I’m taking one more stab at oil puts, adding to existing positions ahead of inventory but I will reduce and take the hit if it doesn’t go my way. I am totally convinced they are up on very badly flawed logic and I’m looking forward to another inventory shock next week.
Selling OIH $180s has not failed me yet so I”m adding those shorts at $3.70, probably giving up if they break $4.50.
osted July 6, 2007 at 9:58 am Permalink (Edit)
BTU will not take abundant nat gas well and the Aug $45s are .82, not a bad play. XXX
Huge Buy program just kicked in – sudden wide massive buying across sectors. Will be interesting to see hwo long it lasts but someone is taking a stand here.
Gold rallying of course with NEM’s huge bet, they jumped 5% already on the news so GDX continues to be a good play. Our Sept $38s are still just $3.50, up .90 from where we took them but the $39s and $40s are valid too. XXX
FTO NOT moving up with other oil.
GENZ getting killed. Make that KILLED. Tolevamer missed it’s trial goal but this will be a buy opportunity if they drop too far. I’ve been avoiding them as too expensive vs. DNA and they still are but this may trigger a nice sell-off, hopefully a test of $60.
TSO pissing me off at $59 – have to take some $57.50 puts at $1.10 ahead of inventory. Nat gas expectation is 80Bcf but it’s selling off hard already and Z says probably 90s based on some pretty good import data that came in high.
CLF – no reason they shouldn’t at least retest $90 in the near future. Earnings are on the 26th and they just made a deal with Kobe steel that I liked. If I were more positive on the markets I would have picked them up last week but they bounced very well off the 50 dma so I really like them now. I like the Aug $90s for $3 and sell the July $90s, now $1.38 or the $85s, now $2.90 ahead of earnings as they don’t benefit from them anyway. XXX My play is to wait and see if I can get $3 for the $90s but to sell the $85s for no less than $2.50 if it goes the wrong way.
CCJ – it’s always a good time to get back into CCJ. The Iranians will need tons of the stuff to run their new reactors and we just gave India the go-ahead on 6 of them and Putin may want to start putting them in bombs again – talk about putting a commodity in storage! I’ve got Jan calls and I will be rolling them to Jan ‘09 $55s in the LTP soon as this has been a great income producer that regularly pounds your callers into dust.
BTU – yes puts, sorry!
RIMM – do you know the Jan ‘08 $310s are $4? I simply cannot bring myself to buy this thing but congrats to those who did. You can buy the Jan ‘09 $300s for $19.50 and sell the Jan $270s for $10.50 as a cheap leap. If RIMM goes to $300 by Jan you owe your caller $30 but the in the money Jan ’08s, with just 6 months to go are $27.95 so XXX
Build of just $78Bcf! This is considered in-line from what they are saying. It’s possible that this can be used as an excuse for some much needed venting but I’m not going to be too brave with my puts. XXX 8-(
JOSB – no reason to pay him a .60 premium when we’re just going to roll him anyay, may as well keep te protection.
BBY – I have the Jan $50s at $2, now $3.10 and sold the Jul $47.50s for $1 and they are now $.97, with the stock at $47.83. That’s still a lot of premium (.64) so under no circumstances will I buy them out 10 trading days ahead of expiration. One of the nice things about writing here all day is it keeps me from obsessing over moves (right now I am ignoring my very sad oil puts to keep myself from dumping them) in the short-term. Sometimes it costs me money (like now with oil) and sometimes it saves me but it absolutely beats the losses you take fiddling with positions all the time.
With any cover sold, you should be looking to win the premium, not the whole postion and once you collect 60% of it, you should treat it like any good gain you make and set a stop at 50%. Then you adjust your basis, reassess you naked leap and decide what to do about that in a nice, orderly fashion.
CME takes cast iron stomach to hold. I would love to see them test $540 and at $530 I say BUYBUYBUY but they already look like they are turning here. If I didn’t have GOOG I might play them but I only want to watch on schitzo stock at a time and Apple is a boarderline case as well.
PCLN – Don’t forget my goal was to sell the $70s, not hold it naked! XXX
Somehow the buying ran out of gas all of a sudden. Watch yourselves here, nothing wrong with taking some off the table ahead of the weekend. I added to my Aug DIA $136 puts, now $2.20 to lock in my gains up here. XXX
KNOT says 400% increase over normal for weddings on 7/7/07 and I like this company anway so a good time to pick up the Aug $22.50s for .70 as an earnings play. XXX
Oil – it’s all front month BS according to NYMEX so I’m going to continue to risk it into the weekend. Note that this is a relatively small bet on the whole and I do intend to roll out to Aug and Sept next week so my view on the collapsing puts is that it’s just cheaper for me. Of course I would have liked to win this week but that’s not going to happen but there is nothing I see that shakes my longer premise.
Puts holding up – that’s true. I have gotten very little punishment for my BTU, DO, OIH, PTR, RIG, SU, TSO, XLE or XOM puts so far so I must not be the only one whos a little dubious of this rally (as the 10-year breaks 5.20%)
CCJ – it always makes sense to pick up a buck in premium but I am thinking they pop here so it’s a “when in doubt sell 1/2″ kind of thing.
