AXP - again you are flat out wrong. Now you are contending (correctly) that we already took out one caller and made a nice profit so somehow the secondary profit on the other caller is a negative. Of course if you were a real member you would bring this up in member chat rather than here and if you were a real member you would have read our strategy section or you would have heard me say perhaps 3 times that day to take callers our we were more than 50% ahead on (and with us being up over 80% on AXP, that would qualify becuase 80% is BIGGER than 50%).
SNE - same thing, the math is just too tedious to go into but it's a break-even position. Seriously, out of 200 open positions those are the best you can do? Right above this comment, at the end of the post are 4 picks that were made pre-market and generated stunning one-day returns, there are 174 free picks made right here on SA in the past 12 months, why don't you make a tracking form and see how they all turned out? Our goals are to make 20% profits and then set trailing stops of 20% of the profits - just follow those very simple rules and see how it goes. I think the body of work speaks for itself as does my work every single day. If it makes you feel better, I have a hedge fund starting next quarter and that will be publicly audited, you can have fun tracking that as well!
NYMEX - they have rules that make it painless to roll contacts to the next month and if you track the totals here:
You'll see all they really do on any given day is shuffle contracts from one month to another so this time next month October will have 300K contracts (+ 200K) and Nov will have 120K (+50K) and 20 or 30K will be distributed to other months and they will close Sept around Aug 20th with less than 40K contracts (1,000 barrels per contract).
You'll notice also the incredible volume of trading while Open Interest barely changes each day. That's churning, plain and simple and the churn rate on the NYMEX is 6Bn barrels (6M contracts) in a typical month with only 20-40M barrels delivered (20-30K contracts). That's just a joke.
Trading is down this week as several scammers have cut back activity while the regulators are walking the floor but the second the heat is off, they will go back in business unless real oversight is put in place.
Do you actully say these things to make a fool of yourself or is that just a natural extentsion of your communications?
AXP earnings were 7/21 after markets. Our spreadsheet of 7/18 had the Jan $45/Aug $40 spread. I would say that lying to make your point is beneath you but that's 3 consecutive posts in a row that you are exposed for the BS you attach to your own name.
Also, your timing is just terrible as we took out our caller on yesterday's dip and now they gained $2, running our long calls up 30% in one day. I hope all my "bad trades" do so well.
BIDU - again your astounding lack of comprehension makes me very sad for you. We took the BIDU play on 7/23 with the following 12:55 comment (I don't know if this will format correctly):
"Bidufly for butterfly collection. Costs $8,740 cash and $4K in margin with profit of $2K+ between $260 and $320 (break even way down at $250/$350) and, of course, it’s rollable. We’ll go with 2 in Butterfly Portfolio XXX"
Buy 2 BIDU DEC 2008 300 Call (.BDULZ) $46.80 $9,360.00 Sell -2 BIDU AUG 2008 290 Call (.BDUHY) $23.30 ($4,660.00) Sell -2 BIDU AUG 2008 290 Put (.BDUTY) $19.70 ($3,940.00) Buy 2 BIDU DEC 2008 280 Put (.BDUXX) $39.70 $7,940.00
So (and I will type this very slowly so you will understand it) our break even points on the trade were between $249.26 and $351.29, which means a-n-y-t-h-i-n-g in between those 2 strikes (that would be higher than $249.26 or lower than $351.29) would make a profit. Let me know if this is going too quickly for you...
So BIDU running up to $344 after earnings was LESS than $351.29 so what do you think happened (I'll give you a few minutes to get a pencil and paper to work this out - feel free to phone a friend if there are people who can stand you)? That's right BS, it's a profit!
So profitable, in fact that we were able to take out the $290 puts we sold for an 82% one-day profit ($3,534), rolled our own December $280 puts up to the December $300 puts (that would be a better put because having a higer strike means you make more on the way down) and then were able to sell the Aug $330 puts for yet another $3,190 and we used some of that money to roll our $300 caller out of the money to the $330 calls, collecting yet another $3,000 in premiums AND WE STILL HAVE 3 MORE MONTHS OF PREMIUMS TO SELL!
