November 2nd, 2007 at 9:41 am | Permalink edit
DIA/BIDU puts/All puts – this was a nice chance to roll up, the “rally” of the pre-market is already looking weak. BIDU is going to be fun but always bid low and ask high as there is a window you can drive a truck through on this stock!
November 2nd, 2007 at 9:57 am | Permalink edit
POT – damn, they shook me out of those the other day.
Woohoo BIDU!
So much for mattressing up, not looking too good is it?
November 2nd, 2007 at 10:07 am | Permalink edit
Chubby – no way! This is what we were saving our brains for. Look at what a load of morons these analysts are. CNBC was declaring a bull victory right up until 9:29 based on a jobs report that has a 150% margin of error. Now we’ve got our 13,500 retest I feel a little more comfortable playing a bounce (if we get it) but that “rally” this morning was beyond suckers…
November 2nd, 2007 at 10:09 am | Permalink edit
Wow, check out BAC! Something VERY bad is out there…
November 2nd, 2007 at 10:35 am | Permalink edit
Holy cow, I had to go out for a minute and they bounce back!
November 2nd, 2007 at 10:41 am | Permalink edit
Greg – with limited capital you run the danger of over-hedging. All it takes is a positive statement from C or Paulson (GS down $10 right now) and this market could snap back to 13,900. Trends look good right now so if you do have long puts – consider selling current puts against them (preferably $1 more out of the money than you are). That way you can buy and sell those with far less risk than leaving yourself exposed on a current month put if you don’t have a lot of money to cover.
This rally looks like it’s based on a dollar collapse. I see gold and oil shooting up and the Euro is testing $1.45. We have to be really careful when Europe closes as that may be where the money is coming from!
November 2nd, 2007 at 10:59 am | Permalink edit
BWLD – I just have the Jun $35s uncovered. 8-(
FSLR – I’d take that profit and run!
GS puts – no they shook me out too. These bull rushes have turned me into a real wimp!
Guys and Girls – REALLY, REALLY, REALLY what is happening to C, BAC, GS et al right now indicates HUNDREDS OF BILLIONS of dollars are leaving key equity positions. The energy patch looks no better. That thing with MER is a BIG deal and I would rather get to 100% cash (for what little that may be worth) than take a lot of long positions right now.
Think back and say to yourself, under what conditions would you expect Citibank to lose 30% of it’s value in less than 6 months? The last time this happened was 9/11 and the time before that was the 1987 S&L crisis – neither one of those was a buy signal for the Nasdaq.
The Nasdaq is just, at the moment, being the least sucky place to park some money while the finaincials are being dumped. Without some reassurances that this sell-off is overdone, I really, really, really want to say very well covered. XXX
November 2nd, 2007 at 11:17 am | Permalink edit
DIA – ignore the prices you see and offer .35 per $1 for rolls.
UTHR fliying through $100
BIDU holding on strong. Huge volume but most of it was selling at the open as they hit $400 so let’s see what happens as they try to do it again.
November 2nd, 2007 at 11:28 am | Permalink edit
AAPL roll for Foto – too bullish for this environment. You have lots of time, better to roll him to something that covers more like 60% of your risk. That is good general advice to people who are not sure if they are well hedged. That position will give up an upside surprise in the next two weeks but will save your virtual portfolio if we wake up and find out GS is down $13 for a good reason.
I love these BIDU roll-ups! $3.70 to gain $10 in position on puts any time it jerks up. At this rate I’ll have $410 puts when it hits $375 at a cost of my initial $11 on the $360s plus and average of $3.60 per bracket!
November 2nd, 2007 at 11:29 am | Permalink edit
OIH $185 puts at $3.20 XXX stop at $2.50, look for $5
November 2nd, 2007 at 11:32 am | Permalink edit
ALL DIA puts off the table (selling into the excitement) Starting a new run with the $134 puts at $1.99 with a stop at $1.75 against the $135 calls at $2.10 XXX
November 2nd, 2007 at 11:34 am | Permalink edit
AAPL going down? Surely the apocalypse is here!