PCLN – so much for selling the $70s! Not sure what to do about this now. I think I’ll still sell the Aug $70s, now $5 over the weekend but I may take them off on Monday. Those callse were $3.25 yesterday. XXX
Another huge wave of buying kicks in, amazing. Every fall is saved and considering you need $300M of inflows to move the Dow 1 point, that’s pretty amazing!
I will point out that this is yet another opportunity to get out on top for those of you who wished you had this morning or yesterday afternoon but have totally forgotten about that now that we are up again… Also, at this point you should be looking for any reason at all to get out of July contracts – If you don’t like them enough to spend a buck and roll them to August, why the heck are you holding them???
Consumer confidence – well they’re not buying houses, and they’re not buying cars and real wages are down from last year when we had the same level of unemployment and gas is over $3 per gallon and food prices are through the roof and 2 out of 3 people have no faith in the President or Congress and it’s travel season and everyone is talking about terrorism again… I’m thinking it will be a miss.
UNH – you have nothing to lose by squeezing that last .35 out of him, .20 at least as he’s still protecting you. UNH is a tough one as the next bracket is worthless to sell to. When you roll him you’ll get another .80 in premium and you have 5 more of those to go and you only paid like $2 for your call so don’t worry – be happy. At some point you can roll to the Sept $55s, now $1.58 but wait until they are like $3 and your guy is perhaps $4.50, then you are spending $1.50 to gain $5 in positiion.
GDX – well that NEM deal blew the equation on GOLD. They just bet their company on gold blowing through $700 in the near future so you don’t really want to have a caller but, since you have one, perhaps just roll him over whenever the bracket above him hits $1. For example, the $39s are $1.77 and have .30 in premium left and the $40s are $1.08 and have .60 in premium left. So you would be spending .70 to gain .30 in premium and $1 in position, a good trade. Of course, that puts your Sept $40s $1 more in the money, which should be good for .60 on that end and, at a certain point, you can roll up $3 and double your holdings and split your caller for even more premium. But nothing goes straight up, however, it’s good to have a plan if it does…
Taking profits – see strategy section but once I cross 20%, 30% for sure I will sell at least half on a small pullback. Assuming I stop the rest out even, that’s still a 10-15% gain. Also, scaling in and out of posiitons is very important. If you watch Happy’s trades too, he is often half out early. The only reason not to take profits off the table is because you think that’s the last good idea you will ever have and the cash will just be a burden on your account. Also, you should note your targets on entry and, when you exceed them – maybe it is overbought. By target I mean that today I say Goog goes to $600 by Jan. That’s a target of $10 per month. When the stock goes up $20 in the first month I am 100% ahead of target – do I really now expect that to continue until GOOG is at $660 in Jan or perhaps it is now overbought and I should be thankful for 2 months gain in one month.
BIDU – NOT breaking through $200! It really hasn’t established any kind of base for that.
SHLD – just way too low, had to happen. I had sold the $175s so that was my target for the month, never bothered to change them until today when he stopped out. Going to sell them again overnight – if it jumps up on me, tough luck and I’ll roll him to Aug but I’m not leaving those naked.
Selling BIDU $200s – was I going to do that? I didn’t but $8.45 is soooo tempting. A safer play is to buy the $210s for $4.90 and sell the $200s when they hit $10 as they will only appreciate $5.20 on the next $10 and you will gain $6 so it’s safe over the weekend and could be a nice double if they drop off. XXX for people who can afford to lose!
How totally strange that GOOG and AAPL sit today out…
XOM – now they’ve pushed me too far! .62 for the $85 puts??? I’m doing a ‘mon back at .60 XXX (they were $1.50 yesterday!).
INTC – there’s no premium in the $22.50s so I wouldn’t sell them but you can sell the $25s for .56 against the Jan $27.50s at $1.03 or the Jan $25s for $2.01 as 25% of your premium back in 10 days is a great deal.
POT – since I got killed on BG I’d have to say no to POT puts.
CME up BOT up – I’ve gotta take the ICE $150 puts for $2.62 as a craps roll. XXX
DIA – so now I am establishing some Aug $137 puts and it costs me .40 to bracket up $1 and gains me .72 of intrinsic value (I had 0). I don’t do it all at once, I had 200 $136 puts and I’m buying 50 here and not even selling until it gets worst on Monday. Meanwhile I am now protecting twice as much naked call value as I was at the beginning of the week (now 60% cash in the STP) and, of course, I do have my 300 DIA Aug $138 calls on the other side so I’m happy with a big move in either direction.
KNOT – I know but a month’s worth of weddings in one day means that for the past quarter their site has had record volumes, hence record earnings when they announce. Plus they sold off and got cheap anyway, I can’t believe no one has bought them yet. Now it’s time for China’s 8/8/08 brides to start planning too.
DNA – yes on my Jan ’85s, $2.25 too cheap to resist! It’s not just a DD though, I’m also mentally committing to a roll to $80s as my next move.
ATI Aug $115s at $2.98, selling the July $110s for $1.90 is a fun trade. Looking at BOOM and BA made me think they are just dogging it for now.
NMX flying!
