June 9, 2007 – 12:06 pm
What a wild week that was!
This morning I said "I wish I was good at Photoshop" and, next thing I know, Evogroup came through with this Image:
This is why I love our member site – the talent pool is extraordinary – I’m starting to think rather than mess around with stocks we should just become corporate raiders, we certainly have enough capable people to take over companies and turn them around!
So when I said "If you were to reverse this picture and overlay the daily movement of the Dow since that day, it pretty much follows the exact profile of that mountain," I was pretty darn close. Not bad for a picture I picked out on May 17th to illustrate where I thought we were (the climber) at the time.
Of course I’m very happy to report that our virtual portfolios, all of them, reflect the accuracy of that call as we took full advantage of the dip, the mini recovery and the subsequent bigger dip to give us three consecutive fantastic weeks.
While we parked ourselves relatively in neutral earlier today, that didn’t last for long as we flipped around and went with DIA calls at 10 to protect our bearish set while we cashed out of the put side. We didn’t have all that much faith in the early rally, but when oil went down and the transports went up (the SOX were strong all day) we had the exact premise I laid out in the morning when I said "Oil MUST fall below $65 and the Transports MUST reverse." None of us expected what happened at about 1, especially me as I was out to lunch but I made a call to buy X the moment I got back and that made for a nice day trade on momentum.
We picked up a few more fun plays but entered the weekend back in neutral as this after lunch rally looked suspiciously like the Asian after lunch rally yesterday, which was followed by a 300-point drop!
It was a really wild way to finish off a crazy week and this will make 4 weeks in a row where I think we should just take these amazing gains and just travel the rest of the year because next week can’t get any better (but I’ve been wrong about that 3 weeks in a row!). We did wind up with half cash, which was goal number one for this week and we are once again well positioned and ready for whatever the markets may bring us.
ZMan and I had our second radio address to the nation on Market News First (click for podcast) and we scored a real home run going back to the well with the VLO $75 puts which went from .85 on Wednesday morning to $3.25 yesterday, before settling back to $2.10 at the close. Of course you got that pick here first on Wednesday morning yet still some of you haven’t signed up 5 friends for this site – that’s just mean! I also recommended selling the GOOG $510 calls at $13.50 (now $9.05) and, of course (as you our readers heard from us on Monday), and Z & I agreed the inventories were a disaster for oil and picked shorts on the COP $75 puts, GSF $67.50 puts and the SLB $80 puts, all of which made doubles within 48 hours – NOW THAT’S GOOD RADIO!
Our live END trade was the dog of the week (sorry) but we had plenty of time to get out yesterday morning as news hit that their well ran dry, but we were on top of that trade well before the market opened and were able to exit without too much damage (10%), better than Zman’s predicted $1.75 that we’d be forced to sell at if they missed this well.
Despite the crushing loss in END, our boring old Stock Virtual Portfolio is now up 30% for the year as my very bad old TSO shorts forgave us just a bit and KNOT came roaring back to life with a nice $2 jump as the rest of the market fell down. As a fundamentalist, I don’t even look at that virtual portfolio very often and was very pleasantly surprised with the gains we got from our 10 remaining positions. MRB is back at our entry at $4.59 so that’s going to be an accumulate as a great mining hedge but it’s a long-term hold. FIZ is also getting cheap again around $12, ahead of their June 12th switch to the Nasdaq.
The Short-Term Virtual Portfolio was our star of the week, posting simply spectacular gains as our very heavy DIA put position paid off in spades after over a month of rolling. Our protections started as June $132 puts and we spent roughly an additional .30 per 100-point Dow move (and there were 2 plus a roll to July) to reposition our insurance play but we were, if anything, over-insured for the drop and, fortunately, wise enough to cash in! My May 24th statement in comments on the subject was: "All these index puts are meant to be insurance plays but if you don’t take a 50% payoff on an insurance play then what the heck are you holding out for? If you bought a $1M life insurance policy and you “almost” died in a car crash and they offered you $1.5M, even though you’re still alive, would you turn it down? When in doubt, sell half!"
