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Thursday thump - "thump" is not a good sound for a stock market to make.

We started off the morning knowing that the "recovery" in Asia was bogus and I called it "Testy Thursday Morning," but it only took us all of 60 seconds to decide we had failed. By 9:32 I had posted: "Ouch - 30-year 5.16, 10-year 5.05, 2-year 5.01… That’s the trifecta of GET OUT! Time to set stops on naked calls or sell against leaps, I think."

Thump!

We had a good old time getting out of our few remaining longs on the members site as most of us were pretty short on the market, and (from a quick poll) half or more in cash just waiting patiently for an entry sign (didn’t get one today). Congrats to everyone for running one of the mellowest crash day chats I’ve ever participated in - I can’t tell you all how proud I am of the group we have here!

• Despite the spectacular run we called the top on Google at 9:52
- "Google (NASDAQ:GOOG), had to take $18.95 for all of my $510s - putting a stop at $27 on the $500s I sold"
• We saw that the "rally" in oil was a scam (as predicted all week)
- o 10:10: "Holy cow - oil up $1.21 to $67. Very muted reaction from the oil patch so far."
- 10:38 (Zman and I concur on the gas Inventories): "110Bcf build, in line but bearish I think."
- 11:06: "Oil Service HOLDRs (NYSEARCA:OIH) marching down again,
Schlumberger Limited (NYSE:SLB) finally breaking, Energy Select Sector SPDR (NYSEARCA:XLE) still good to jump on, buying back Exxon Mobil Corporation (NYSE:XOM) $85 puts I sold."
- 11:10 "I’m calling shenanigans on United States Oil Fund LP (NYSEARCA:USO) and taking a few $51 puts for .75."
• General concerns on the market
- 10:28: "I’m seeing a lot of consumer stocks falling and a movement to drugs and energy (stuff you have to buy no matter what), not really a sign of health."
- 10:40: "I should have just gone with my gut first thing when those rates went up!"
- 10:58: "Bond market total disaster - support is shot and we could go much higher in rates. 5.5%+ would not be surprising soon, as this could be a massive push on sub-prime debt. New Zealand, of all things, caused this by raising their rates, leaving the BOE all alone in holding rates steady. It doesn’t matter; all it leads to is people putting money somewhere else, and we (the perpetual borrower) having to offer more and more interest to attract foreign capital. 30-year now at 5.18%." (Bill Gross must be a member as he came out with pretty much the same statement at 3:30).
- 11:21: "If it wasn’t for the Cramer pump, this would be much worse already. I’m cutting back on Apple (NASDAQ:AAPL) here, they can get to $130 without me! Selling $125s for $3.50 against my naked Jan. ‘09 $120s. rolling my Oct. $105 puts to $115 puts for $2.80."

The rest of the day went pretty much as expected, the little bounce didn’t fool us and we debated how many Diamonds Trust, Series 1 (NYSEARCA:DIA) and PowerShares QQQ Trust, Series 1 (QQQQ) puts to leave on the table, but it was like watching a slow motion train wreck - we just couldn’t take our eyes off the market even though most of us were fully covered and frankly thrilled with the drop (as it’s so dull to cover for no reason all the time)!

I was very proud of my 12:24 Crocs, Inc. (NASDAQ:CROX) Condor, which hit every one of my targets and may do so again tomorrow:

• Sell Jul $85 puts for $4.50, now $4.10
• Buy Jul $80 puts for $2.50, 2.50 (net -$2, risk $5)
• Sell Jul $85 calls for $8.50, now $8.30
• Put buy order in for Jul $90s at $4.50, now $5.50 (net -$4, risk $5)

Of course, the key to a play like this is to initiate the legs at the right side of the momentum, but we nailed this one! Hopefully I didn’t nail it when I warned at 1:31: "Hopefully we stabilize here (not looking good though) - Dow 13,350, S&P 1,500, Nas 2,550 - if we don’t settle above them then expect more of the same tomorrow. Feb 27th will be a fond memory compared to where we could go if commodities break down (and take the brokers with them)." So far, so bad is all I have to say about that!

