Philip Davis'  Instablog

 BAC/Mike – It’s only $29M, small-time stuff but worth watching if this becomes a pattern because $29M here and $29M there and, after a while, it starts to look like real money…

Dollar/Mike – I think the fact that we’re coming to the EU’s "rescue" is probably not going to be a long-term negative.  It’s keeping up the overall appearance that we may be a total mess but Europe is worse at the moment.  Very tricky to call at the moment. 

C/Yodi – I’m not a big fan of increasing risk out of greed.  Those are huge percentage plays and you should be THRILLED to have winners on them.  If you want to add risk, why not add more hedged positions instead of leaving current positions more exposed?  You can sell C 2012 $4.50 puts for .60 and the margin on that is like .70 so you have an 85% winner there if C holds up AND it’s covered by the calls that you were going to spend perfectly good money to buy out.  The 2013 $5/6 spread is .30, you can add that or roll an existing caller out to the $6s but don’t spend money to add risk if you can avoid it.  

Orlando/Aug – Thanks for field report – have a great trip! 

WSJ/Matt – Yep, as an avid 30-year reader I can tell you its getting worse and worse every day.  I don’t even look at them on the IPad anymore, which is bad as that is still what the masses follow but I literally can’t stomach them any more.  I do still force myself to read them every morning – the same logic that forces me to watch CNBC all day – it moves the markets, plain and simple…

SKX/Rain – Wow, and they’ve already been hammered back into submission.  May make for a nice re-entry next week.

This Dow move is filling the gap from Friday morning so 11,520 will be a good test line although 11,543 was Thursday’s high.  

Why fail/Barf – Because it is a $40Tn market and they don’t control everything.  I do think that outside of that indisputable, unspinnable bad news they can pull it off but, with Europe where it is right now and earnings on the horizon – I’m not yet convinced that news won’t be coming.  As I noted earlier this week, we had 18 bullish picks last week and I’m not bailing on those unless we drop 3 of 5 of our breakout levels but I’m sure not piling more on until I see more proper evidence that we can sustain this and, even then – do we want to put more of our chips on the table over a 3-day weekend?  If this is a rally to 1,550 or even 1,450 – we’re not missing much waiting to see if 1,250 holds.  

USO/Yshen – We’re gong to give up I think.  It will suck as the losses will put us back to 0 but under the current Portfolo objectives (doubling by Jan 21st) there’s no option to roll longer.  I think we’ll aim to maintain that $25K and our goal for 2011 is going to be a more realistic $25K – $100K in a year.  

SPY $125 puts pushing .40 on 2 S&P points up to 1,253 so it looks like 1,255 is going to be the fail line on that trade.  

XLF/Yodi – XLF is at $15.73 so, if it closed today, your net .62 entry would be up .11.  What is your reason for wanting to quit the trade at net .62?  Impatience or do you not think XLF will go higher?  When you enter a vertical you will not make money until petty much the last 10 days (in a short-term play) as the premium on the lower call will fade faster than the one you sold.   The question is, is the STOCK on track for the target of $16?  If so, you have to have faith that the math will work out in the end.  I chose XLF because – IF (IF) we break up, it’s the financials that are the laggards and have the most to gain AND I think XLF is undervalued anyway (why not with the Fed handing our $30Bn a week?).   So, I still like them for the upside hedge and they still make a fine new play at net .62 with a 50% upside potential in 30 days.  

Kass/Matt – Cool! 

China/Mike – Which one?