November 2nd, 2007 at 11:36 am | Permalink edit
VLO – don’t bet against them. They are a very well-run company.
GS down $15! Something wicked this way comes!
November 2nd, 2007 at 11:50 am | Permalink edit
SPWR – good point on solars but I hate to short them as they are very dangerous. On the other hand, I rolled my FSLR spread back to the $135s becasue they look sooooooooooooooo ugly right now.
BIDU – PTR and Alibaba start trading on Monday (and someone else I think). There were $180Bn worth of requests for $1Bn worth of Alibaba stock in the IPO so it is POSSIBLE that China weakness was caused by $500Bn being pulled out of the market by people who are going to go totally nuts bidding on shares for those two companies on Monday morning. That is my bullish case for next week.
It is POSSIBLE that this tremendous dump is a major shakeout but that’s why I’d rather be either well-covered or in cash going into the weekend. There is no way I want to place a directional bet on this market. If China opens up 1,000 with both of those IPOs doubling, we can use our cash to jump right on the 14,000 train. If EITHER IPO fizzles or the weekend uncovers the reason the financials are being dumped like the plague, then we will have months of put plays ahead of us.
TIE – dead a while ago.
Focus call (place to put 30% of your put profits): GS Jan $240s at $14 – were $21 2 days ago and we can sell the current $240s for $6 on a small bounce (a roll down on the Jans costs $4.50 so we are well protected). You need to scale into this and be prepared to roll and roll and roll but it’s a good hedge against a big rebound. XXX
November 2nd, 2007 at 12:03 pm | Permalink edit
SHLD/BA/IRBT – they are a great mix of solid and speculative but ALL are too risky to leave unhedged. I like IRBT too much at $17 to sell it so I’d say go longer and sell 2/3 the $17.50s to pay for the roll. SHLD is always crazy to leave uncovered but pays great premiums and BA is BA – as long as you are long and not greedy (I currently am sitting with my $95 callers) this stock will usually be good to you.
DM – great list but like Rein said yesterday, it’s like being at a sale and finding nothing to buy. I’d rather wait for the next major markdown. Since I am not going to be making too many short-term plays, it doesn’t matter to me if I get CAT at $73 and sell the $75s or if I get it at $76 and sell the $75s (in fact, I will do better by waiting for it to get to $76). On the other hand, if I buy CAT ‘09 $75s now at $10.72 and sell the current $75s for $1.47 (which is a good trade anyway), it’s just going to be a pain in the ass for me if the market gaps down on Monday.
I’m very glad you mentioned it becuase it’s important that everyone knows where I’m coming form right now. I’m playing “better safe than sorry” becuase I’m looking at a financial meltdown that has historically only happened around a major market shock. Money doesn’t come right out of the markets, it gets shifted around first – when it does come out you will know it and there will be no one around to buy your shares, I simply have too much money to play that game.
Now, that being said. MER denies the WSJ story and says they didn’t do anything wrong. Of course they are going to say that but let’s keep a close eye on them. If MER gets back over $58, we can expect a lot of bargain hunting in financials and the above GS play and C Dec $40s at $1.70 are my top calls. XXX
November 2nd, 2007 at 12:07 pm | Permalink edit
YHOO – I have Naked Jan $27.50s and I have Naked Apr $30s and I’m holding pat on the IPO for Monday, it’s a gamble but a fun one.
AIG ‘09 $60s for $7.95 XXX
November 2nd, 2007 at 12:13 pm | Permalink edit
BIDU bear call – not with Cramer on the warpath! Too much risk!
MTB gone (thank goodness!). I do still like them but they are the baby that got thrown out with the bathwater right now. What’s the point of keeping the $100 covers at .47? Roll yourself down to the $95s and sell the $95s to pay for it (then you will sell Dec $95s, now $3.25 when you make $1 off the Novembers). Just take out your caller for now and roll if you can, financials may rally at this point.
We could get a huge relief rally here if people believe MER is innocent.
November 2nd, 2007 at 12:18 pm | Permalink edit
BIDU giving me another roll – this will suck if I’m wrong!