Bouncing

I mentioned that we weren’t buying the 3 pm bounce - at 2:57 I said: "GOOG/Everything else - do not interpret a minor bounce as a change in direction. There’s been no consolidation and no volume blow off, nothing that I would want to place bets on. The STP gained another 10% today but I’ll be perfectly fine with losing it tomorrow on a recovery rather than messing around making all new bets when I already know I’m well balanced. If you are looking to lock in gains here, going half cash is an excellent way to do that!"

For some reason, after all that, the media credits Bill Gross with causing the markets to drop because HE turned bearish and not a word about me . . . ah well, what can you do? I think I’ll cause Asia to crash tomorrow by reminding you that I said on Wednesday night that Asia was going down:

We shorted the iShares FTSE/Xinhua China 25 Index (NYSEARCA:FXI) this afternoon as a drop in Asia tomorrow is a foregone conclusion. The question will be how will Europe bear up (they had an awful finish) and what mega-merger or Bernanke statement can save the market now?

So everything was awful, and oil didn’t even have the decency to go down - how much worse can things be? The dollar gained some strength today and punched right back up over 82.20 resistance to finish at 82.31, mainly in anticipation of rates going higher and higher. We closed a bunch of positions in the past two days, so here’s a chart of the month to date.

Oil and Dollar

We’ll do full review over the weekend.



  Description  Basis    Sold_For   Days  Gain/Loss %
Short-Term
  150 JUL 135.00 DIA PUT [DAWSE]  $   36,010 6/6  $     50,990 6/7 1  $       14,980 42%
  50 JUN 75.00 VLO PUT [ZPYRO]  $     5,510 6/6  $     12,490 6/7 1  $         6,980 127%
  40 JUL 50.00 BTU PUT [BTUSJ]  $     3,930 5/24  $       7,990 6/7 14  $         4,060 103%
  50 JUL 134.00 DIA PUT [DAWSD]  $   10,510 6/7  $     14,990 6/7 0  $         4,480 43%
  10 JUN 115.00 X CALL [XFC]  $     3,110 6/5  $       5,190 6/7 2  $         2,080 67%
  100 JUL 136.00 DIA PUT [DAZSF]  $   29,510 5/30  $     38,990 6/7 8  $         9,480 32%
  10 JUN 17.00 $VIX CALL [VIXFR]  $        360 5/18  $          740 6/7 20  $            380 106%
  25 JUN 62.50 TSO PUT [TSORU]  $     6,885 6/6  $       7,490 6/7 1  $            605 9%
  100 JUL 48.00 QQQQ PUT [QQQSV]  $     9,010 5/31  $     19,490 6/7 7  $       10,480 116%
  20 JUN 40.00 YRCW CALL [YUXFH]  $     1,910 5/23  $       1,090 6/7 15

 $           (820)

-43%
  30 JUN 62.50 TSO PUT [TSORU]  $     6,910 5/30  $     14,690 6/7 8  $         7,780 113%
  150 JUL 137.00 DIA PUT [DAZSG]  $   29,260 6/1  $     68,990 6/7 6  $       39,730 136%
  50 JUN 62.50 TSO CALL [TSOFU]  $     3,510 6/6  $       4,240 6/7 1  $            730 21%
  40 JUN 165.00 RIMM PUT [RFYRM]  $     8,010 6/6  $     14,390 6/7 1  $         6,380 80%
  80 JUL 50.00 BTU PUT [BTUSJ]  $     7,850 5/24  $     11,990 6/6 13  $         4,140 53%
  10 JUL 115.00 FDX CALL [FDXGC]  $          60 5/11  $       1,640 6/6 26  $         1,580 2633%
  20 JUN 80.00 COP PUT [COPRP]  $     4,010 6/6  $       4,790 6/6 0  $            780 20%
  50 JUN 75.00 VLO PUT [ZPYRO]  $     5,260 6/6  $       7,990 6/6 0  $         2,730 52%
  10 JUN 105.00 FWLT PUT [UFBRA]  $     2,010 6/4  $       2,890 6/6 2  $            880 44%
  20 JUN 175.00 OIH CALL [ODLFO]  $     5,510 6/4  $       3,790 6/6 2

