October 24th, 2007 at 9:35 am | Permalink edit
AMZN – we can assume the sell-off is overdone and look to take out the caller but leave our calls in place. It looks like the $100 calls are .90, if you can get him for .50, do that as it frees you up to sel yours on a bounce. That end of the trade becomes a winner. On the put side we do the opposite, wait for the excitement to die down and hope for a bounce to take out your putter (you can take your put’s profits off the table by rolling him down a level if you can afford the additional margin on the larger spread.
This is, by the way, the CME pop we were hoping for so don’t be greedy if you’re in that play!
October 24th, 2007 at 9:36 am | Permalink edit
IMCL we like. ICE I wouldn’t touch but they’ll probably do well.
October 24th, 2007 at 9:41 am | Permalink edit
Turkey on the warpath, actively bombing Iraq. Nice move on inventory day!
BA – glad we have that caller now!
PTR getting spanked. BIDU next I bet. Good time to take some putters off the table if you have them.
October 24th, 2007 at 9:43 am | Permalink edit
Market holding up well, no reason to hold DIA puts, we can always buy them back. XXX
October 24th, 2007 at 9:49 am | Permalink edit
XAU – I prefer the GDX as I don’t trust silver (goes way back to the Hunts). I think some exposure to gold is a good thing as they should have great earnings. Unlike copper miners, the gold miners haven’t had to curtail production to keep prices up.
DM – what do you mean by tell you the links? I do know how to approve it now so I’ll get to them soon.
TIE – absolutely, that was the idea of picking it. XXX
October 24th, 2007 at 9:57 am | Permalink edit
DIA puts – having rolled up to the $136 puts and gotten out even, I’m back to watching the $135 puts if they go back to $2 and grabbing those again.
October 24th, 2007 at 10:04 am | Permalink edit
HMY – Not yet. The intent was to take the Jan ’10s for .95 against the Dec $10s for .75 and that’s around the spread now ($1.05/.90) so it should fill for you. It’s not the $$$ of each leg, it’s the spread you’re buying.
Existing home sales down 8% from LAST MONTH, down 19% from last Sept. Highest supply since 1999 – back in the DIA puts!
October 24th, 2007 at 10:11 am | Permalink edit
CAKE – I wish we would have sold a few more calls but we’re in decent shape, nothing to do but let the caller expire right now. Our net entry is about $1.10 per so we’re just over even if we hold $22 (once caller expires) and the Dec $22.50s are $1.15 so we should be able to roll to a near-free play as long as we don’t dip too deep.
DM – you have to make those charts smaller, they are loading too many kb!
October 24th, 2007 at 10:36 am | Permalink edit
CAKE spread – you have lots of time to roll, safer to keep the protection. They had good numbers but project slower growth in ‘08, should take some time to digest.
SNDK – well the Nov $50s are pretty dead. You need to play to get even now which means rolling down the Jan ’10s $50s to $40s for $4 and selling the $42.50s for $1.62.
Uh oh! Huge crude draw!!! Crude down 3Mb, Gas down 2Mb, down 1.8Mb distillates, very bad numbers. Should make COP $85s a good mo play and XLE $75s. XXX
October 24th, 2007 at 10:46 am | Permalink edit
Not much conviction to the sell-off. Oil patch will hold up the markets for a while at least but that won’t be good news for the transports and UNP gave poor guidance already.
INFY – sadly I’mm still in those. I was considering rolling to the Dec $50s at $3.25 and sellling the Nov $50s for $1.85 for a net cost of under $1 but it’s a dangerous spread. More likely, if momentum comes our way, I’d rather just roll my .80 loss into the Nov $50s for $1.30 and hope to get out at $2.20 for an even trade.
CME – HOLY COW! Yet another position where my caller goes a mile in the money! Have to short them here as a mo play (but I have a spread already) so the $640 puts for $11.50 with a stop at $10.50 are fun. XXX but dangerous!
October 24th, 2007 at 10:49 am | Permalink edit
5M barrels? I thought they said 3, 5 is insane – what are they doing with it all? So much for SU puts if those numbers are real and so much for our economy unless people are going to get comfortable with $4 gas.
Airlines getting hammered but puts are too expensive.
Whole market going down, follow mattress rules. XXX
October 24th, 2007 at 10:53 am | Permalink edit
Oil stocks going down on that report? Something very strange is happening. Not touching that sector until we figure this out.
SOX down 22!!! That is not a sign that we’re coming back soon!
October 24th, 2007 at 11:01 am | Permalink edit
AMZN $100s? – no, I would not buy any calls right now!
This is good DM, I can take a vacation soon (as soon as you fix those charts – have you seen the main page?)
TASR – sooooo manipulated, always flushing callers, which is why we always have some.
FFIV – it’s a stock so I don’t like it right now.
PFE et al – no sense in putting money in right now, just have to wait and see if the music stops at some point.
Fed Funds now at 100% chance of a cut. Madness! Maybe they can get oil up to $90 this time by throwing money at the problem.