Oil testing $95, GS bouncing back (they still have way too much oil)
BAC $45s at $1.40 as a mo play, stop at $1.20 or if they don’t break $45 in 20 mins. XXX
November 2nd, 2007 at 12:29 pm | Permalink edit
BA – I’d rather cover with 1/2 Dec $95s at $5 as you can always cover more if it turns down or flip the $95s to 2x the $100s, currently $2.58.
See thes little bank turnaround plays are the kind of fun things we can do with cash in any kind of market!
DIA – In the $135s now and rolling the puts up to follow. This is a revenue neutral strategy to keep a tight strangle as I’m playing for a big move on Monday – one way or the other.
YHOO – not playing naked Nov because I could be wrong and I’d rather lose 30% than all. Also, if it runs up hard, just like out NEM play on Wednesday, I can still make my premiums by selling Novembers at the top (not to mention gettng an additional income from future rolls). Or I guess you can gamble instead… 
November 2nd, 2007 at 12:38 pm | Permalink edit
RIMM at $126 is a very tempting put. I’m lining up the $125 puts, now $4.60 as a mo play if the market breaks back down. Keeping an eye on GS and, of course, GOOG, who are in charge of the markets right now. XXX
November 2nd, 2007 at 12:44 pm | Permalink edit
2/3 – yes, partial covers. Very useful things to do but a real pain in the ass with a lot of trading systems trying to keep track of your coverage.
Oil $95.50 and climbing, Euro $1.45, gold $806, gas up 3%+… Holy crap, and not a word about how friggin dreadful this all is!
The dollar is down 1% today – anything less than a 1% gain in the markets means equities are LOSING ground as money goes elsewhere. Really I hate to be all doom and gloomy but please, please, please be very careful with your positons at least until Monday!
November 2nd, 2007 at 12:52 pm | Permalink edit
Really – how can you not think there is a conspiracy on CNBC to get you to buy stocks when they can go more than 30 minutes without so far mentioning that gold broke $800? Do you think no one noticed? Do you think this isn’t a story that’s more important than the TV writer’s strike (the story now)?
It’s like living in some bizzaro world where no one cares about things that matter!
OK, I’m done, getting ready to switch off my brain and buy some more stocks….
November 2nd, 2007 at 1:22 pm | Permalink edit
SHFL – that casino news was a nail in the coffin for them. I sold Dec $15s agasinst Jan $15s and Jan $20s and I haven’t got the hear to roll down today but maybe next week if we get a rally.
GS – of course they’re overstated. That’s what the FAF appraisal scandal is all about. I’m just too far ahead of this because I’ve been in the mortgage business and I know exactly what all this means but I would think it was obvious that if you lend (as an aggregate) $6Tn on 20M homes (just 20% of the country at the $250K median home price, so I’m being super conservative!) at the top of the market and if those homes turn out to be (consevatively) 20% overvalued at the time of the loan – then the “assets” you are backing your securities with are short $1.2Tn in actual coverage!
You can get away with this when times are good and everyone you sold an overpriced home to is paying off their loans but if times turn bad and higher real estate tages and higher fuel prices and food inflation and unemployment (and we’re not even going to talk about adjustable rates!) make it “necessary” for the bank to take possetion of these assets – well then the “mark to market” of the homes will have to be realized at the actual price they can sell them for.
Once that happens, there as cascading series of covenants all the way from the Prime Lenders down to the smallest mortgage company that come into question as there are coverage provisions that would be (THAT ALREADY ARE) broken by the lack of true value in the securities. If ANY lender in that chain gets nervous and calls in a loan, that forces the debtor corp to liquidate to satisfy the loan. If they don’t do that, they go BK and EITHER WAY the assets go up for sale, flooding the market with unwanted homes and driving the price lower – repeating the cycle until you find a price that people are willing to “snap” homes up at.
Warren Buffett just said it last week when he said “Well you don’t know what something is worth until you try to sell it.” This is what he meant but I’m convinced that hardly anyone seems to understand what he was talking about.
Gold traders get it, gold is hitting $810!
Sorry, brain stuck in on position… will go get a brick or a very big drink so I can join the party!