 $        (1,720)

-31%
  30 JUN 69.00 XLE PUT [XBTRQ]  $     2,710 6/4  $       3,740 6/6 2  $         1,030 38%
  20 JUN 67.50 GSF PUT [GSFRU]  $     1,710 6/1  $       1,290 6/6 5

 $           (420)

-25%
  10 JUN 500.00 GOOG CALL [GOPFO]  $   15,010 5/29  $       6,390 6/5 7

 $        (8,620)

-57%
  80 JUN 27.50 CSCO CALL [CYQFY]  $     1,770 5/1  $       1,999 6/5 35  $            229 13%
  30 JUL 65.00 OSK CALL [OSKGM]  $        160 5/11  $       5,390 6/5 25  $         5,230 3269%
  4 JUN 85.00 NYX CALL [NYXFQ]  $     1,010 5/23  $       1,870 6/4 12  $            860 85%
  50 JUN 75.00 VLO PUT [ZPYRO]  $     5,510 6/1  $       4,490 6/4 3

 $        (1,020)

-19%
  10 JUL 165.00 OIH PUT [OIHSM]  $     3,060 5/31  $       3,590 6/4 4  $            530 17%
  20 JUN 68.00 XLE PUT [XBTRP]  $     1,610 6/1  $       1,090 6/4 3

 $           (520)

-32%
  5 DEC 45.00 IBN CALL [IBNLI]  $     1,260 5/1  $       3,740 6/4 34  $         2,480 197%
$10KP
  7 JUN 7.50 DNDN CALL [UKOFU]  $          10 5/31  $          970 6/2 2  $            960 9600%
  10 JUN 50.00 BIIB CALL [IDKFJ]  $        590 5/25  $       1,220 6/2 8  $            630 107%
  700 Dendreon Corp. [DNDN]  $     5,645 6/1  $       5,240 6/2 1

 $           (405)

-7%
  3 JUN 100.00 FWLT PUT [UFBRT]  $        745 5/29  $          650 6/2 4  $             (95) -13%
Free Picks
  5 JUN 110.00 FXI CALL [FJJFF]  $     1,260 5/30  $       3,240 6/7 8  $         1,980 157%
  5 JUN 45.00 NFX CALL [NFXFI]  $     1,510 5/31  $       2,540 6/7 7  $         1,030 68%
  3 JUL 95.00 AAPL CALL [QAAGS]  $     1,585 5/14  $       9,590 6/7 24  $         8,005 505%
  5 JUN 120.00 MA CALL [MAFD]  $     1,260 5/2  $     13,490 6/6 35  $       12,230 971%
  50 JUN 25.00 GLW CALL [GLWFE]  $     1,110 5/16  $       4,990 6/5 20  $         3,880 350%
  10 JUN 55.00 SNE CALL [SNEFK]  $     1,510 5/16  $       1,690 6/5 20  $            180 12%
  10 JUN 45.00 CHL CALL [CHLFI]  $     1,010 5/30  $       2,040 6/5 6  $         1,030 102%
Long-Term
  200 JUN 85.00 XOM PUT [XOMRQ]  $   32,010 6/4  $     30,990 6/7 3

 $        (1,020)

-3%
  60 JUN 80.00 LVS PUT [LVSRP]  $     9,010 4/20  $     18,590 6/7 48  $         9,580 106%
  3 JAN 7.50 SCI CALL [YTYAU]  $        655 11/15  $       1,490 6/4 201  $            835 128%
  50 JUN 37.50 GE CALL [GEFS]  $        910 5/10  $       2,240 6/1 22  $         1,330 146%
Stocks
  2 JUN 60.00 TSO PUT [TSORL]  $        230 5/22  $          570 6/7 16  $            340 148%
Complex Spreads
  5 JUN 510.00 GOOG CALL [GOPFU]  $     3,360 6/4  $       8,240 6/7 3  $         4,880 145%

US Markets

Source: Options Trader: Thursday Wrapup