Top Trades for Thu, 10 Jan 2019 13:45 – 9 Trade Adjustments

Hey, I finally found that Post where we discussed 9 Trade Ideas to Make $101,875 into Jan expirations.  I thought it was a post but it was from our Sept 26th Chat and was sent out as a Top Trade Alert that day too.  Keep in mind we were bearish and looking for a big pullback and the idea was to add these things to the LTP as an additional hedge.  Let's see how they did – hopefully educational (all copied from the same comment).  KEEP IN MIND THESE ARE NOT NEW TRADE IDEAS but I will make new adjustment red so they stand out:

Adding some holiday income (and hedges) for Q4 with a set that you can start a whole new portfolio with:  

In the LTP, we have BBBY:

Short Put 2020 17-JAN 17.50 PUT [BBBY @ $19.09 $0.19] -20 1/8/2018 (478) $-5,600

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Top Trades for Thu, 10 Jan 2019 12:29 – LB

LB/Batman – Like HBI, very steady sales and profits means I'm very comfortable at 10x, so let's say $7Bn as a floor, which is where we are now ($26) and, of course, any good news can put them up to 15x so range should be from $26 to $39 and LOOK – that's the range:

I wish this stuff were more complicated but it isn't…

Year End 03rd Feb 2013 2014 2015 2016 2017 2018 TTM 2019E 2020E

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Top Trades for Wed, 09 Jan 2019 15:16 – GS

In the Webinar, we liked a GS play we can add to the LTP:

  • Sell 5 GS 2021 $140 puts for $12.50 ($6,000) 
  • Buy 10 GS 2021 $150 calls for $44 ($44,000) 
  • Sell 10 GS 2021 $200 calls for $19 ($19,000) 

That's net $19,000 on the $50,000 spread that's half in the money to start and it's such a high-probability trade that there's no sense in not doing it.

Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
Revenue $m 41,664 40,874 40,085 39,395 37,850 42,828 50,899 36,155 36,457 +0.6%
Operating Profit $m 11,207 11,737 12,357 8,778 10,304 11,132 12,881     -0.1%
Net Profit $m 7,475 8,040 8,477 6,083 7,398 4,286 5,993 9,861 9,538 -10.5%
EPS Reported $ 14.1 15.5 17.1 12.1 16.3 19.8 25.0     +6.9%
EPS Normalised $ 14.6 16.4 18.7 18.4 16.9 20.1 25.7 25.1 25.1 +6.6%
EPS Growth % +186.6 +12.5 +13.8 -1.8 -7.7 +18.8 +27.7 +24.6 -0.052  
PE Ratio x           8.72 6.82 7.00 7.00  
PEG x           0.35 0.28 n/a 0.82

Last year, GS took a $5Bn tax charge in Q4 as they repatriated some cash (they have $120Bn on hand) and this year I think they'll drop $10Bn to the bottom line against a $65Bn valuation at $175 so miles below fair value.  They have an outstanding issue with Malaysia over the scam they were running but, like every other time they get busted – it will likely be resolved with a wrist slap.  

Top Trades for Thu, 27 Dec 2018 12:16 – MT

RUT/Jasu – Those are the 20% drops, not the bottoms, so RUT is simply way below the 20% correction I thought the others would be able to hold.

MT/Coulter – Tarrifs and Global slowdown are not good for MT at all so this is not their year and next year is not likely to be their year but $20 is $20Bn I can SHOW YOU THE MONEY!!!

Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
Revenue $m 84,213 79,440 79,282 63,578 56,791 68,679 75,416 77,610 76,267 -4.0%
Operating Profit $m -2,645 1,197 3,034 -4,161 4,161 5,434 6,731      
Net Profit $m -3,352 -2,545 -1,086 -7,946 1,779 4,568 4,995 5,727 5,015  
EPS Reported $ -3.92 -2.63 -1.11 -7.99 1.86 4.46 4.89      
EPS Normalised $ 0.17 -1.98 -0.94 -4.87 1.44 3.90 4.84 5.49 4.87 +86.4%
EPS Growth % -91.6         +170.2 +21.4 +40.7 -11.4  
PE Ratio x           5.38 4.34 3.83 4.32  
PEG x           0.13 0.11 n/a n/a

So, really, I don't give a flying F what other people think, MT is a BUYBUYBUY down here for sure.  In the LTP, we rolled down on 10/19 to 40 2021 $20 calls with 10 short 2020 $30 puts and, of course, we already bought back short calls we had sold along the way so about even on the overall trade and not in a hurry to cover.

As a new trade on MT, I would go with:

  • Sell 10 MT 2021 $20 puts for $4 ($4,000)
  • Buy 25 MT 2021 $20 calls for $5 ($12,500)
  • Sell 25 MT 2021 $27 calls for $2.60 ($6,500) 

That's net $2,000 on the $17,500 spread so $15,000 (750%) worth of upside at $27+ makes for a nice little trade.  

Top Trades for Fri, 21 Dec 2018 11:09 – MO

MO/Soma – Yeah, I think they paid a ridiculous amount but, on the other hand, MO looks at how people consume pot and it's mostly vaping and vaping saves them incredible amounts of packaging costs and lets them introduce flavors, etc and, eventually, THC too.  So I can see why MO wanted to lock them up though I know a company in China that is much better for 1/10th the price (Kind, we work with them at New Age, as well a Juul). 

Good time for a value lesson.  MO drops $8Bn to the bottom line and $50 is $92Bn so, even if we assume Juul is worthless and will not increase sales and will not increase profits and they burned the whole $18Bn – then call it $1.8Bn a year for 10 years off profits and that makes profits $6Bn and a 15 p/e takes care of the market cap.  So 25% of the profits at risk and we're down from $66 to $50 so 24% makes this right in-line with the worst-case scenario.  

Year End 31st Dec 2012 2013 2014 2015 2016 2017

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Top Trades for Wed, 12 Dec 2018 09:57 – MJ


MJ/Albo – Someone asked about a new entry on MJ yesterday and I want to reiterate that I think ALL of the Marijuana stocks that are public are massively overpriced but that doesn't mean they won't go higher.  New Age is making more sales and more money than CRON and we decided it's still too early to go public as we can put up some stunning numbers in another year or two and THEN we will go public.  So I firmly believe the best way to invest in Cannabis is through private equity but, if you MUST play in the public market – THEN I like the MJ ETF as it spreads the risk and it's very likely that one or more of their holdings will go on to be 10-baggers.

So, as a new trade, I like:

  • Sell 10 MJ 2021 $30 puts for $8.25 ($8,250)
  • Buy 20 MJ 2021 $27 calls for $7.50 ($15,000) 
  • Sell 15 MJ 2021 $40 calls for $4 ($6,000) 
  • Sell 5 MJ April $32 calls for $2 ($1,000)

That's net $250 credit and we'll call it a $26,000 spread since the short April $32s can be rolled to the 2021 $40s if MJ pops but selling the shorter-term calls 8 times for $2 ($1,000) is $8,000 vs one time for $4 ($2,000), so it's worth the effort to have 5 flexible sales to make each quarter (or not make if things look good).  Meanwhile, the upside at $26,000 is $26,250 which is a Bazillion percent – so it's a really good trade and the worst thing that can happen is you can be assigned 1,000 shares at a bit under $30.


Top Trades for Tue, 11 Dec 2018 11:33 – CHK

CHK/Pat – I think LNG exports will double next year and keep up demand and, eventually, CHK should benefit.

As a new play, I'd go with:

  • Sell 10 CHK 2021 $3.50 puts for $1.40 ($1,400)
  • Buy 30 CHK 2021 $2 calls for $1.25 ($3,750)
  • Sell 30 CHK 2021 $4 calls for 0.65 ($1,950)

That's net $400 on the $6,000 spread so upside potential of $5,400 (+1,350%) at $4 and worst case is you own 1,000 shares at net $3.90 ($3,900) so good risk/reward ratio.


