Philip Davis

Options Trader: Tuesday Outlook

Oh sorry Mmarrkk, as to storage, I mean for this time of year (see chart) not compared to the 3Tn+ level we usually get to by the year's end. What I said was right next to the picture I was talking about, the green dot of 2008 storage is above the midpoint of the 5-year average. 350 out of 2,903 lower than last year's extremely high August storage level.

Options Trader: Tuesday Outlook

Mmarrkk, you are right, I linked to him through the wonder of GOOG and he had links to lots of crap about LNG that I gave a quick look at so I should have vetted his arguements more thoroughly. I will note to SA if they can remove link.

That doesn't change the fact that I think LNG is a scam. If as you say, there is no point shipping gas here when we pay less, then why build the terminals? I really believe that the whole thing is to find a way to shove nat gas into the ground, kind of like the SPR. Let's say we build terminals that can hold 10% of the nations' annual demand. Filling it would cause other inventories to dip and prices to go up. Once they are filled, then our best case scenario is the same case we have now - gas is sent to market as it's produced.

Of course, having LNG terminals does allow our Nat gas producers to SEND gas to other countries,taking it out of the American market and driving up the prices at home. If I were to tell you I was making a warehouse and intended to fill it with 10% of the world's annual gold production - in what scenario do you think that would cause prices to come down?


Al - as you asked, the XLF longs dropped back to $4.85 so we're up just 2.7% now, not including the callers we took out for huge profits of course. FRE was well covered and we took out the callers and actually added down at $4 so we'll see how that goes.

Nat gas did have a good day, making back 3.5% of the 25% drop. I was pleased that it didn't break back over last week's high yet and oil had trouble at $115 so inventories will be critical tomorrow.

Options Trader: Thursday Outlook

Not at $4! That's our magic number. JPM was going to buy them at $8 before the BSC thing hit the fan and diverted them so I like the risk/reward of WM at $4, which has been our buy point 2 other times with outs at $5ish. Buying the stock for $4 and selling the Sept $4 call for .71 is also very attractive and you can add a sale of the Sept $4 put at .60 which gives you a $2.69 basis if you get called away at $4 on Sept 19th or forces you to buy another round at $4 for an average purchase price of $3.35 - that's my kind of play!

Options Trader: Thursday Outlook

SF94... - We agree GOOG is pinned for the month. We took a buttefly to that effect today, expecting them to hold $465 but have trouble getting over $485 by expiration. Today's finish was very depressing though.

JJason - Excellent site, thank goodness people are able to let Congress know how we feel about things!

Options Trader: Friday Outlook

Al, Hedge fund is launching in the fall, will be fully audited so no problem there.

Options Trader: Thursday Outlook

GOOG - they were calls but just a quick day trade we're out of already (and now back in at the close!). WM - that got complicated, we bought back our callers on a dip and now stopped out of the calls and just have the puts we sold, that we are not too worried about. This market is crazy!

Vacation-Proofing Your Portfolio

I'm not sure I'm following that logic. We are a subscription service, we discuss 99% of our trades in member chat. The morning posts that are picked up by SA are simply a market overview that contain the occasional pick but we are a live site that buys, sells and adjusts positions all day long, 5 days a week. These free posts are a tiny slice of what we do... My evening wrap-ups are available to SA but they choose not to carry them but you can go to phistockwold.com and view them for free, including the weekend wrap-up, which details every postion we close each week - for free.

The trades mentioned above were all old, old trades and none of them were recent picks at all, they just happened to be 4 trades that ran into poor earnings so I'm letting BS know they were mentioned pleny in our chat and, after as well. When a trade is opened or closed in the $10KX, $25KP, Day Trading Portfolio, Butterfly Portfolio or Stocks Portfolio they are ALWAYS preceeded by a comment on the trade - no exceptions.

I could sit here all day and point out 100 trades that went fantastically but that's not what we do. I make picks publically and you can go back right here on SA and my own free site and look over 2 years worth of picks and decide if it's something you'd be interested in having more of. If so, then you join, if not, don't. There's nothing insidious about it.

