Philip Davis

Options Trader: Thursday Outlook

Hidilip - I assume you know this better than me. I was summarizing the linked WSJ article which perhaps is blaming the Left because the paper is controlled by Murdoch now and loves bashing communists, if you have links from that perspective, I'd be very interested to read it as it fascinates me to see the WSJ spinning a story that way. You'll notice that I did not directly connect the Leftists with the strike as I wasn't sure, but it was the same sentence separated by an "and". In the WSJ, the original text read:

"Wednesday's strike by workers in government-owned banks, post offices, airports and railways was backed by the Leftist parties that withdrew support from the ruling United Progressive Alliance government."


FRE/Vermont: Check out the post entitled "Wednesday Rebound" on philstockwold.com - it should be available for free tomorrow morning and let me know what you think of the trade..

What's Driving Fannie and Freddie

I love it Jack, lots of good actionable ideas.

Options Trader: Friday Outlook

One very important rule we teach is that, once you are ahead 50% on a caller, you set a very tight stop on him. With more than 2 weeks to expiration, we generally buy back any caller that is down 50% or more (assuming nothing bad happened to the stock's outlook) and then we wait for a recovery and, failing that, look to sell the next lower strike and use that money to roll down our long position.

Options Trader: Friday Outlook

Cover - you do realize that this article is Friday the 8th, not the current day's article right?

WMT - at 9:41 yesterday, my comment to members was: "WMT so going the wrong way. What a relief as I thought my $57.50 callers were going to blow me out. This is so great! Let’s pick up 5 Sept $55s at $3 in the $10KX and the $25KP XXX"

So the adjustment to this play was that we had the coverage through earnings and, on the dip, we took out the caller at just .40 and then flipped bullish becuase it was silly for them to go down (see this Thursday's post for my general take on the morning sell-off).

Meanwhile, the March $57.50s were bought for $4.75 and we sold calls for $1 and bought them back for .40 so the net basis on the leaps is $47.15 and they are now worth $6.25, not a bad gain for a week!

Had you not bought back the caller, your basis would be $3.75 on the March $57.50s and you would owe your August caller $1.87, for a net profit of .63, still 17% in one week and not so awful but you can spend just .40 to roll your caller to the Sept $60 calls, now $1.50, which would leave you in the March $57.50s at $6.25 and about 25% covered with the Sept $60s. You can do that month after month so, even without the good timing (and luck) we had, it's a nice little income producer.

Options Trader: Friday Outlook

Actually the puts cost less than that, 500 at avg. (300 then 200)$1.37, not sure where that number came from. I think $1.64 must have been the estimated price I was looking at as I wrote. Anyway, we got out at $1.51 with a small profit.

Yes Al, please keep selling me your shares!