Nice Oil Major run-up ahead of inventory. XOM $90 puts are too cheap not to play at .70 (XXX mo play with a DD at .50 and a stop at .35 (down 40%) that would really hurt) but I’m concerned that the fix is in as they are going nuts ahead of Bernanke’s speech. It could be just based on the fact that it’s always worked before or it could be a good trend…
IMB – I don’t know, I got inside information that said they would not miss earnings from that article so I have to think that this sell-off is not about them but about the general disaster in that market. LEH downgraded them today and we’ll have to see if $27.50 holds but I think I’ll DD on the Aug $30s at $1.10, certainly at $1, reducing the basis to $1.30-1.35. If it can’t hold a buck into earnings I’ll probably give up or I may short a few July $25s as a mo play.
Damn, I’ve got to tell you – everytime the market goes down the VIX shoots up. Think of the VIX as a rubberband that gives you a tightness reading. When the VIX is low, you have slack, when the VIX is high, it is harder and harder to keep going. The VIX shot up 5% this morning on a 100-point drop (from yesterday’s high) in the Dow. This keeps happening and makes me think downside resistance is WAY higher than upside resistance. Conclusion – crazy as it seems, keep short index positions covered with DIA Aug $140s, now $2.08 or Sept $142s, now $2.40 against which you can sell the July 140s for .40. XXX
Bernanke is pushing that core number “preferred guage of price trends.” but “possible spillover” from subprime and that market has “eroded significantly.” Building permits are down 25% from last year!
I’m scaling into the DIA buys VERY slowly, they are easy to grab fast if the market jumps but no sense in buying when the market is on the way down. XXX
Bernanke testimony: http://www.federalreserve.gov/boarddocs/hh/2007/july/testimony.htm
The gist of this speech is we need to pull out all the stops to boost the economy or we are screwed but he wants the government to do it while he maintains a tight bias to control inflation. With 2 days of Q&A, the marked can go up and down 100 points several times so lots of half outs and DDs on the index puts as we may get a nice channel between 13,850 and 14,000 but a break below 13,900 and then 13,850 will begin to concern me…
BG finally going down – I’ve had those Aug $85 puts for a while.
VLO $75 calls are the safety cover play on oil inventories, currently .65. Watch out for the headfake and listening to www.mn1.com may help but if we get a clear number we can get some major action. I’m lovin’ the XOM puts but I’ll be hating them fast if they fly through $90. Oil is up .40 right now at $74.40 to a break below $74 will be our first good sign. SU Aug $90 puts are just $1.60 – great deal if oil drops a buck.
INTC – they weren’t that bad, the Aug $25s are just .85 and you can sell 1/2 the July $25s for .35 bringing the basis down to .75 which should give you a free look into next week. XXX
EDU – I sold the July $60s but I wish I had sold the $55s… My original basis is $6.30 on the Jan $65s, now $4.90 but I got .95 from my caller so not so bad yet. Aug contracts have an insane premium!
I may have worried too early on oil – really poor response to huge gas build. I’m out of oil on both side for now until we see what’s up – took .80 and ran on the VLO $75s XXX
Dead cat brokers – try the XLF if you dare but betting on a single broker can be very dangerous.
TM – I really don’t think they should have lost $8Bn in market cap in 2 days based on that earthquake. They are shutting down for 3 days and will reasses on Friday. They make 11,000 cars a day in Japan – that’s out of about 8M cars a year! I’m not crying as my July $125 caller got murdered right in front of me (and there were 50 at $2+ on Monday). That makes my Oct $140s free, now .68 and my Jan $120s are still $9.75, which is what I bought them for in May. I’m going to roll my Oct $140s down to Oct $125s, now $4.20 ahead of earnings and I will sell Aug $125s if I get nervous but I think they will have huge numbers. XXX
Back in XOM $90 puts at .44!
VLO – damn, I’m way off on these things today, now they’re going up! That’s why I cashed out, if you’re playing something wrong, stop playing!
According to Pisani, LEH got whacked on false rumor they were making a sub-prime statement that was going to be bad. Aug $75s at $1.17 were $2 yesterday so I’m going to give them a shot as earnings were great on 6/1 so no bad news ahead. XXX
TIE – If they hold $32.50 they should be OK as I think growth will be about 30% and they are flat to last year’s average. Outlook is a wildcard but I’d cover 1/2 with the Aug $35s at $1 since they’re willing to pay you all that you might as well take it.
By the way, I have a meeting tomorrow and will be gone from 11 probably through close so I’m making a lot of cash outs and taking defensive positions as this thing can go crazy on day 2 of Bernanke as well.
DIA calls – I will have them by the day’s end but I’ve got my eye on the Aug $139s again which were very very good to me when I picked them up for $1.65 on the 12th.
Absolutely astonishing gainst in STP! Mostly due to DIA puts going from -$40K to even (on my rolled basis). I’ve been mattressing down so I’m out of the $140 puts and will leave the 200 $139 puts and 100 $138 puts and will add 100 $137 puts and DD on the $138 puts and take half the $400 puts off the table right here. .25 stop on top 2 layers if we get a run up. XXX
MRK Aug $50s at $1.33 XXX
BAC – if I were going to buy it, now’s the time but I prefer C. The BAC Aug $50s are just .57 though… As to what’s up with C – they lend, therefore they get dumped.