Vacation-Proofing Your Portfolio

Hopefully, BS, you are not, as has been rumored, a CNBC worker and someone who is genuinely concerned so let's discuss the trades you mention as if you can pick 4 of 200 open positions we're tracking as representative of our work:

SNDK - As we shut the STP down last week (too risky the way earnings were looking), we had no active position in SNDK into earnings on Monday. The last time my position on SNDK was asked by a member was this exchange:

rahul

Phil - Would you be a buyer of SNDK at these levels? Do you see any catalyst to reverse it’s downward trend? I believe it’s trading below book value and PEG at ~1. Jul 1, 11:45 AM

Phil


SNDK/Rahul - I would accumulate very long positions but this market is starting to look bottomless. Jul 1, 11:58 AM

As there was not a single member mention of SNDK between that day and July 22nd, I guess we can assume it wasn't a big holding.


TXN: Going into the weekend, our position (as always published in the portfolio section for members) was the Jan $27.50s at a basis of $2.87 that we have held since 12/29 fully covered with the Aug $27.50 calls at $1.50

This was an adjustment ahead of 7/21 earnings as we got nervous and covered more but the last exchange on the subject was:

Alex

Phil I covered TXN with the Aug 27.5 will sell half before earning. You would go naked?
hope my BA Jul 65 cover will be zero at friday.
I´ll stick to my C half cover till you say that is not good because C will shoot up like WFC
PEP no cover, waiting till tomorrow like you said Jul 16, 11:39 AM


Phil


TXN/Alex - The Aug $27.50s just went from .85 yesterday to $1.60, the correct thing to do is 1/2 cover no matter how bullish you are and set a stop to cover the rest at $1.20 if it heads down (then with tight stops since your average cover will be $1.40 with the calls at $1.20 so you can buy back half at $1.40 even if it goes back up on you).


The Jan $27.50s dropped to .95 and the Aug calls are, of course, wiped out leaving our Long-Term position with a net $1.37 basis and down 28%. At the moment we are sitting tight but we'll be rolling down to the 2010 $25s at $3.60 at a cost of $2.23 and that will give us just 18 more months to make up the missing .42 selling premiums like the Sept $27.50s at .20 already (but we'll wait and hope to sell for .50+ and, if we don't get to that level by the end of July, we'll probably take the .20 because 18 x .20 is $3.60 and that's more than the entire cost of our leap).


WFR: Those we got killed on, we had the Aug $55s in our Day Trading Portfolio and the Jan $50s at a basis of $10.95 (held since 2/15) in our Long-Term Portfolio, fully covered by the Aug $55s at $3, sold on the 16th and the 21st. We also had the Aug $55s in our $10K Portfolio and the $25K Portfolio as of last Sunday.

As it was a popular holding there were many exchanges but we shut down the $10KP over the weekend and eliminated that holding and these were the relevant comments before earnings:


Marek

Phil - I have some WFR Jan 55 uncovered. With earnings on Wed - how would you cover it? Jul 21, 1:53 PM


Phil

WFR/Marek - All covers should be visible in LTP under portfolios. WFR is fully covered with $55s at $3 as that was just too much premium to turn down. I do like them a lot. Jul 21, 2:07 PM


contingent

Phil in the old 10kp I have WFR 55s. Are you wanting to hold these through earnings? I know you like them, but is there a move we ought to be considering? Jul 22, 10:09 AM

Phil

WFR/Contingent - I’m thinking them over as they may not be worth the risk anymore. The only reason they are still worth $2.45 is because of earnings and risking $2,450 (or 1/2 in $10KP) is not advisable after the SNDK debacle. I didn’t want to sell on the morning dip but we’ll have to watch them closely to see how they do today. I’d say at $3 take the money and run. XXX
Jul 22, 10:29 AM


(XXX by the way is our system for calling all members attention to a comment I consider important to everybody)


vicky

Phil, did you get out of WFR in the 25/10kp? Jul 22, 12:23 PM


Phil

WFR - yes, stopped out! XXX Jul 22, 12:50 PM


Phil

SNDK/Tes - No mas for me, that was a terrible report and downside guidance. Still have hope for WFR but not much. Jul 22, 1:07 PM


jomama

Phil, what is your prediction on WFR’s earnings today. I know you are covered with the 55’s. They seem quite oversold to me. Jul 23, 3:23 PM

Phil

WFR - since they are big on selling to solars I think they will do great but SNDK was such a disaster they spooked me and the premiums are just too good to turn down anyway. Jul 23, 3:30 PM