We had no doubts and stopped out of all of our puts yesterday, buying back the DIA July $132 and $133 puts later but kept them balanced against the August $138 calls we picked up in the morning as we don’t know what the heck is going to happen on Monday. The 84 remaining positions in our Short-Term Virtual Portfolio are up 74.1% and that’s AFTER going half cash on the week so saying this was a good week would be a bit of an understatement!
Our usually mellow Long-Term Virtual Portfolio had an active week as we covered pretty much everything by Thursday as I’d rather give up a month of gains on our leaps than take a bracket’s worth of hits. The 35 open positions there are up 105% and we are about 40% cash there but feeling good about our hedges.
Our month-old Complex Spreads Virtual Portfolio even had a good week (for boring plays) with 23 very hedged positions finishing up 13% but with a gain on capital at risk of 25%, which is our goal with these plays. I’ve been very happy getting these plays out of the STP as they do not need the kind of attention that STP trades do and it has helped me focus more efficiently so I recommend this concept to members wholeheartedly. On the whole, it’s an extension of what I do with the LTP, it simply never occurred to me to make a subset of our short-term trades before!
The $10,000 Virtual Portfolio was our worst performer of the week, dropping down to $9,494 but I’m not worried yet as we are well hedged and waiting for many callers to expire and pay us a nice premium. I’ll be very surprised if we aren’t pleased with the performance by next weekend. My goal of the virtual portfolio, since it was started from scratch this month, was NOT to lose money if the market tanked. Well the market tanked and we’re still in the game – mission accomplished.
After last week’s contest article I decided to keep tracking the Free Picks in a separate folder, which we will publish under the "Performance" tab for the remainder of the contest. The Free Picks Virtual Portfolio (the ones we print right on the FREE site and in the FREE daily newsletter) gained another 8% on the week, now up 134% since 6/1 and 68% in cash at $58,581, not bad for a $25K start!
Surely you must know someone who appreciates good free advice – please do us the favor of introducing them to our site, it’s all we ask in return for all this entertainment value – thanks!
FREE PSW NEWSLETTER
