Welcome Cody – try hitting F5 to refresh but that shouldn’t be happening – let me know if it continues and I’ll call Jared. Oops, size too – I guess we’d better get ahead of this. Although it is possible that the errors were caused by me updating this post (I published it in progress) so let me know if it keeps up.
Ka-ching on BHI and RIG puts from yesterday, not going to be greedy ahead of the weekend, half off by close at least even if it doesn’t reverse.
BHI – half out into the excitement as it was “weather related” so there shouldn’t be a long-term breakdown but I do think it’s somewhat of an excuse to mask other issues. The first one or two guys get to blame the weather, after that it’s called a trend. I remember making fun of WFMI when the stock was up near $150 and they blamed the hurricanes for a bad quarter and I said “Oh, yeah – groceries are the first thing people give up on.” To some extent I feel the same way about BHI – when I’m getting paid $70 a barrel to pump oil, the last thing I do is cut back on my drilling.
FWLT – what a disaster! I’m going to let the current caller expire and then roll to a higher put as this party can have a sharp correction. Cramer just jumped on TV to pump them so this may be the top for these guys as he usually does that when his buddies need an exit strategy. At the moment I’m probably going to roll to the Nov $115 at $8.50 and paying for the $4 move by selling the Aug $115 puts for $4.15. I suppose we have enough money to roll it up now, since that’s our intention so let’s do that.
$10KP – spending $4.50 to roll Nov $100 puts to Nov $115 puts, will wait to sell Aug in case we get lucky and the stock drops. XXX <ENDED UP WITH $110S AS $115s DID NOT FILL>
AMZN Oct $80s at $4.30 XXX selling the Aug $75s for $4.50 hopefully.
Consumer sentiment was rockin! 92.4 vs 85.3 – big news, should give us a nice pump
FWLT was added to the Nasdaq 100 index, that’s why they’re up but Cramer is taking credit for spurring the move with his brilliant analysis. All this is is index shuffling and I will be taking some new puts if they hit $125, probably selling the $125 calls which are already ridiculous at $2.
CAT/Every Roll – yes and the Aug $85 you would roll into has gone from $2 yesterday to $3.50! Your caller WILL lose his $1.30 premium by next Friday. It’s a fact, it will happen! THEN you can roll for the additional premium given to you by the Aug caller, whether it’s the $85s or the $90s. Meanwhile, your leap is growing in value and has good downside protection. The optimium time to roll is when the spread between your July caller and the Aug caller you want to sell to starts to deteriorate. XXX
Speaking of Always sell into the initial excitement – it’s game of for FWLT and I’m selling the $120s for $4.35 with a stop at $5 XXX, looking for $3 maybe.
DO – still a ways to go for my Aug $100s to be even but I will be getting 1/2 out there ($3.35).
CCJ – I’m naked so, yes, you should worry a little but don’t panic, they are very likely to flatline. I just didn’t feel like taking the chance for .70 worth of premium as I’m pretty confident this is the bottom and I can always get $2 worth of premium from Aug if I’m wrong.
Somebody’s willing to pay me $1.25 to sell him COP at $90 next Friday – I’m going to take him up on it.
SGR is a great long-term play and up that much you can roll to the ‘09 $60s at $9.65, take $5 off the table and sell Aug $60s for $2.25. If it goes up, that’s the least of your worries! XXX as a new entry as $2 against $9 with 18 months to sell is a great deal! <NO FILL>
RIMM – got my $5 for selling the $220 calls!
UTX is a great long-term play as they own Otis and building construction is globally en fuego. They are paused at $75 and earnings are on the 18th so I like the ‘09 $80s for $7.30 and riding it out through earnings unless we get a really good spike to sell the July $75s for $1.50+ XXX
I’m going to start easing out of my Qs soon as I have tons and they are +.16 for the day even though the Nas is flat. Not worth being greedy with a 50% profit on a huge bet. XXX
GOOG – best to take the $10 in position and $4 in additional premium from a roll to the $550s I think. XXX
SLB – another call to sell if I can get $2 for the $90s.
Gosh I hate to be a flip flopper but the QQQQ $51 puts are getting interesting at $1.36 with .04 premium because the Qs are now .17 higher than they should be so if it breaks $49.65 I will take these as a mo play really just looking for a dime or so. XXX
SPWR – I think they are stretched but I defer to happy on these as he is better at spotting ones that can really break out. With 7/19 earnings I prefer to play the premium selling game by taking the Aug $75s for $2.20 and selling the July $70s for $1.88 and XXX because I like this one.
EDU – that’s it – I’m in! This one seems very dicey J but I’m not even going to worry about it… I think the Jan $65s for $6.25, selling the July $60s for .85, then the Aug $60s, now $3.25 will be the way to go. XXX Hmm, Happy is right, maybe these guys should expand and train on both sides of the globe!