Top Trades for Tue, 04 Dec 2018 11:34 – TOL

Damn, I was just thinking I wanted to look at them because the fires in CA present a major long-term need for housing:

  • Down nearly 10% after reporting its first year-over-year decline in new home orders in four years, Toll Brothers (NYSE:TOL) has reversed dramatically, now higher by 0.2%.
  • We could attribute the move to comments in the conference call, but that doesn't begin until 2 ET.
  • More likely, there's some sell (buy) the news action going on – the homebuilders have been relentlessly sold this year, squeezed by higher rates, higher prices, higher costs, and the removal of the SALT deduction. But the news is improving, at least on rates. The 10-year yield is at a three-month low and the Fed rate hike cycle is showing signs of ending.
  • Previously: Homebuilders cry for help (Dec. 4)

Still very low at $33 but $30 was a huge bargain.  $33 is $4.85Bn and they are good for $600M but very big in CA so, once the insurance money comes in – lots of opportunity for all builders out there.  

Year End 31st Oct 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
Revenue $m 1,883 2,674 3,912 4,171 5,170 5,815 6,716 7,037 7,773 +25.3%
Operating Profit $m 63.4 214.3 397.2 446.9 490.1 644.9 732.2     +59.0%
Net Profit $m 487.1 170.6 340 363.2 382.1 535.5 629.1 710.5 756.6 +1.9%
EPS Reported $ 2.86 0.97 1.84 1.97 2.18 3.17 3.75     +2.0%
EPS Normalised $ 2.86 0.90 1.75 1.93 2.13 3.13 3.73 4.61 5.06 +1.9%
EPS Growth % +1,038 -68.4 +93.2 +10.2 +10.6 +47.1 +18.9 +47.1 +9.79  
PE Ratio x           10.7 8.99 7.27 6.62  
PEG x           0.23 0.19 0.74 1.59

I think, for the LTP, this is one of those things where there's certainly no reason not to sell some puts for income so let's sell 10 of the TOL 2021 $30 puts for $4.50 ($4,500) and, in the very least, we get a nice net $25.50 entry.

Top Trades for Thu, 29 Nov 2018 10:28 – FCX

Yes to ABX and WPM.  If the Fed does pause in raising rates, the Dollar will weaken and likely inflation and metals will rise.  

FCX is another way to diversify into gold as they get about 13% of their profits from gold but 80% is still copper and they popped 6% yesterday, back to $12 from $10.50 last week but that's still only $17.5Bn in market cap while they've already dropped $2Bn to the bottom line in Q1-Q3 this year and next year is projected down due to a planned overhaul of their Grasberg operations as well as lingering issues in Indonesia that should be resolved eventually..

Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E

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Top Trades for Tue, 20 Nov 2018 14:34 – SQQQ Hedge

Nas still looks like the best short because it could drop back to 5,000, down more than 20% from here.  That still wouldn't take AMZN or NFLX below 50x earnings – nor half the rest of the index.  

SQQQ is at $16.45 and, in the STP, we now have 80 of the June $12 ($5.40)/17 ($3.40) bull call spreads at $2 and that's going to pay over 100% UNLESS The Nasdaq goes higher than it is now.  

As a hedge, however, we're more worried about a correction between now and Jan earnings so something higher than here would be appropriate so, as a new hedge, I'd go with:

  • Sell 5 AAPL 2021 $170 puts for $22 ($11,000) 
  • Buy 80 SQQQ March $15 calls at $3.40 ($27,200) 
  • Sell 80 SQQQ March $22 calls for $1.60 ($12,800) 

That's net $3,400 on the $56,000 spread that's $12,000 in the money to start so you can't lose you're $3,400 unless the Nasdaq improves and, if it does improve, it's not likely AAPL will be much lower.  If, on the other hand, AAPL is below $170, it's not likely SQQQ isn't paying you most of that $56,000 back and you are only obligated to own $85,000 worth of AAPL stock so, as a stand-along – the worst likely case is owning 500 shares of AAPL for net $29,000 ($58/share) but more likely you have some very good downside protection.