November 2nd, 2007 at 1:29 pm | Permalink edit
BIDU at $405 – my puts at $400! That’s $11 for the $360s + $14.60 to roll to $400 for those of you keeping score (down $7 so far).
HMY was just an elevator accident in a mine and the other elevator is working already. Slightly different situation but they haven’t even recovered yet. They make a great long-term play though. I’d say the Jan ‘09 $50s for $5 that were $6.20 yesterday as you can already sell Dec $50s for .55 (but don’t).
November 2nd, 2007 at 1:30 pm | Permalink edit
Has anyone heard CNBC say one word about gold?
November 2nd, 2007 at 1:37 pm | Permalink edit
Buffett is like Greenspan, he takes the oracle way of dropping hints because he knows his words carry a ridiculous amount of weight. Not to get a swelled head but I’m starting to understand this as I have to be careful about what I say sometimes because people put too much into it – but I’m dead serious about this housing thing and so is Buffett, he chose to say that right to the cameras!
Nat gas just fell off a cliff.
Oh finally CNBC mentions gold!
OIH – skimming my stop price but looking toppy, I’m willing to DD and set a new stop at $2. XXX
November 2nd, 2007 at 1:41 pm | Permalink edit
BIDU – no my next roll is to go to Dec $400 puts at $37.90 (+23) and sell the Nov $400s for $20 so I’m left in for net $20 at which point I will be perversely rooting for BIDU to hold $400 through expiration (but I will be able to add and subract and roll my caller as needed, taking the pressure off me while his $19 of premium melts away over 10 sessions).
November 2nd, 2007 at 1:48 pm | Permalink edit
HMY – you can roll to the Dec $12.50s and sell the current $12.50s for net .25 and the least of your problems is if HMY goes up to $13 by the 16th! I heard a tip (not reliable enough to use) that ABX may want to partner with them in New Guinea, which could be good or bad depending on terms (ABX way up today) so to some extent I think little HMY is being forced down, the question is until when?
My MRBs went nuts today and I am so glad I dumped NAK to concentrate on them. GOLD looks like it will break up as well and NEM broke up nicely.
November 2nd, 2007 at 1:58 pm | Permalink edit
Gold up 2% on the day, chances are the dollar is truly worth 2% less so less than 300 points up in the markets is losing ground. The Fed easing rates is NOT going to be the solution for this problem and they only have 40 days until the next meeting (12/11) so they can either lower rates and knock the dollar down another 5% or not lower rates and kill the markets (as lowering them .25 didn’t help at all). If they raise rates the dollar will come back and that will DEVALUE stocks and commodities which will kill the markets anyway so I’m not sure what the December solution will be but I’m pretty sure I’ll be hedging that one to the downside!
November 2nd, 2007 at 2:02 pm | Permalink edit
RIMM is in! $4.40 on the $125 puts. XXX
November 2nd, 2007 at 2:31 pm | Permalink edit
Alibaba I think on the 5th, one would assume that morning for them.
MER never made my target and I’m not holding the financial plays into the weekend. XXX
French SPR – the truth is that there is too much money in big oil and it has corrupted all. Even if the government isn’t directly in bed with the oil companies they get their advice from “experts” who are so the oil companies have created a shortage, are prolonging the shortage and are doing whatever they can to increase demand, including fear mongering to build SPRs and, even worse LNG storage, which is a way to store 100x more gas than the world needs in a year underground and will give us decades of “shortages” that drive up the price of gas and give them more profits that they will plow into building more LNG storage. It’s a beautiful, glorious thing! (see that second drink is working already!).
NEM – we sold calls because the stock was going to pull back off its highs and the stop was $2.25, which is right here.
SHFL – while revenue streams make for a great company, they don’t make for a good stock unless they are growing and any danger to the casinos is a seen as a problem for SHFL, with or without merit. The CFO just resigned, no one likes that. They are such a good company, growing nicely solid base but they seem hated by the markets for some reason. I’ll be adding these in longer postions as I just think people are dead wrong on these guys.
YHOO – not covering but it’s a gamble. Cover 1/2 if you are worried.