Again, your astounding lack of knowledge just blows me away. One would think that you were purposely distorting the truth in order to slander me if one didn't know you were such a low functioning individual who is simply to be pitied...
AMZN - same thing, it's right on track and do you even follow the markets? AMZN gained $2.30 today so it's right on track to the targets we adjusted for yesterday. Again, the total lack of comprehension is very difficult to get past, perhaps there is a remedial site where you would be more comfortable?
OIH - my 9:42 comment to members on OIH was "Market held up well off a bad open so far, oil co’s are heading down again as oil can’t even hold $125 with Iran pumping up the rhetoric volume and that is just terrible for oil bulls. OIH is primed for a test of $185 and if they break below that things will be ugly so let’s start scaliing into 5 $190 puts at $6.50 in the DTP and we’ll offer to roll them up to the $195 puts for $2 and to the $200 puts for another $2 whenre we will double down. If we can sell the $185 puts for $5, let’s do that to make the spread."
Following that course we ended up with 10 $200 puts at an average entry of $9.75 and they sold today for $14.15 so, are you being sarcastic or did you actually realize that trade worked?
SNE - Also a covered spread of the Aug $40s, that were sold for $2.90 against the Jan $40s that had a basis of $5.90. With the Aug callers wiped out on the dip, the basis reduces to $3 and the Jans are now trading at $2.75, a loss of .25 with only 4 months remaining to sell more calls against the position. OK, you've got me, it was a catastrophe (that is me being sarcastic, as I'm sure the subtlety escapes you).
That's 3 days in a row you attack me with totally unsubstantiated nonsense, whatever your agenda is, it can be clearly tracked by anyone clicking on your pseudonym (lack of guts is obvious there) who can witness the daily failed attacks you put together. I don't get tired of this, I review my trades on a regular basis to see how they perform so I can improve my performance - for me, this is exercise. I don't know what it is for you....
I did read that re. the financing of the buyout and I decided I don't mind as MER makes a bonus 4.5% on the loan and I do believe that the average home in America is worth 22 cents on the dollar. I would have to call 5 cents on the dollar a decidedly negative way to spin the value of a home loan but that's what makes a market right!
We counted on that reaction today, loaded up the truck on MER and other financials and had a pretty good day. It doesn't mean my long premise is right and Whitney is wrong or vs. vs - only time will really tell how extensive the damage is but we're effectively buying into the dips now on a regular basis (but covering or getting out EOD as we're not that in love with the financials) and it's kind of a fun way to play it until things settle down.
Thanks Lobster. If you want to get an idea of what we do in member chat, I did take the time to address BSchecker's "concerns" to the trades he asked about in the next post. I don't claim to be perfect - we have wins and misses but the nature of the hedged strategy we run is that we cash in our wins and usually we can roll our misses and turn them into wins at a later date. With a diversified portfolio, time is on your side and, as I we like to say at PSW, there's always an option...
WM/Calvin - Of course there's a possibility but $2 would very likely be on the way to $0 as the bank is already priced for bankruptcy. Like the stand we took on C in the teens, sometimes you just have to look at a stock and say "Yes, I would buy the whole company at that price." WM tested $3 and bounced sharply back on the 14th and we're hoping that line holds for the rest of the month. On this play, if we have faith that the downside is $3 on our $3.10 net entry and the upside is $4, it's a pretty good risk/reward spread.
Also, you have to look at the fundamentals. Congress is passing a housing bill that Bush said he would sign. The concerns on the banks is primarily based on concerns of the value of their housing portfolios due to high default rates so fixing the housing problem fixes the banks. While it might not make everything all better, it sure might mean that some part of the 85% drop in value for WM may be recovered, giving us a nice win.
BSchecker, Rumplewhatever, Contender - as much as it pleases me that you hang on my every word like you do (it's a powerful thing to take up so much of someone else's life), it seems the curse of the Midianites is upon you and that's a sad thing so I will help anyone who asks for it and you can dream about me this weekend or obsess over me during your waking hours but that's no reason I can't chat with real people on this site.