All in all, we closed out 53 positions on the week with a 90% average gain and a 54% return on capital at risk. With our DIA puts, it wasn’t so much the final gains as the reversal of the losses that led to such a great improvement in our fortunes as we had been placing nearly 15% of our prior gains in that bank for just such a rainy day.
|
Description |
Basis |
Open |
Sale Price |
Close |
Gain/Loss |
% |
| 10 JUN 17.00 $VIX CALL (VIXFR) | $ 360 | 5/18 | $ 740 | 6/7 | $ 380 | 106% |
| 3 JUL 95.00 AAPL CALL (QAAGS) | $ 1,585 | 5/14 | $ 9,590 | 6/7 | $ 8,005 | 505% |
| 10 JUN 50.00 BIIB CALL (IDKFJ) | $ 590 | 5/25 | $ 1,220 | 6/2 | $ 630 | 107% |
| 40 JUL 50.00 BTU PUT (BTUSJ) | $ 3,930 | 5/24 | $ 7,990 | 6/7 | $ 4,060 | 103% |
| 80 JUL 50.00 BTU PUT (BTUSJ) | $ 7,850 | 5/24 | $ 11,990 | 6/6 | $ 4,140 | 53% |
| 10 JUN 45.00 CHL CALL (CHLFI) | $ 1,010 | 5/30 | $ 2,040 | 6/5 | $ 1,030 | 102% |
| 20 JUN 80.00 COP PUT (COPRP) | $ 4,010 | 6/6 | $ 4,790 | 6/6 | $ 780 | 20% |
| 80 JUN 27.50 CSCO CALL (CYQFY) | $ 1,770 | 5/1 | $ 1,999 | 6/5 | $ 229 | 13% |
| 50 JUL 133.00 DIA PUT (DAWSC) | $ 10,010 | 6/7 | $ 15,990 | 6/8 | $ 5,980 | 60% |
| 100 JUL 134.00 DIA PUT (DAWSD) | $ 21,010 | 6/7 | $ 27,990 | 6/8 | $ 6,980 | 33% |
| 150 JUL 135.00 DIA PUT (DAWSE) | $ 36,010 | 6/6 | $ 50,990 | 6/7 | $14,980 | 42% |
| 50 JUL 134.00 DIA PUT (DAWSD) | $ 10,510 | 6/7 | $ 14,990 | 6/7 | $ 4,480 | 43% |
| 100 JUL 136.00 DIA PUT (DAZSF) | $ 29,510 | 5/30 | $ 38,990 | 6/7 | $ 9,480 | 32% |
| 150 JUL 137.00 DIA PUT (DAZSG) | $ 29,260 | 6/1 | $ 68,990 | 6/7 | $39,730 | 136% |
| 700 Dendreon Corp. (DNDN) | $ 5,645 | 6/1 | $ 5,240 | 6/2 | $ (405) | -7% |
| 7 JUN 7.50 DNDN CALL (UKOFU) | $ 10 | 5/31 | $ 970 | 6/2 | $ 960 | 9600% |
| 500 ENDEAVOUR INTL (END) | $ 1,085 | 6/7 | $ 965 | 6/9 | $ (120) | -11% |
| 10 JUL 115.00 FDX CALL (FDXGC) | $ 60 | 5/11 | $ 1,640 | 6/6 | $ 1,580 | 2633% |
| 10 JUN 105.00 FWLT PUT (UFBRA) | $ 2,010 | 6/4 | $ 2,890 | 6/6 | $ 880 | 44% |
| 3 JUN 100.00 FWLT PUT (UFBRT) | $ 745 | 5/29 | $ 650 | 6/2 | $ (95) | -13% |
| 5 JUN 110.00 FXI CALL (FJJFF) | $ 1,260 | 5/30 | $ 3,240 | 6/7 | $ 1,980 | 157% |
| 50 JUN 37.50 GE CALL (GEFS) | $ 910 | 5/10 | $ 2,240 | 6/1 | $ 1,330 | 146% |
| 50 JUN 25.00 GLW CALL (GLWFE) | $ 1,110 | 5/16 | $ 4,990 | 6/5 | $ 3,880 | 350% |
| 10 JUN 500.00 GOOG CALL (GOPFO) | $ 15,010 | 5/29 | $ 6,390 | 6/5 | $ (8,620) | -57% |
| 5 JUN 510.00 GOOG CALL (GOPFU) | $ 3,360 | 6/4 | $ 8,240 | 6/7 | $ 4,880 | 145% |
| 20 JUN 67.50 GSF PUT (GSFRU) | $ 1,710 | 6/1 | $ 1,290 | 6/6 | $ (420) | -25% |
| 5 DEC 45.00 IBN CALL (IBNLI) | $ 1,260 | 5/1 | $ 3,740 | 6/4 | $ 2,480 | 197% |
| 60 JUN 80.00 LVS PUT (LVSRP) | $ 9,010 | 4/20 | $ 18,590 | 6/7 | $ 9,580 | 106% |
