October 15th, 2007 at 9:30 am | Permalink edit
XOM – I doubt they will break 95. If you have Nov or Jans, you can sell Oct $95 puts as a mo play for $1.75 XXX
October 15th, 2007 at 9:33 am | Permalink edit
IBM – you’re only capping your upside so why not? Your biggest worry is IBM goes above $122 and caps your Nov call at $4 (plus remaining premium). Since the Nov $120 is at $2.95 and this protects 66% of it – I say XXX as a new play too.
October 15th, 2007 at 9:34 am | Permalink edit
Oh sorry, I always forget to say this but of course, as a new entry, buy the Nov $120s first and sell the Oct $120s if they slip to $2 with a .25 trailing stop as they go up!
October 15th, 2007 at 9:53 am | Permalink edit
EDU – serves to remind us that the China story is actually backed by some amaazing growth.
BIIB – in case you didn’t get lucky you cheapest escape is to roll to 2x the Jan $80s, now $7.30 ($1.70 back to you) and roll your caller to 2x the Nov $80s at $5.30 (-3.60 from you) which covers most of your gains and puts you even with your caller with a 1 month advantage and $1.85 in premium ($3.70 per original share) on his calls. Other than that, you can just roll him to the Jan $75s ($11.40 with a $3.20 premium) but you do want to take advantage of a roll while the premiums are up here.
MDT – you really, really, really should rarely hold leaps without a caller, especially in industries that are prone to sudden problems. I have the ‘10 $60s and I find this to be a wild overreaction to what will be about a $250M loss and vey little chance of suits since the company is pro-actively pulling devices at the fist sign of a 1% failure rate. The company made $2.8Bn last year and, of course, there are sales and manufacturing costs which will go away as well but even a total write-off doesn’t justify a 10% stock drop. I’m rolling my MDTs to the Jan ‘09 $50s and selling the shell shocked Nov $52.50s when they get back to $2.50 or better (were $4 yesterday) OR selling the Nov $50s if they slip below $2.
October 15th, 2007 at 11:14 am | Permalink edit
PTR – out of control!
PTR – that was Oct $210 calls I hope. I bought the calls, not the puts. I’d leave calls for protection unless you can afford to roll him up to the $230s at $15.45 for now as that’s another $8 on premium to grab now that we toasted the $10 we got on the $210s. Picking up $18 in premium before our first roll pretty much guarantees a nice trade!
If you have the puts, let me know where you got in but absolutely you want to take out the putter before they correct and probably roll yourself up and sell again (kind of like what we did with BIDU).
MDT – offering .40 for the Nov $52.50s but risky. This is not a recall, they are going to stop marketing this device, change the way it’s made to reduce fracturing as they fracture 1.4% more often than antother device after 30 months. They are reacting to the early findings of the first study to look this far out in time and are cooperating with the FDA – total overreaction I think but that’s no reason not to hedge bets!
SHLD – LOL, no it has not been adjusted unfortunately. Let’s do that – I’m rolling to the Jan $140s (+$4) and selling the Oct $140s for $1.80, I will then roll to the Nov $140s for $6.50 or roll myself down again and sell the Nov $135s, now $9.10 but I think we’ll hold $135 and the $1.80 I get for this week gives me a chance to calmly watch to see what happens.
GM – be careful on those. Crazy buyers (the only possible kind for these guys).
GOOG – we’re going to want to balance the $600 puts (up 60% already!) with (hopefully)the $660s at $5. I’ve got 20 $600 puts so I’m probably going to take 10 $660s and sell 1/2 of my $600 puts so I get a free ride, then I’ll see about taking adjustments. XXX
BXP and VNO coming down nicely.
October 15th, 2007 at 11:39 am | Permalink edit
XOM – selling $95 puts is risky (actually, playing options is generally risky you know) but getting a $1.20 premium for 5 days is a sure thing. If your long is the Jans, you can already see a roll to Nov $90 puts is even at $1.20 so what’s your risk? Keep a 20% stop on it and sell the Novs when the downward momentum stops but it’s always riskier to have a naked position than to sell a position at the same strike, that’s just math.
TM – that is nasty! Where’s that fantastic global economy they keep trying to shove down our throats? I stopped out of my Jans, not worth chasing.
CAKE – you shouldn’t worry about each leg, just the net of the roll. Off our original Jan /Oct $25 position, at this moment, I’d spend $1.30 to roll to the Jan $22.50s and wait a bit as this drop is not about anything CAKE did but a sector issue. I’d let them test $23 before I worried about selling the Nov $22.50s, which were $2 on Friday so I wouldn’t be greedy and look to sell around $1.85.
BA – I wouldn’t sell calls against right away but I also wouln;t initiate a play right now with the market falling apart like this DESPITE the magic $100Bn fund that’s supposed to make everything better.
“Feels like up so probably down” LOL, good call Film!
There was a survey of consumers and what their expectations are of thier houme values and they are trying to spin it as a positive as 90% of the people think their homes will stay flat or improve in value. I think this indicates that consumers are clueless and that they are still spending way over their heads as they have a totally unrealistic assessment of their net worth and it means that there is still a massive shock in store for the economy when reality hits the fan!
IMCL – MDT money has to go somewhere….
BA – I have the ‘09 $95s naked, that’s it.
MO – I said earlier, the puts and calls make a cheap spread. See earlier post for the whole play.
October 15th, 2007 at 11:48 am | Permalink edit
MDT – sold the $50s and bought 2x the Nov $52.50s at .45, puts me in pretty good shape either way.
I smell a possible comeback – remember, no sell-off has gone without spanking the shorts for about 2 months now so be careful betting on the streak to end. When DiMaggio had a 56-game hitting streak, the previous record was 41 and you can bet a lot of people went broke betting the next 15 games would be the last!