Lobsterboy - what would you have me respond to? They make things up that aren't true and expect me to spend time defending myself, not worth my time. We have over 1,000 members now and a couple of them must be satisfied and I still post on SA for free because they gave me an early break (well before I had a pay service) and I'm loyal to them and allow them to publish my morning posts. How do you see my providing to SA for free something that other people pay for to be "just using this webside to get more clients"? If anything, it costs me clients as it's a very low cost alternative for people who don't want to pay for membership.
If these boys want to attempt to turn this site into the YHOO message board, that's not my problem and even their obsession with me isn't my problem, clearly it's theirs. There are people I don't like and I just don't read them, much less hang on their every word. Stalkers go with the territory, most of the popular writers I talk to have their obsessed anti-fans. I'm harsh on Cramer, Bush and Whitney myself so I guess it all goes with the territory but I don't see them interrupting their lives to address my concerns.
What bothers me is I used to enjoy having conversations with readers here as there are lots of really smart people who read SA but, as you point out, my disinterest in rising to their bait is taken by someone like you to be an admission of guilt of some kind so I'm saying this once here and that's it. I am very amused by the fact that I, Phil Davis, occupy the thoughts of these people to this extent while if I don't happen to click over here for a day, they don't even exist to me at all. Just think of the disproportionate impact I'm having!
So I've decided to simply respond to the people who have real questions (why should they suffer) but, overall, it sure is nice to be ranked as one of SA's most commented authors!
CROX/Likestock - What a disaster! I have to give props to Ahmit, who totally called this one while I trusted the management. I still can't figure out what they did with all the money as sales were "only" off 2% for the Quarter, down $4M from last year, yet the company managed to not make the $48M they made last Q2. Our bullish case was based on the 80% increase in international sales that were reported in Q1 and had increased to over 1/2 of total sales. Now that's drying up too but it's the MASSIVE missed guidance by management that makes me want to give up on them.
Our position, which had been rolled and doubled several times from our original play (but we sold many calls against them along the way so, until today, we were in decent shape) was the Sept $6 calls with a $2.85 basis against which we'd last sold the $9s for $1.15.
It's rare but there's really nothing to save in this trade, all we could do was sell the current $5s for .70 and use that money to roll back to the Dec $5s and hope we find some way to make back the $1.70.
Usually, if you get blown out of a hedged position (and almost all of our positons are hedged) the best course of action is to sell another option with good premium that pays for you to roll yourself back in time and closer to the money but you never want your caller to have position advantage over you, in case there is a sharp bounce.
I would say that this is the type of strategy we teach but Lobsterboy would think I was soliciting so I'll just say that there are many fine web sites that teach using stock options as a hedging tool and those strategies can get you through many tough times but there's really nothing that's going to save you from a 50% drop pre-market and that's why position management MUST be a part of any good portfolio strategy (many fine sites teach that as well).
Murphy - this is all your fault as your link caught my attention and I decided to respond to you but first I had to do a little housekeeping! First point is XLF is financial so I'm not sure we're talking apples to apples subsituting a health-ETF basket but I think you were thinkining about the XLV.
We use the XLF because the risk of owning any single bank is pretty insane. We took gambles on C and BAC pre earnings as well as LEH and JPM as they were ones we were pretty sure were going to beat. We also took the XLF and had a variety of covers and naked positions among the 5.
You can pursue a similar strategy targeting health care but one interesting use of an ETF, if you are playing a major component of it, is to go long on the single stock and short on the ETF ahead of earning. Bad earnings from a major player in a sector can bring down the whole ETF but good earnings from one stand-out don't always translate into a sector break-out.
All portfolio management is about balance and it's not the sort of thing you can learn without practice but, as Mr. Miyagi says "Once you find balance, you can accomplish anything."
90K bankruptcies x 12 months = 1,080,000,000, just about 1% a year, should have clarified the year part.
McDonell - LOL, been so long I forgot their name!