BEN is breaking back down. $135 puts at $3.60 , out if they break back over $140 XXX
October 24th, 2007 at 11:06 am | Permalink edit
MER indicates this is not the end of write-downs, no wonder market is selling.
I’m being very tight with DIA $135 puts, now $2.44 – out at $2.35, already in $134s, now $2.09 (stop $2) and starting to pick up $133 puts at $1.75 with a stop at $1.65. I don’t have that much to protect so it would be stupid to get caught short in another round of fed fever. Once I hit $3 on the $135 puts, I’ll get more aggressive. XXX
October 24th, 2007 at 11:23 am | Permalink edit
AAPL spread – you don’t want to give up the protection of callers right now. SOX heading to 450, very bad.
GLW – I love them but they are a stock so not today. They will also get hit as SNE and Samsung roll out OLED at the Tokyo electronics show but that won’t last as demand is too strong to hurt them.
RIMM – interesting time to buy calls, I’m not seeing any signs of life yet. This is very broad selling. Russell broke 800, S&P 1,491, Dow 13,480… unless these guys take back levels, this is not going to stop…
October 24th, 2007 at 11:28 am | Permalink edit
BIDU – I put back my putters at the Nov $330 level, nice $10 gap and I think that may be it for them for a while.
CROX falling to $64.
Selling slowing down. Must get (and these are pathetic) Dow 13,500, S&P 1,500, Nas 2,750, NYSE 10,000, Russell 800, SOX 480 to get back on a weak track, anything less is no signal you should follow.
October 24th, 2007 at 11:32 am | Permalink edit
SPWR a tempting call here. $110s at $4.45, were $6.50 this morning, worth a go with a stop at $3.75 XXX
October 24th, 2007 at 11:38 am | Permalink edit
AAPL – took out my $185 callers (hope springs eternal) will reenter them as $180 callers for an extra $1 in premium and a bit more protection if we go below $180.
That was good timing on my DIA exits so far – looks like at least a bounce.
October 24th, 2007 at 11:47 am | Permalink edit
LOL Parchesia – that too! Now it may be time for the “Fed is going to cut” party to start. Be careful on both sides right now, like I said this morning, you need to be dispassionate and just check off your levels as they cross to determine your next trade.
CME – almost ready to go back in again but that wold be pushing it. I took $16 and got out a little late ($15.40 now) as I was worried they would break $650 but no such luck so far.
October 24th, 2007 at 11:52 am | Permalink edit
AMZN very tempting at $85. Seriously this is all over a 2% miss in profit margins. I’m liking the $90s for $2 as a fun play, they were $14 yesterday! XXX
October 24th, 2007 at 12:02 pm | Permalink edit
AMZN big value is due to the fact they are in early stages of outsourcing their distribution system to the other $2T worth of US retail operations. If they make a very small penetration for a very small fee, they turn themselves into a whole new business with service and consulting revenues (IBM used to be a retailer too!).
October 24th, 2007 at 12:13 pm | Permalink edit
AAPL ‘09 $150s/Nov $155s – You are best off biting the bullet and rolling him to the Dec $165s for $22.95. That gives you plenty of protection. If you don’t want to spend money, you can just roll him up to the $160s and collect $2 (ask for $3 for a week first). If you pick up just $2 per month and bump your caller up $5 while keeping yourself 50% covered, you will be a happy camper come Jan ‘09!
DD’d on DNDN Jan $7.50s at .40, will certainly take 1/2 out at .50 despite the fact that it’s so great to sell calls against. XXX
October 24th, 2007 at 12:21 pm | Permalink edit
Remember, my big mistake last period was underestimating the idiocy of the rally over a Fed cut so this time let’s take the upside more seriously. I’m going to use my remaining DIA puts ($134s) to work into a strangle of the Fed with the $136 calls at $2.20 if I can get it for that, otherwise I’ll take the $137 calls for $1.95. No matter what I get, the rule is to roll to a tighet bracket on either side for .35 or less and add 25% to whichever side slips to $1.50 or less. The goal is to have a $2 or less spread on the strangle by Tuesday am. XXX
October 24th, 2007 at 12:22 pm | Permalink edit
Curbs on the NYSE!!!
October 24th, 2007 at 1:38 pm | Permalink edit
BMY – depends what you are protecting but I’d roll down and sell 1/2 to 3/4 the $27.50s, preferably whatever covers the cost of the roll.
I’m not worried about RIMM not going up (I sold the $116s anyway) but AAPL not getting over $183 is very disturbing. I’m all sold on Apple Nov $180s now as they $185s were so good to me earlier at about the same start ($9).
October 24th, 2007 at 2:01 pm | Permalink edit
NYX is good but ICE is going to be tricky.
Oil back at $87 and oddly,the refiners think that’s good.