| 20 JUN 140.00 MA CALL (MALFH) | $ 10,010 | 6/9 | $ 12,390 | 6/9 | $ 2,380 | 24% |
| 5 JUN 120.00 MA CALL (MAFD) | $ 1,260 | 5/2 | $ 13,490 | 6/6 | $12,230 | 971% |
| 5 JUN 45.00 NFX CALL (NFXFI) | $ 1,510 | 5/31 | $ 2,540 | 6/7 | $ 1,030 | 68% |
| 4 JUN 85.00 NYX CALL (NYXFQ) | $ 1,010 | 5/23 | $ 1,870 | 6/4 | $ 860 | 85% |
| 20 JUN 175.00 OIH CALL (ODLFO) | $ 5,510 | 6/4 | $ 3,790 | 6/6 | $ (1,720) | -31% |
| 10 JUL 165.00 OIH PUT (OIHSM) | $ 3,060 | 5/31 | $ 3,590 | 6/4 | $ 530 | 17% |
| 30 JUL 65.00 OSK CALL (OSKGM) | $ 160 | 5/11 | $ 5,390 | 6/5 | $ 5,230 | 3269% |
| 100 JUL 47.00 QQQQ PUT (QQQSU) | $ 9,010 | 6/7 | $ 12,490 | 6/9 | $ 3,480 | 39% |
| 50 JUL 46.00 QQQQ PUT (QQQST) | $ 4,510 | 6/7 | $ 3,990 | 6/9 | $ (520) | -12% |
| 100 JUL 48.00 QQQQ PUT (QQQSV) | $ 9,010 | 5/31 | $ 19,490 | 6/7 | $10,480 | 116% |
| 40 JUN 165.00 RIMM PUT (RFYRM) | $ 8,010 | 6/6 | $ 14,390 | 6/7 | $ 6,380 | 80% |
| 3 JAN 7.50 SCI CALL (YTYAU) | $ 655 | 11/15 | $ 1,490 | 6/4 | $ 835 | 128% |
| 10 JUN 55.00 SNE CALL (SNEFK) | $ 1,510 | 5/16 | $ 1,690 | 6/5 | $ 180 | 12% |
| 25 JUN 62.50 TSO PUT (TSORU) | $ 6,885 | 6/6 | $ 7,490 | 6/7 | $ 605 | 9% |
| 30 JUN 62.50 TSO PUT (TSORU) | $ 6,910 | 5/30 | $ 14,690 | 6/7 | $ 7,780 | 113% |
| 50 JUN 62.50 TSO CALL (TSOFU) | $ 3,510 | 6/6 | $ 4,240 | 6/7 | $ 730 | 21% |
| 2 JUN 60.00 TSO PUT (TSORL) | $ 230 | 5/22 | $ 570 | 6/7 | $ 340 | 148% |
| 50 JUN 75.00 VLO PUT (ZPYRO) | $ 5,510 | 6/6 | $ 12,490 | 6/7 | $ 6,980 | 127% |
| 50 JUN 75.00 VLO PUT (ZPYRO) | $ 5,260 | 6/6 | $ 7,990 | 6/6 | $ 2,730 | 52% |
| 50 JUN 75.00 VLO PUT (ZPYRO) | $ 5,510 | 6/1 | $ 4,490 | 6/4 | $ (1,020) | -19% |
| 15 JUN 75.00 VLO PUT (ZPYRO) | $ 1,510 | 6/9 | $ 4,490 | 6/9 | $ 2,980 | 197% |
| 10 JUN 115.00 X CALL (XFC) | $ 3,110 | 6/5 | $ 5,190 | 6/7 | $ 2,080 | 67% |
| 30 JUN 69.00 XLE PUT (XBTRQ) | $ 2,710 | 6/4 | $ 3,740 | 6/6 | $ 1,030 | 38% |
| 20 JUN 68.00 XLE PUT (XBTRP) | $ 1,610 | 6/1 | $ 1,090 | 6/4 | $ (520) | -32% |
| 200 JUN 85.00 XOM PUT (XOMRQ) | $ 32,010 | 6/4 | $ 30,990 | 6/7 | $ (1,020) | -3% |
| 20 JUN 40.00 YRCW CALL (YUXFH) | $ 1,910 | 5/23 | $ 1,090 | 6/7 | $ (820) | -43% |
As I will now say for the 5th week in a row, now would be a good time to pack it in and call it a year but no one sold in May and it remains to be seen if the markets are going to swoon in June, fly in July or bust in August (I’m going to bail on this before forcing a rhyme for September but I’ll "remember" to get back to it before the summer is at an end)…
Have a great weekend,
– Phil