Phil

Just passing by but WFR looks like massive overreaction to me, might be a nice buy in the morning. If my memory is correct, this puts their p/e down around 10, even with the lowered guidance, fantastic time to pick up 2010s at the money, maybe the $40s for $12 or the Jan $40s for maybe $7. This might even be our first new covered stock in stocks - I haven’t bought any all week, maybe sell the $40 puts…. Jul 23, 6:14 PM


Phil

WFR - waiting to see where it settles, probably will retest $40 before going up. Jul 24, 9:47 AM

Phil


WFR - selling current $45 puts for $4.25, 10 in stocks portfolio XXX Jul 24, 10:17 AM

troy

Phil - good call so far on WFR. I bought the ‘09 45’s today a little higher than you at $6.30. Good time to sell something against it or wait till it rebounds a little? Jul 24, 2:08 PM


Phil

WFR/Troy - it’s called long-term investing, involves waiting. I know it’s an alien concept to most here but sometimes it’s good to buy something and wait a bit…. Jul 24, 2:37 PM

The Jan $55s dropped from $9.80 to $3.60 and the $3 caller was wiped out. So our basis is $7.95 but we made it up on the puts we sold and the new positions we grabbed at the open and the LTP play is spit between the Jan $40s with a $13.95 basis (rolled down for $6) which are currently $9.95 and uncovered and the Jan $45s at $7.30, that were much cheaper to roll to at a $10.95 basis (+$3). Our plan is to sell Sept $50s for $3 or better (first 1/2, then more as it rises) to make up most of our loss by the end of July.


CROX, I think I said, was a wipeout we did not chase but was also from a portfolio that was shut down over the weekend so not an official positon of ours into earnings but I know you have to search very hard for something to attack me with so I don't want to deprive you...

Pre-earnings comments on CROX were:

Anonymous

any thoughts on CROX before earnings tomorrow? Jul 24, 11:28 AM


Phil

CROX - Not a clue! They got good news that their shoes are going into a medicare program and bad news that they get stuck in escalators and have injured some kids and the company will be adding tags to each shoe with a warning - not the kind of thing that gives moms the warm fuzzies and could delay shipments if they decided to hold it up for tagging (not to mention costs). Those would be Q3 issues but you don’t want them to guide down. Jul 24, 12:26 PM

mck

crox - I understand power of brand, but injection molded plastic shoes - aren’t they getting to be a commodoty? Every grocery store around here has them now for $5. Is there anything proprietary about a Crox pair? Jul 24, 1:19 PM


Phil

CROX/MCK - the material they use is special, some kind of breathable thing and very different when you wear it but, unfortunately, not when you look at it. Jul 24, 1:54 PM

Options Trader: Thursday Outlook

Thanks fat - Hope you took the money and ran!

Bbody - The dollar was 40% stronger when oil was 70% cheaper. It's the disposal of $12Bn a day used on a commodity that is burned the same day (effectively burning the dollars) that is destroying our currency. Dollars flood the market as they are exchanged for what becomes nothing as soon as it's used and end up in the hands of OPEC, who don't need them all, allowing them to spend up for things they want creating more global inflation.

If I paid you $2 a gallon for your tap water and you collected $1M a day at a huge profit, then you would end up inflating your local economy spending that money. If I paid you only in Lira and you tried spreading that around, you would find it was harder and harder to pass off as you push more of it on your local vendors and the local banks were swimming in it. Multiply that $1M a day by 12,000 and that is what is happening to the dollar - globally 4 Trillion of them are being used to buy oil per year and the consumers end up with nothing of lasting value for their dollars while the producers get more and more dollars every day and they do last, they pile up and up and up until they become worth what they look like - trash. Your currency cannot have value if you flood the world with it....

Options Trader: Thursday Outlook

Tradeflow - Greg will be in touch with your shortly.

Options Trader: Thursday Outlook

I'm sorry that you had trouble. If you like that kind of trading I'd be happy to give you a pass for our new Swing Trading portfolio, run by Optrader, I think it might be more what you were looking for as they are mainly momentum trades with a constantly updated live spreadsheet with all the entries and exits laid out.

Let me know if you'd like to take a look.

- Phil

Options Trader: Thursday Outlook

No I'm not happy, are you? The market sure isn't and oil going up was our signal to go negative and cover longs yesterday. Am I not allowed to have a market premise on which we take action now?