Sorry user 153975 but I used to be the only options guy on SA and they tagged me with it. I don't like the title either. My site specializes in options trading but my morning posts are generally market overviews to set up the day's trading.
U.S. Banks Still Need To Come Clean on Subprime [View article]
$235Bn is the amount of Sub-prime ARMs alone, multiply your figure by 6 and that's the number of total loans at risk, current delinquency rates in the sub-prime category are 20% and climbing but Seeking Alpha retitled this post from my original "What Doesn't Kill Us, Makes Us Stronger" and caused a very interesting change in tone to the article. If you read it as it was intended, you'll notice I picked Citibank as a buy - I was saying it was good to put this behind us but, as always, we will keep our eyes on the very real issues that are destroying the lives of millions of homeowners. It's easy not to care - we take the harder path.
Options Trader: Thursday Outlook [View article]
Options Trader: Tuesday Outlook [View article]
SNE - same thing, the math is just too tedious to go into but it's a break-even position. Seriously, out of 200 open positions those are the best you can do? Right above this comment, at the end of the post are 4 picks that were made pre-market and generated stunning one-day returns, there are 174 free picks made right here on SA in the past 12 months, why don't you make a tracking form and see how they all turned out? Our goals are to make 20% profits and then set trailing stops of 20% of the profits - just follow those very simple rules and see how it goes. I think the body of work speaks for itself as does my work every single day. If it makes you feel better, I have a hedge fund starting next quarter and that will be publicly audited, you can have fun tracking that as well!
NYMEX - they have rules that make it painless to roll contacts to the next month and if you track the totals here:
futures.tradingcharts....
You'll see all they really do on any given day is shuffle contracts from one month to another so this time next month October will have 300K contracts (+ 200K) and Nov will have 120K (+50K) and 20 or 30K will be distributed to other months and they will close Sept around Aug 20th with less than 40K contracts (1,000 barrels per contract).
You'll notice also the incredible volume of trading while Open Interest barely changes each day. That's churning, plain and simple and the churn rate on the NYMEX is 6Bn barrels (6M contracts) in a typical month with only 20-40M barrels delivered (20-30K contracts). That's just a joke.
Trading is down this week as several scammers have cut back activity while the regulators are walking the floor but the second the heat is off, they will go back in business unless real oversight is put in place.
Options Trader: Tuesday Outlook [View article]
AXP earnings were 7/21 after markets. Our spreadsheet of 7/18 had the Jan $45/Aug $40 spread. I would say that lying to make your point is beneath you but that's 3 consecutive posts in a row that you are exposed for the BS you attach to your own name.
Also, your timing is just terrible as we took out our caller on yesterday's dip and now they gained $2, running our long calls up 30% in one day. I hope all my "bad trades" do so well.
BIDU - again your astounding lack of comprehension makes me very sad for you. We took the BIDU play on 7/23 with the following 12:55 comment (I don't know if this will format correctly):
"Bidufly for butterfly collection. Costs $8,740 cash and $4K in margin with profit of $2K+ between $260 and $320 (break even way down at $250/$350) and, of course, it’s rollable. We’ll go with 2 in Butterfly Portfolio XXX"
Buy 2 BIDU DEC 2008 300 Call (.BDULZ) $46.80 $9,360.00
Sell -2 BIDU AUG 2008 290 Call (.BDUHY) $23.30 ($4,660.00)
Sell -2 BIDU AUG 2008 290 Put (.BDUTY) $19.70 ($3,940.00)
Buy 2 BIDU DEC 2008 280 Put (.BDUXX) $39.70 $7,940.00
Price - Profit/Loss
$249.76 $0
$260.00 $2,053
$270.00 $4,058
$280.00 $6,063
$290.00 $8,396
$300.00 $6,744
$310.00 $5,437
$320.00 $4,129
$351.59 $0
So (and I will type this very slowly so you will understand it) our break even points on the trade were between $249.26 and $351.29, which means a-n-y-t-h-i-n-g in between those 2 strikes (that would be higher than $249.26 or lower than $351.29) would make a profit. Let me know if this is going too quickly for you...
