercial direct business, SunPower forecasts FY 2020 adjusted EBITDA of $125M-$175M.


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Zero Hedge

An American Horror Story: Rabobank On The Recession Of 2020

Courtesy of ZeroHedge View original post here.

Authored by Philip Marey via Rabobank,

Summary
  • While the outlook for 2020 remains sketchy, heavily dependent on non-economic factors, we now expect GDP to fall by 6% in 2020.

  • With a slowdown in February and a sharp contraction of the economy in March, we expect GDP growth in Q1 to be negative (-5% quarter on quarter at an annualized rate).

  • However, the most extreme economic growth figure is likely to be Q2 GDP growth with the lockdown continuing through at least April and l...



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Phil's Favorites

The PhilStockWorld.com Weekly Webinar - 04-08-2020

For LIVE access on Wednesday afternoons, join us at Phil's Stock World – click here.

 

Major Topics:

00:01:34 - Checking on the Markets
00:04:32 - Current News
00:31:34 - LEVI
00:35:08 - AMZN
00:39:26 - Mark Mahaney's Stock Coverage
00:43:00 - Public Transportation & Disinfecting
00:48:08 - Petroleum Status Report & OPEC
01:00:24 - COVID-19 Update | WYNN
01:16:00 - Portfolio Projection: Income Portfolio
01:17:23 - FUTURES
01:18:49 - Earnings Portfolio
01:19:27 - STP | LTP
01:22:52 - S&P 500
01:30:05 - AAPL
01:34:15 - VIX
01:36:00 - M
01:42:56 - VIAC
01:47:02 - XOM
01:50:29 - LB
01:52:44 - IRBT
01:57:48 - Crude Oil WTI
02...



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ValueWalk

Public pensions face liquidity crunch amid volatility

By Michelle Jones. Originally published at ValueWalk.

Public pensions have had weak liquidity for a long time, but the recent volatility has made a bad situation even worse. S&P noted that pensions‘ investment horizons are decades long. As a result, many funds claim that market turmoil doesn’t affect their returns because they have plenty of time to ride out volatility. However, funds with weak liquidity don’t have that luxury in the current volatility.

Q1 2020 hedge fund letters, conferences and more

Public pensions in liquidity stress

S&P Global Ratings analyst Todd Kanaster and team said in a recent report that because of ...



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Biotech/COVID-19

COVID-19 is hitting black and poor communities the hardest, underscoring fault lines in access and care for those on margins

 

COVID-19 is hitting black and poor communities the hardest, underscoring fault lines in access and care for those on margins

Nurse Shelia Rickman participates in an after-shift demonstration on Monday, April 6, 2020, in Chicago’s Hyde Park neighborhood, after media reports of disproportionate numbers of black people dying from COVID-19 in the city. AP Photo/Charles Rex Arbogast

Grace A. Noppert, University of North Carolina at Chapel Hill

As the COVID-19 epidemic continues to ravage the American public, an unsurprisin...



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Kimble Charting Solutions

Silver/Gold Indicator Creates Largest Bullish Pattern In Decades!

Courtesy of Chris Kimble

Is an important metals indicator sending one of the largest bullish messages in nearly 50-years? Very Possible!

This chart looks at the Silver/Gold ratio on a monthly basis since the mid-1970s. Historically metals bulls want to see the ratio heading up, to send the metals complex a solid bullish message.

The ratio hit the top of the falling channel (A) back in 2011, where it created a large bearish reversal pattern. Since creating the bearish pattern at resistance, the ratio has experienced a significant decline.

9 years after hitting the top of the channel the ratio hit the bottom of the channel at (1) last month, where it looks to have created one of the largest monthly b...



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The Technical Traders

Adaptive Fibonacci Suggests Much Lower Prices Yet To Come - Part I

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system suggests a much deeper price move is in the works and the current price rally will likely end near resistance levels identified by the Adaptive Fibonacci Price Modeling system.  We are posting this research post for friends and followers to help them understand the true structure of price and to allow them to prepare for what we believe will become a much deeper downside price move in the future.

Fibonacci Price Theory teaches us that price moves in waves within up and down price cycles. The recent peak in price, near February 25, 2020, has resulted in a very deep -36% price collapse in the S&P 500 (ES) recently. This dow...



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Chart School

The Big Short movie guides us to what is next for the stock market

Courtesy of Read the Ticker

There is nothing new in WallStreet, it is only the players that change. Sometimes a market player or an event gets ahead of the crowd and WallStreet has to play catch up.

Previous Post Dow 2020 Crash Watch Dow, Three strikes and your out!

It is important to understand major WallStreet players do not want to miss out on a money making moves.  







...

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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

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...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

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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Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.