MTP holding up very well considering (down 15% from highs):

Note the SQQQ spread is $10,000 and and currently net $5,500 so more coming if we stay down but not much. I'm not too worried, they are all good positions but I wish I could make adjustments.  


Zero Hedge

'Hedge Fund Hotel' Arconic Crashes 25% As Sale Plan Abandoned

Courtesy of ZeroHedge. View original post here.

Widely-held by hedge funds (e.g. Elliott Mgmnt with 52mm shares), aerospace company Arconic has decided to no longer pursue a potential sale of the company. The shares are down over 25% pre-market...

What changed in 4 days?

Jan.18: Arconic Hopes to Finalize Sale to Apollo This Weekend: NY Post


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Kimble Charting Solutions

S&P and Crude both testing key breakout levels!

Courtesy of Chris Kimble.

The correlation between Crude Oil and the S&P 500 has been rather high over the last 100-days, as each looks to have peaked at the same time around the 1st of October at (1).

After peaking together in October, Crude fell over 40% and the S&P nearly declined 20%, with both bottoming on Christmas Eve at each (2).

Both have experienced counter-trend rallies since the lows, as Crude is up 23% and the S&P 13%.

These rallies have both testing dual resist...

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Insider Scoop

10 Stocks To Watch For January 22, 2019

Courtesy of Benzinga.

Some of the stocks that may grab investor focus today are:

  • Wall Street expects Johnson & Johnson (NYSE: JNJ) to report quarterly earnings at $1.95 per share on revenue of $20.17 billion before the opening bell. Johnson & Johnson shares gained 0.1 percent to $130.80 in after-hours trading.
  • Analysts expect IBM Common Stock (NYSE: ... more from Insider

Phil's Favorites

Martin Luther King Jr., union man


Martin Luther King Jr., union man

Dr. Martin Luther King Jr. on the picket line at the Scripto plant in Atlanta, Ga., December, 1964. AP

Courtesy of Peter Cole, Western Illinois University

If Martin Luther King Jr. still lived, he’d probably tell people to join unions.

King understood racial equality was inextricably linked to economics. He asked, “What good does it do to be able to eat at a lunch counter if you can’t buy a hamburger?”

Those disadvantages have persisted. Tod...

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Chart School

Weekly Market Recap Jan 20, 2019

Courtesy of Blain.

After entering the week quite overbought, indexes took a small retreat Monday before hurling back upwards.  This is typical of the “V” shaped moves up after any significant selloff, we’ve seen most of the past decade and watching them unfurl is quite amazing actually.  Thought maybe this time would be “different” but not so much.  So two week’s ago we asked “Has the Fed solved all the market’s problem in 1 speech?” – and thus far the market has answered resoundingly yes.  The word of the year thus far in 2019 is “patience” as that simple insert into a speech change the whole complexion of everything.

China has also been busy stimulating; on Tuesday:

An announcement from the People’s Bank of China that ...

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Everyone Else Is Selling Stocks, So Is It Time To Buy?

By Michelle Jones. Originally published at ValueWalk.

After a difficult few trading days in the beginning of the year, U.S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by more than half a percent by midday. It looks like investors could be taking advantage of the end-of-the-year declines, but is this a wise time to be buying?

Trying to time the bottom of the market will almost always be a fool’s errand, but one firm suggests equities could have much farther to fall before they hit bottom in 2019.


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Digital Currencies

Transparency and privacy: Empowering people through blockchain


Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...

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Members' Corner

Why Trump Can't Learn


Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...

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Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.


Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.


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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...

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Swing trading portfolio - week of September 11th, 2017

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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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

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.

Some other great content in this free eBook includes:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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