So BIDU running up to $344 after earnings was LESS than $351.29 so what do you think happened (I'll give you a few minutes to get a pencil and paper to work this out - feel free to phone a friend if there are people who can stand you)? That's right BS, it's a profit!
So profitable, in fact that we were able to take out the $290 puts we sold for an 82% one-day profit ($3,534), rolled our own December $280 puts up to the December $300 puts (that would be a better put because having a higer strike means you make more on the way down) and then were able to sell the Aug $330 puts for yet another $3,190 and we used some of that money to roll our $300 caller out of the money to the $330 calls, collecting yet another $3,000 in premiums AND WE STILL HAVE 3 MORE MONTHS OF PREMIUMS TO SELL!
Again, your astounding lack of knowledge just blows me away. One would think that you were purposely distorting the truth in order to slander me if one didn't know you were such a low functioning individual who is simply to be pitied...
AMZN - same thing, it's right on track and do you even follow the markets? AMZN gained $2.30 today so it's right on track to the targets we adjusted for yesterday. Again, the total lack of comprehension is very difficult to get past, perhaps there is a remedial site where you would be more comfortable?
OIH - my 9:42 comment to members on OIH was "Market held up well off a bad open so far, oil co’s are heading down again as oil can’t even hold $125 with Iran pumping up the rhetoric volume and that is just terrible for oil bulls. OIH is primed for a test of $185 and if they break below that things will be ugly so let’s start scaliing into 5 $190 puts at $6.50 in the DTP and we’ll offer to roll them up to the $195 puts for $2 and to the $200 puts for another $2 whenre we will double down. If we can sell the $185 puts for $5, let’s do that to make the spread."
Following that course we ended up with 10 $200 puts at an average entry of $9.75 and they sold today for $14.15 so, are you being sarcastic or did you actually realize that trade worked?
SNE - Also a covered spread of the Aug $40s, that were sold for $2.90 against the Jan $40s that had a basis of $5.90. With the Aug callers wiped out on the dip, the basis reduces to $3 and the Jans are now trading at $2.75, a loss of .25 with only 4 months remaining to sell more calls against the position. OK, you've got me, it was a catastrophe (that is me being sarcastic, as I'm sure the subtlety escapes you).
That's 3 days in a row you attack me with totally unsubstantiated nonsense, whatever your agenda is, it can be clearly tracked by anyone clicking on your pseudonym (lack of guts is obvious there) who can witness the daily failed attacks you put together. I don't get tired of this, I review my trades on a regular basis to see how they perform so I can improve my performance - for me, this is exercise. I don't know what it is for you....
Options Trader: Tuesday Outlook [View article]
We counted on that reaction today, loaded up the truck on MER and other financials and had a pretty good day. It doesn't mean my long premise is right and Whitney is wrong or vs. vs - only time will really tell how extensive the damage is but we're effectively buying into the dips now on a regular basis (but covering or getting out EOD as we're not that in love with the financials) and it's kind of a fun way to play it until things settle down.
Options Trader: Friday Outlook [View article]
WM/Calvin - Of course there's a possibility but $2 would very likely be on the way to $0 as the bank is already priced for bankruptcy. Like the stand we took on C in the teens, sometimes you just have to look at a stock and say "Yes, I would buy the whole company at that price." WM tested $3 and bounced sharply back on the 14th and we're hoping that line holds for the rest of the month. On this play, if we have faith that the downside is $3 on our $3.10 net entry and the upside is $4, it's a pretty good risk/reward spread.
Also, you have to look at the fundamentals. Congress is passing a housing bill that Bush said he would sign. The concerns on the banks is primarily based on concerns of the value of their housing portfolios due to high default rates so fixing the housing problem fixes the banks. While it might not make everything all better, it sure might mean that some part of the 85% drop in value for WM may be recovered, giving us a nice win.