XOM – I’ve been restraining myself from buying the $90 puts all morning as I am so loaded with oil puts right now. It’s a tough call into the weekend and I’m sticking with the Aug $85 puts for now I think. I’m also tempted to sell the July $90s at $130 but I’ve got too many naked sells out.
CHK – if you are long then selling the $35s is good cover for the weekend to protect this gain, you can always roll to Aug if it pops up or to the $37.50s, which would probably pick up in premium what you lose in basis buying back the $35s. XXX
GOOG – If you are serious about establishing an earnings play on this, the Aug $540s are $13.20. You take these first over the weekend, even if GOOG jumps up $10, you still want these for protection. On the plus side, you do 1/2 the Sept $570s, now $19.80 and sell $560s against 3/4 of them, now $8.85. You can then sell $530 puts against the longer puts as you are well covered and on Monday we can see which end we want to tighten up but we are working our way into a strangle. Since each contract cost $1,500 to $2,000 and you will need to make at least 4, maybe 10 moves over the next week, this is certainly not a trade for everyone but we are playing for a $30 move either way on earnings. XXX for rich folks.
I’m still trying to come up with a cheaper play but I’d say the Aug $510 puts at $4.75 make a nice maybe they drop play for the weekend but they are very high risk/high reward. They can be offset by selling the $510s for $1.55 but I’d rather risk it playing for a correction on the assumption that they won’t jump up to a 10% gain on the month at $560 ahead of earnings without at least a shakeout.
KO – sorry I just remembered someone asking for that! (if I miss things, always feel free to ask again) – I think Aug $52.50s at $1.50 protected by $52.50 puts at .40.
BID – I wouldn’t panic. They’ve had a busy season and report in early August. Revs are way up (20%) and most of their costs are very fixed BUT that’s no reason not to hedge a bit. Maybe go Oct/Aug $50s for $1.50 debit where they pick up most of your premium perhaps in a 4:3 ratio. You could even get fancy and do (for example) 10 Oct $50s/10 Aug $50s + 5 naked Jan $60s at $2.83 but that’s a slightly more bullish stance. The assumption is you can’t really lose to the upside on the $60s and the Jans protect you from a huge run up but with a normal pop your guys will lose $1.90 in premium, you will keep most of yours and you gain in full on the longs. On the downside, you are in for $5,400+1,415 and you sold $3,900 worth of protection so you would have to take a pretty nasty hit of more than 1/2 on the much longer calls. XXX
CAT (7/20) – Crazy not to sell the July $85s for $1.75 into earnings as it’s pure premium that will end that day. Estimates are actually low ($1.49 vs. $1.52 last year with sales up 5%). They had a 12% surprise last Q which gapped them up $5 from $67.50 but now they are up 35% from there with 15% projected growth so I’m not comfortable making a short bet on them. I’ve got the ‘09 $75s and I rolled to the $85 calls but I’m also going to roll my $75s up to ‘10 $80s, now $19.80 as a pretty even swap. This will lower my volatility into earnings and add 12 months of sales to me at the cost of just $5 in position so XXX if you got ‘em. If I were initiating a new CAT position I’d use the Cramer 80/100/120 theory to buy the Jan ‘10 $100s at $10.97 (which I may do as a pre-roll) and just wait and hope for nice earnings before selling the Aug $90s or $95s into the excitement. If it goes the other way, I either accumulate or roll as a $10 fall would only cost me about $4 to bracket down and I still have 30 months to make it back.
RIMM – short covering. I agree to some extent but I sold some RIMM $220s for $5, now $8 but I will roll them into 2x $230 calls, currently $3.25, when they get to about $5. Now I can only really do this twice as it becomes a margin problem but I can fix that by buying the $240s for $1 if I have to but I am currently even on the intrinsic value despite the big gain and I am already shocked that we are up $50 from last expiration with almost 70,000 contracts in the money (7M shares), many deep, deep in the money. I could be tragically wrong but I’m also the proud owner of Jan ‘09 $300s so I will survive…
EOG/Oil puts – I’m in until October/Novemer with a roll, roll, roll plan. It will break but it may go back to $80 first but the higher it goes, the more spectacular the pop.
SHLD – Over the weekend I’m into protection, someone might say something to spook the markets. Next week I will decide.
VIX continues to be calm when market is going in the non-volatile direction (up).
AAPL – I’m 50% pre rolling to Jan $160s, now $8.50 from my Oct $125s and $140s – no cover since I’m hugely covered on my existing positions. XXX
I have to buy the SLB Aug $85 puts for $1.60 – are they kidding me? Earnings are 7/20. XXX
