Whee! Another fun day on the oil slip and slide!
We had a great time with our oil puts and we never needed those silly calls (although I bought some EOD as I’m the nervous type!).
As I said in the morning, no reason to panic unless we break our levels and anything positive would be amazing – and amazing it is!
Nuclear Armageddon is staring us in the face – and it doesn’t matter. The Chairman, yes the Chairman of the Federal Reserve said that we are spending our way into a financial hell that our children and our children’s children will pay for, for the rest of their lives – and it doesn’t matter. The housing market and the auto industry are melting down and we’ve squeezed every last dime out of our homes to buy gas – and it doesn’t matter. IT JUST DOESN’T MATTER!!!
You have got to love the Meatball Economy!
The Dow gained more ground (Yawn!) making a nice morning reversal off 11,813 and finishing near the high of the day at 11,857.
The S&P also was strong as the oil sector turned down indicating this rally may have real legs if oil can normalize below $50.
The NYSE tested only 8,516 before turning back up and finishing positive. The Nasdaq gained 11 points and was strong all day, finishing at 2,311 – now retracing most of it’s May fall!
What is that red line on top of the indices? Why it’s Nasdaq leadership!!!
The SOX gained 1% and the Transports laughed off an early drop and rising oil prices to finish at 2,562 – WOW!
Oil thought it was going somewhere but had far too much trouble at $61, never making our $61.29 worry zone and fell off a virtual cliff at 1:30, dropping a dollar into the NYMEX close to finish below $60 at $59.96.
Gold learned to love the bomb and made scant progress against a sleeping dollar to close up $6 at a not impressive $583.
None of this matters because we get earnings tomorrow and if that doesn’t matter I’m just going to put all my money on the Dow and wait for it to catch up to the Nikkei – probably by the end of the month (just kidding!).
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Both Tom and I were snubbed by the Nobel committee in favor of Edmund Phelps, but we will wish our best to the guy who finally figured out that zero unemployment wasn’t the best idea for the economy!
Not getting our medal, we were forced to satisfy ourselves by beating the markets – We had a lot of fun with our intraday trades today as the Valero Rule gave us a nice clear signal to take puts early on and then we just chatted until the bottom fell out!
We took more XOM $67.50 puts for $1 early on, at 10, which was a little premature but worked out well. I stopped out of those, as well as our other October plays at the end of day as I just didn’t want to push it so close to expiration.
The $67.50 puts closed out at $1.55, up 55% on our day trade and up 35% on the position we took on 10/5. The $65 puts remain open at .50 (up 25%) as they were a pre-roll and they are our last October oil play.
PBR $80 puts got me all excited as they fell 50% to .85 at 10:21 and we took them off the table at $1.20 (up 50%).
Zman made an excellent call on HAL $27.50s for .60 which finished the day at .90 (up 50%).
SU was a slow dropper and we grabbed the Nov $65 puts for $2 and they ran up to $2.65 (up 33%).
At 1:12 I reiterated a buy call on all our puts, not the worst timing!
At 1:34 I covered a very heavy put position with some XOM $67.50s for $1.10 (the worst timing!).
We picked up the low-premium TSO $65 puts for 5.90 at 1:41 which finished at $7 (up 19%) We also let go of the $55 puts at .60 (down 14%) as there was no point in risking it after that nice day trade. We still have the Nov $55 puts, now $1.90 (even).
Rather than take a loss I double downed on XOM $67.50s at .80, reducing the basis to .95 but they finished the day at .70 (down 20%). This is a very painful way to buy insurance!
Our regular plays did well too!
I figured we had done enough damage on PD $87.50s (which came in high at $2) at 12:30 but with a .10T stop it took until 1:22 to stop out at $2.80 (up 40%).
For whatever reason SONC dropped today and we were able to get the Nov $22.50s for $1 but I was holding out for .90 all day!
AA had an exciting day and it was tempting to take profits but it was an earnings play so we stuck with the Nov $30s at .55 (up .10).
The CVX $65 puts never came near our target.
ECA Nov $45 puts opened at $1.75 and finished at $2.05 (up 17%).
OII Nov $30 puts gave us a .95 entry and finished at $1.20 (up 37%)
RDS.A finally broke down and the Nov $65 puts finished at $2.20 (up 57%).
RIG had a perfect day for us, jumping $1 at the open, but never making my $70.50 stop, and finishing $2.50 lower! The Nov $65 puts came in at just $1.65 and finished the day at $2.30 (up 40%).
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Wow what deal for Google! When you’re watching GoogleVision in your living room a few years from now, this will be the moment! Congrats to them for not letting YouTube out of the room without an agreement.
I realize now I underestimated the benefit to Google as $730M a year in revenues is just YouTube’s cut, the ad revenues Google gets need to be added to that!