November 2nd, 2007 at 2:40 pm | Permalink edit
Santelli making a good point, treasuries being driven down to silly low levels by people running to cash. We’re still 400 points down from Wednesday and just 150 points over the pre-fed level of 9/17 but that’s unfair as the market had rallied up from 13,000 the week before on the “guarantee” that the Fed would cut. Here we are .75 Fed Funds Rate AND .75 Discount Window points later and We are right back to where we were right before we dropped 800 points in August.
Back then the financials were doing great!
If you’re remember, I was in a really pissy mood then too as I went to cash and went on vacation as I thought the market run back then was overdone.
Don’t forget, I’ve got a 15,000 target for next summer. I just don’t think we get there in a straight line and we’ll never get there without some proper rotation out of energy and the finanicals that will be very painful to ride out.
November 2nd, 2007 at 2:42 pm | Permalink edit
I think BIDU is holding up for Cramer – if he fails to mention them it will be interesting to see what happens.
November 2nd, 2007 at 2:48 pm | Permalink edit
Triple low test 1,500, 13,500, 2,800. NYSE just blew 10,000
And here’s Cramer making light of things. “Another cut is coming” “The Fed doesn’t care about a weak dollar” “they don’t worry about commodity prices”. He is right that crisis management overrides all but making sure GS earns 60% more than last Q is not a crisis!
Uh oh, no BIDU mention!
I so love SIRI – took out the caller and it comes right back and I sold the caller again and it comes back down. I could just do this for a living!
November 2nd, 2007 at 2:53 pm | Permalink edit
FXI in the toilet all day today having a bad finish so far.
C – yes, not holding the finaincial plays included Citibank!
NBR – part of a Cramer pump to go with the E&Ps. Not a bad idea if you believe oil stays at $80 and that the oil majors aren’t holding anything back to create this “shortage” which would mean the E&P cos are vital to America’s future.
November 2nd, 2007 at 3:24 pm | Permalink edit
SIRI – wasn’t a call I don’t think, just the normal rules that go for any drop (set 20% of profit stop at 50%+ gain on caller, then don’t be greedy)
SBUX is like crack. People will skimp on their kids before giving up the coffee but the market has to see it in action. They haven’t really existed in tough economic times (9/11 doesn’t count as it didn’t really cause a recession) but if you remember the song “brother can you spare a dime” that was the price of a cup of coffee in the depression and that’s what people with no money do – they seek small pleasures…
FNF – that was called out if they didn’t break up after the Fed (they didn’t).
HET – sold! ALWAYS sell a cover for more than you paid unless you have some fantastic reason for not locking in a sure thing (as life is just so full of them that we turn them down constantly). I did an 8/10 sell as it kept me covered but gave me room for some fun if they really turn down. Otherwise, I already got my money back + a .20 profit at least!
November 2nd, 2007 at 3:31 pm | Permalink edit
CCJ – Beat, I have no idea why anyone buys actual stocks other than the fact that they have no options, pay a huge dividend or are so cheap I use them as my underlying leap (MU is a good example). To me, tying up $700 in Google when I can make $13 a month on 10 contracts instead is just crazy!
Yahoo/Alibaba – I wrote a whole post on that I think Tuesday. Basically the impact is probably way underestimated because no one understands the structure of Alibaba.
November 2nd, 2007 at 3:41 pm | Permalink edit
C – I love the financials at these prices but not for close plays. I’ll have plenty of leaps next week once I get a good look at the group but buying them down here is you saying that you are right and $10Bn worht of physical shares of C that were dumped this week were all held by idiots who should have just waited a few days – possible but, while I often bet on most people being wrong, I try not to bet that I’m the only guy who’s right.
This whole thing is amazing that I can listen to “expert” after “expert” on CNBC talk about the nice recovery the markets made today because they’re only down 30 and that sure beats being down 100!
RIMM – yeah that was going well for a while then flew up. BIDU too.
November 2nd, 2007 at 3:58 pm | Permalink edit
C coming back!
OIH and RIMM – no nothing naked. Covering BIDU with FXI Dec $210s, now $16.70. XXX