Options Trader: Friday Outlook [View article]
Lobsterboy - what would you have me respond to? They make things up that aren't true and expect me to spend time defending myself, not worth my time. We have over 1,000 members now and a couple of them must be satisfied and I still post on SA for free because they gave me an early break (well before I had a pay service) and I'm loyal to them and allow them to publish my morning posts. How do you see my providing to SA for free something that other people pay for to be "just using this webside to get more clients"? If anything, it costs me clients as it's a very low cost alternative for people who don't want to pay for membership.
If these boys want to attempt to turn this site into the YHOO message board, that's not my problem and even their obsession with me isn't my problem, clearly it's theirs. There are people I don't like and I just don't read them, much less hang on their every word. Stalkers go with the territory, most of the popular writers I talk to have their obsessed anti-fans. I'm harsh on Cramer, Bush and Whitney myself so I guess it all goes with the territory but I don't see them interrupting their lives to address my concerns.
What bothers me is I used to enjoy having conversations with readers here as there are lots of really smart people who read SA but, as you point out, my disinterest in rising to their bait is taken by someone like you to be an admission of guilt of some kind so I'm saying this once here and that's it. I am very amused by the fact that I, Phil Davis, occupy the thoughts of these people to this extent while if I don't happen to click over here for a day, they don't even exist to me at all. Just think of the disproportionate impact I'm having!
So I've decided to simply respond to the people who have real questions (why should they suffer) but, overall, it sure is nice to be ranked as one of SA's most commented authors!
CROX/Likestock - What a disaster! I have to give props to Ahmit, who totally called this one while I trusted the management. I still can't figure out what they did with all the money as sales were "only" off 2% for the Quarter, down $4M from last year, yet the company managed to not make the $48M they made last Q2. Our bullish case was based on the 80% increase in international sales that were reported in Q1 and had increased to over 1/2 of total sales. Now that's drying up too but it's the MASSIVE missed guidance by management that makes me want to give up on them.
Our position, which had been rolled and doubled several times from our original play (but we sold many calls against them along the way so, until today, we were in decent shape) was the Sept $6 calls with a $2.85 basis against which we'd last sold the $9s for $1.15.
It's rare but there's really nothing to save in this trade, all we could do was sell the current $5s for .70 and use that money to roll back to the Dec $5s and hope we find some way to make back the $1.70.
Usually, if you get blown out of a hedged position (and almost all of our positons are hedged) the best course of action is to sell another option with good premium that pays for you to roll yourself back in time and closer to the money but you never want your caller to have position advantage over you, in case there is a sharp bounce.
I would say that this is the type of strategy we teach but Lobsterboy would think I was soliciting so I'll just say that there are many fine web sites that teach using stock options as a hedging tool and those strategies can get you through many tough times but there's really nothing that's going to save you from a 50% drop pre-market and that's why position management MUST be a part of any good portfolio strategy (many fine sites teach that as well).
Murphy - this is all your fault as your link caught my attention and I decided to respond to you but first I had to do a little housekeeping! First point is XLF is financial so I'm not sure we're talking apples to apples subsituting a health-ETF basket but I think you were thinkining about the XLV.
We use the XLF because the risk of owning any single bank is pretty insane. We took gambles on C and BAC pre earnings as well as LEH and JPM as they were ones we were pretty sure were going to beat. We also took the XLF and had a variety of covers and naked positions among the 5.
You can pursue a similar strategy targeting health care but one interesting use of an ETF, if you are playing a major component of it, is to go long on the single stock and short on the ETF ahead of earning. Bad earnings from a major player in a sector can bring down the whole ETF but good earnings from one stand-out don't always translate into a sector break-out.
All portfolio management is about balance and it's not the sort of thing you can learn without practice but, as Mr. Miyagi says "Once you find balance, you can accomplish anything."
Have a good weekend all,
- Phil
Options Trader: Monday Outlook [View article]
McDonell - LOL, been so long I forgot their name!
Sorry user 153975 but I used to be the only options guy on SA and they tagged me with it. I don't like the title either. My site specializes in options trading but my morning posts are generally market overviews to set up the day's trading.
U.S. Banks Still Need To Come Clean on Subprime [View article]