October 15th, 2007 at 12:23 pm | Permalink edit
TM – I’d roll out and down, they’ll come back one day.
Oct $140 puts – DIA I guess you mean, I wanted to take them out but the premium is ridiculous so I’m going to ride them out. I’ll probably end up rolling us both back a month.
Getting my HMY Nov $12.50s for .15, don’t know if I should be happy about it…
MAR was a stop out but I forgot to stop and now I’m suffering. Down $1 I can (and will) roll to the Jan/Nov $40s, which have a $1.10 spread so I’ll get my $1 back in premiums at least. XXX
PTR – I thought it was a good time for puts at $190 so, luckily, I gave up and drank the Kool-aid last week. You can’t fight China. It’s a bubble but until it pops it will just keep expanding.
SHLD – (+$4) is/was the net cost of the roll.
Black Monday – Good point Cap, oil is saving us from a lot of downside for whatever that’s worth.
October 15th, 2007 at 1:06 pm | Permalink edit
CCJ – no way, let the $45 premiums expire.
WFMI – I love it when bad stocks get bought!
Sorry got tied up. So much for my attempt at optimism earlier….
October 15th, 2007 at 1:26 pm | Permalink edit
PTR $190 puts – this is why we robotically roll up whenever our caller loses half his value, it’s a bit late now but you’re not dead. Of course take out your caller – that’s a step you have to take anyway. Then wait to see if it comes down to fill the gap a bit and then (at this moment anyway)roll yourself to the Dec $200 puts for + $7 (first if you can afford it) and look to sell the Nov $190 puts for no less than $7. That yeilds a nice improvement on your position and you’re still in for the same $7 you started with.
Nice put play Greg!
GDX – with the markets heading down you don’t want to give up the protection your caller is offering you, there’s a value to that. The roll will always be there. Remember, when you first sold him the call, you were wishing GDX would finish this week right at $45 – anything else you are trying to squeeze out of the position is greed as you’ve already collected the full premium, which is all we ever set out to do.
IBM – absolutely sell the Oct $120s against a long (almost time to sell the $115s!)
C puts – not my favorite but I do like the general idea of focus puts (mine at the moment is XOM) which you simply make a decision that you will roll and roll and roll and roll until you are right. As long as you keep it a reasonable position as a hedge against profits and as long as your premise is intact (if the Dow goes, they should go down hard for example) then putting a little more money in once in a while is fine. I had an unrealized loss of $160K on one of my DIA puts wich I’ve been doing that on. Today it gained $40K on just this little drop. It’s a terrible strategy if you run out of conviction OR resources but it’s a fun way to play a volatile market as long as you can control your emotions.
October 15th, 2007 at 2:03 pm | Permalink edit
GOOG calls – I had one this morning in the previous post, working into a strangle. Will have more complicated ones later.
CROX – that was one of my very few naked calls going into the weekend. I will be selling calls again but first I’ll probably roll up my Jan $60s and take some off the table, I’ll let you know when I see a new play but it’s not a put here.
I am so pleased with my naked STP calls today. CCJ. CROX and XLE up nicely, only MAR is a big disappointment (TM is gone).
October 15th, 2007 at 2:33 pm | Permalink edit
Uh oh. Regional banks getting hammered. That was one of my main predictions that this loan crisis is much worse than they’re letting on.
XOM $90 puts fun at .17, Nov $90s still good at $1.35 (we paid $1.50 last week), this could snap back down to $92 if we’re lucky.
BA – I’d sell the $100s, that’s plenty far away. You’re not going to cry if the stock gains $7 and you have to give your caller his money back…
HMY – all but 3 filled at .15 basis .24, order for 1/2 out at .25.
$56 oil – oops, having flashbacks. $86 it is coming into the close. Go, go, go oil!
October 15th, 2007 at 3:14 pm | Permalink edit
BA yes, they have that defense kick but be prepared to scale in. A lot of today’s dip is over some BS that Airbus may get our military contract for refuling jets. I’d really like to hear how the government decided to send another $100Bn + 50,000 jobs out of the country over a refueling plane with specs that you need a team of experts to tell apart.
Down goes Google, Down goes Google!!!
October 15th, 2007 at 3:23 pm | Permalink edit
C did not hurt the sector, the sector is already maimed and every one that reports gives you a look under the band-aids that have been slapped on to stop the bleeding and it’s not at all pretty. As I’ve said for quite a while, C et al, with their $150Bn in revenues, can make numbers say anything they want them to for a quarter or so but the local and regional banks, when they report, may have some really terrifying things to say.
If the Q’s go then so will the rest.
October 15th, 2007 at 3:25 pm | Permalink edit
Took spread of GOOG Dec/Oct $620s for $24, will roll to Jan/Nov ahead of earnings. XXX
October 15th, 2007 at 3:40 pm | Permalink edit
HXL less than sexy so far but the spread is now better if you buy at $1.75 and sell the current $22.50s for .40.
ANF – you should take $1 for at least half, no time left to be right!
October 15th, 2007 at 3:53 pm | Permalink edit
GOOG strangle – sold 1/2 the $600 puts to buy the $650 calls for $8.20, pocketing $2 which brings the cost of the whole trade down to $4 for a $650 call/600 put spread. Now the rule is to spend $2.50 to tighten by $10 in whichever direction I get a chance. If GOOG starts to run in one direction or the other, I follow mattress strategy of buying next position that cost $4 within 2 brackets ($20) and then setting tight stops and rolling out of the higher contract, then tighten again (for $4 total) if it goes the other way.