PTR and CEO crushed today. Aren’t they oil companies too? BP, RDS.A and TOT all flat to down. I guess only XOM, COP and CVX know how to make money… Offering $2 for XOM Aug $90 puts.
Buy program kicking in, someone is determined to spin Ben posiitive now that he’s done. BX getting killed again.
DIA puts – well I roll mine so I was down $1 on 400 Aug $140 puts which I was happy to get out even. On the way down I bought 200 $139 puts and 100 $138 puts and 100 $137 puts and now I have to decide where I will leave my larger bet (probably the $138s) but it depends where this all stops as it looks like we may get another leg down.
UNH – I have naked Jan $55s that are even at $3.50 so they either perform or they don’t.
ABX – oh this is just the tip of the iceberg if the dollar falls through 85 – I took the gold plays as disaster protction but if you are in it as a trade, of course you should take some off the table or you could sell 1/2 the Aug $32.50s for $1.58 with a $1.10 premium and nice downside protection for you.
C – I have the Aug $42.50 and I’m DD at .65 for a $1.10 basis. I don’t think they are going to get hit and that’s what it will all be about in the end.
DIA – largest bet is closest to the money option, usually I’ll go up if not prohibative so I had 400 $140 puts at the end of yesterday. The KEY though it, as with many things I do, not trying to “win” the trade. I buy or roll to the next put when the Dow gains about 100 points on me (assuming my main positions are still bullish). I buy into the initial disappointment (for the puts) when the contracts are cheap. If I wait for a turn down, it would cost me .20 more and I’d probably never make a dime. This is based on a quaint little theory I have that the Dow will, even in a great run, eventually go down but, even if it never does, I am feeding about $12K per 100 up points into the bet which is just 2% of my capital at risk. If the rest of my virtual portfolio isn’t making much more than that then I’m not as bullish as I think I am and I should adjust my puts accordingly.
Of course, yesterday for example, I went a little heavier on the put side because I simply expected some sort of rejection off of 14,000. The BSC thing just turned it into a bonus by accident.
So now stopped out of the DIA puts and looking for a new entry when the music stops back in 50 Aug $139 calls at $2.30, more at $2.50 then switching to $140s but mostly stopping out of puts and calls sold but remember, I’m looking to get to more cash so I’m just looking for excuses to dump things.
FIZZ a real bargain today, selling off on legal BS (monster is suing them over similarities in energy drinks) but their numbers are great. You can buy the stock for $10.76 and sell the Jan $10s for $2.08 for a net $8.68 which will net you 15% in Jan if you get bought out at $10. The energy drinks are new and there would be no damages, just a name and package change most likely (monster claims “Freak” means the same thing as “Monster” so it’s a tm infringement and the colors are similar) but FIZZ is a beverage distributor and this would represent less than 2% of their revs.
AHR – I like it enough to risk a quarter but not enough to risk $1.40 as I think I feel better getting a look at Aug and Nov earnings reports. If it’s going to go up, I’ll make a double much faster than the $10s will and, if it goes down, I can never lose what they can lose AND, even if I lose my .25, I can roll down to the $10 for $1.15 so I end up spending the same $1.40 you want to commit to now and I can have fun with that $1.15 while I wait!
How are airlines going up with oil at $75? When oil hit $60 the airlines crashed.
YHOO – I think we have to pray for a bounce but sell into that.
GOOG premiums are out of control. I’m cutting down to even on the Aug $530 puts and the Sept $550 calls as I’m not going to leave an unprotected double with a ridiculous premium on the table. I’d rather have the cash to buy on mo if it really takes off.
EBAY better have their act together or people will start treating them like YHOO.
Be mindful that many of your positions are benefiting from a jumpy VIX – if we flatline those premiums will deflate fast so if you have positions that are “up for no reason” or “holding up well” take advantage of it.
XOM $512Bn and still going! What a mess. They go up $5Bn in market cap for each $1 movement in stock so they gained 1.5 TSOs in value today and gained the entire market cap of SUN!
I think we can count on IBM to deliver but EBAY could hurt if they miss.
DIA – I am reestablishing downside covers with just 200 Aug $139 puts, now $2.25 as I forgot I had the 250 Aug $137 puts because I sold July $138s against them so they weren’t where I was looking – that’s penty of coverage as I’m 70% cash now. XXX
FXI $136 calls for $1.60 because the only reason they went down is because they thought we were going down. XXX but a gamble!
Now 500 XOM $90 puts at .31, probably a lost cause but will be great if someone regains sanity tomorrow.
AXP taking off, great sign. It’s a good thing I’m missing tomorrow or I’d be way too tempted to buy stuff. GOOG flying up…
Posted July 18, 2007 at 4:03 pm Permalink (Edit)
Surviving that was huge. We could get a massive rally if we don’t get any bombshells from Bernanke tomorrow. $10KP now down just 15% so I am thrilled!