Tradeflow, I see you were a member from 11/30/07 - 12/29/07 on my site and from 9/7-12/7 on Wangs. I can't speak for Andy but obviously Dec was a rough month with the Dow dropping 500 points but I'm very curious as to what it was that you lost $30,000 on in one month.

Options Trader: Thursday Outlook

Al - discussed in previous post. What exactly is your problem?

Trade flow - what was your member name?

Options Trader: Thursday Outlook

Oh I get to them all Donald, it just takes too long on a daily basis!


Saifl - Obviously you are too lazy to do your own research or just like misleading people with your ridiculous comments. Facts are here: in.reuters.com/article...

I would suggest you go and do some research next time before embarrasing yourself again but your "body of work" speaks for itself: seekingalpha.com/user/...

It is interesting to see the same people appear over and over again in rabid defense of certain positions. Nonetheless, you have inspired me to write up a primer for how oil is mainipulated through the buying and selling of relatively few contracts, I think it would be helpful for people to understand and something we can get before Congress when they reconvene next week.

Options Trader: Thursday Outlook

Thanks junk! Yes, who is right, the Japanese did not cause runaway commodity prices by trashing their currency and they were getting paid with what was, at that time, the world's best currrency which they would use to buy steel and such to make more cars and such...

What we are doing, and I wrote an article called "Burn dollars to fight gravity" which you will like, is printing up more and more dollars in order to get ourselves out of debt but the energy speculators siezed on this plan (that was hatched by GS former CEO Paulson and taken advantage of by GS currently) to divert all those extra dollars into commodities, tripling the price of commodities on a 40% decline in the dollar. That still net's out to them as an inflation-adjusted 100% increase in what they get for the commodities.

Also, what's really great is that we get nothing of lasting value for out dollars since this country produces virtually nothing (other than homes, which they crashed first to put a stop to it) so we are spending and spending and spending and accumulating no assets for it and the government goes further and further into debt to keep the whole charade going.

In the end, GS/MS et al hope to be the last men standing when they pull off the deal of the century and broker the restructuring of our $10Tn national debt as our creditors fear we will slip into bankruptcy. They could easlily collect a $250Bn fee for that and eliminating BSC and LEH along the way (and C if they can) means that pot will be split less ways.

Cash is good Blink, we're mainly cash and giving it to earnings to see if we can break oil and get some good news, otherwise it's off to Vegas to do some real gambling!

Al - Yes, two weeks ago (6/13) I called a bottom. I also shamefully called a top in September at about 13,800 and 3 weeks later we went over 14,000 where I continued to say we were too high and people just like you (was it you) said the same kind of things.

Since we run diversified portfolios on our site, it isn't the sort of thing we shift on a dime from day to day. We have actually committed very little additional cash this month despite my desire to as we look for a proper bottom but if it somehow satisfies you to say "wrong, wrong, wrong"


I don't know what your deal is - clicking on your name shows that in Aug '06 you said "Phil, Thanks for your response. I have been enjoying your posts for almost a year now. You have lots of good ideas and a refreshing take on things. Hope you keep them coming. Aug 20 06:54 PM"

I guess you must have lost your smart ass on Sept 24th when oil was below $70 and I said it would go up (after we had correctly called the sell-off) and you said "Wow, are you finally capitulating on your bearish stance on oil after all this time?... Maybe I should think about shorting it now... "

Oh I see, it must have been Sept 28th, with the Dow at 13,895 when I recommended puts on the DIA and you corrected me by saying "Why puts on the DIA?? It's a mega cap, diversified index that is easy for i-banks to move around? These are huge companies with enough moving parts that they can print any number they want at earnings time (at least for a couple qtrs). " Yeah, I'd be embarrassed too to be that totally wrong trying to call someone else out. Sorry about that...

I also love your May 21st statement: "I think in the long run higher energy prices are the best thing that can happen to this country. I hope it goes to 200.00 a barrell. " So far so good I guess...

May 23rd, still on topic: "Here is a tip Phil. Take everything to do with oil off your screen. It isn't really as important as you think! You need to move on because its getting really pitiful."

Gosh thank goodness you explained to me oil wasn't going to be a big problem for the markets, you are really being borne out by the action since then.

I have no problems with people who wish to engage in an intellectual debate on a topic but when you make comments like "Everyone reading this needs to know that Phil is full of shit and just trying to promote his subscription based website. (June 13th)" then it says a lot more about you than it does about me.


Have a happy 4th everyone (else)!