AAPL callers – if you gain 50% on a caller, it’s always a good idea to flip him to another position, especially if that position has only dropped 20% in the same amount of time. If you make 50% on anything, any time, anywhere, you should be trying to find some way to take it off the table. Rolling to another call locks in the gains you made and puts your caller in a brand new position with even more premium to lose. Also, with AAPL at $182, there’s not much protection left in a $4 $185 call. I took those rolls to scalp the premium yesterday and it worked. Always remember why you entered a trade…
October 24th, 2007 at 2:07 pm | Permalink edit
Next leg down coming!!!
October 24th, 2007 at 2:11 pm | Permalink edit
BA put spread – I wish I could be confident enough to risk it! You get $3.65 on the $100/$95 put spread and your max loss is $1.69 with a b/e at $98.65 – very doubtful they’ll get there and this is a nice way to protect a BA long since you can’t lose more than you’ll gain by holding the leap up $5 XXX
October 24th, 2007 at 2:15 pm | Permalink edit
Wait, scratch that! I was looking at it upside down! You need BA to go up on that one, not down. It’s Buying the $100 put for $6.90, selling the $95 put for $3.25 = $3.65 at risk and, as long as BA doesnt break $96.35 you are better than even with a $1.35 max gain.
October 24th, 2007 at 2:55 pm | Permalink edit
CCJ – one way to manage your covers is not to play such volatile stocks (although they’re ALL volatile lately!). They still have a premium and they still protect you. I think yesterday I said that you will want to roll to the Dec $50s eventually but you still have $1.40 in premium with 4 weeks left to expire so figure you should get at least .70 closed on the currently $1 spread on the roll so you can just put in an order now to pay .30 or .40 to roll your caller to the Dec $50s and then go to work. It will be nice if it triggers (CCJ would have to be flying up) and, otherwise, you can adjust it on the weekend.
QQQQs – I can’t for the life of me imagine why you would own those but it’s a valid sysstem. Rather than pay $53 for a share, you can take the 4 X ‘09 $40s for $16 ($64) and sell 4 X the Dec $53s for $2.40 ($9.60) for a 17% 60-day return and you can roll them at each $1 move if you want but it is highly unlikely that you’ll get caught with a drop or a gain big enough to hurt you. When you are bullish, you buy back some callers, when you are bearish, you roll your callers lower – very low hassle index spread..
UTX – roll down and buy him out, sure but you need to sell the $75s if it drops below that line.
DNDN – just don’t sell 100%, this thing can bite you hard!
Volatility – yes you are overpaying for the back end too! Usually it balances out but you need to make tighter spreads that way. In the above Q spread, the first month’s sold premium is greater than the premium of the leap – that’s the kind of thing you want to do if possible.
IBM – I’m still showing the $115 caller at $1.80, now way do I pay him that!
Curbs are STILL in on the NYSE! I don’t think I like that, indicates a lot of pent-up selling but let’s get neutral with our index collar, no opinin about tomorrow as FED DAY is comming!!! That’s the day Bernanke comes down the chimney with a sack full of money and throws it into the economy – better hope it doesn’t land in California or it’ll go up in smoke along with the value of homes (perhaps a realtor set that fire?).
October 24th, 2007 at 2:59 pm | Permalink edit
TOL breaking up, same BS as yesterday (and the day before..)
Go Dow Go! Oil sector coming back but COP not forgiven yet.
October 24th, 2007 at 3:07 pm | Permalink edit
AMGN getting sold ahead of earnings.
HOW CAN CURBS STILL BE IN???? Oh, finally lifted at 3pm, NYSE at 9,962, will be interesting to see which way they go but markets are firming up.
PCLN – yes to buying on the momentum but watch the $90 mark.
October 24th, 2007 at 3:10 pm | Permalink edit
SLB on the move, $105s at $1.88 as a mo play. XXX, stop at $1.50
October 24th, 2007 at 3:20 pm | Permalink edit
DIA plays – rules are imperative for mattress plays, as is remmebering to layer both ways – it’s been an amazing day for that particular play but, on the whole, I’m glad I’m generally covered for this madness.
GS with a nice $9 move off the low!
October 24th, 2007 at 3:29 pm | Permalink edit
ATI – done with that trade, plenty for the day! XXX
TIE I can be patient with.
October 24th, 2007 at 3:39 pm | Permalink edit
Dow green! Amazing!
XOM – sure, with the Aprils there is no harm in covering with the $90s.
DIA rolling – well we got our 200-point pop and the $136 calls gained 40% in one day and the $135 puts are still $1.92 – that’s mission accomplished there and time to take the calls off the table and tighten up the puts!
October 24th, 2007 at 3:58 pm | Permalink edit
CY – don’t worry if SPWR is flying.
IMCL – nothing to do, leaving in. I liked them for earnings, I still like them, no cover. Cover 1/2 if you’re nervous for sure though. Happy and I decided this was our favorite bio play along with AMGN, which we are already done with.
October 24th, 2007 at 3:59 pm | Permalink edit
SLB – leaving it.
October 24th, 2007 at 4:01 pm | Permalink edit
NYX – bitchin good time! Nice call Opt!
