Trade Alert: Three trades and must-read headlines
There’s an awful lot of angst if not outright fear out there amongst the bulls. The high-beta stocks and especially big tech have been the leaders on the way up of late, but the momentum seems to be about to run out, at least for the near-term.
I’m buying some JP Morgan puts today. Thus far, I’ve only been short the common, and I’ve been dead wrong about the timing on the entry of that initial tranche, but this is still not a full-sized position and I don’t have any puts in the name yet. So I’m buying some slightly in the money JPMorgan puts with strike prices ranging mostly around $45 a share and dated out into December 2012 and January 2013.
I don’t necessarily foresee some sudden collapse or catalyst for the stock to crack, but as I have been doing with my slow tranche hedging with Morgan Stanley, the JPMorgan short works to help reduce some of my overall net long exposure and would help me capture some gains on the downside if the markets were to crack.
And if the markets are to crack, I would expect it to be the financials that would lead on the way down, along with, unfortunately the high-beta and big tech stocks that have been up so huge of late.
On the buying side, while DDD is down below $37 here this morning, I’m bidding on some DDD calls dated out into February 2013 and/or later with strike prices starting from $40 to $45 or so.
For the more aggressive traders out there, take a look at ZNGA here for a long trade. The stock seems to be trying to get some momentum going to the upside. Don’t go crazy on a trade like this though, keep it small if you do it at all. I’m going to add a little to my ZNGA common here.
Other than that, here are a few headlines and my thoughts on them.
Union chief gives NFL referees‘ side on lockout in open letter – I did a little research on the NFL Referee dispute. It’s not a dispute and definitely NOT A STRIKE, but an outright lockout — which means that the NFL has renegged on a long-term CONTRACT with the NFL Referee Union and has said if you won’t renegotiate with lower pay and benefits, you are not allowed to return to work and we will not honor that contract. The value of those benefits that the NFL no longer wants to pay its referees even though its in their contract is worth probably a few hundred million dollars in future pension funding by the the NFL, which equates down to about $10-20 million a year right now that the NFL doesn’t want to pay their 180 referees. The NFL, which is a not-for-profit which includes an arrangement in which the owners get to deduct their $5-10 million a year in fees from their own taxes like a church or the Red Cross’ own donors do (and keep in mind that the owner’s stadiums are also recipients of billions in direct and indirect welfare for “their” stadiums, parking, real estate, and much taxpayer help), will do nearly $10 billion in revenues this year, including those donations from the billionaire owners into the league’s coffers. Roger Goodell, the NFL Commissioner and my old beer drinking buddy when I hosted my Fox show out of the Waldorf, and the NFL president will take home about $20 million in salary this year. I am not a commie and I am not a socialist and if that is capitalism then I guess I’m not a capitalist either. At least not in this crony capitalist 21st century. Please spread the word and maybe at least the referees can benefit from the welfare the NFL gets. Not cool at all.
Taibbi on Mitt Romney as Preface to Video of Romney Speaking Privately to Wealthy Donors – Romney and Obama personally pay less than any middle class small town business owner and GE doesn’t pay taxes at all and Microsoft and Apple hardly pay 10% on their record profits for years while Goldman Sachs was completely insolvent but that one company got a trillion dollars in direct welfare to save its billionaire shareholders and executives many of whom were knowingly in on fraudulent financialization schemes…and Obama/Robomney and the media who fawn over them have the gumption to talk about some supposed 47% of the population who “doesn’t pay taxes”?! And yet so many of my dear friends from both sides here fall for the class warfare doctrine. It’s all about how they frame the issues. Don’t fall for it any more please. Close all tax loopholes, every single one of them and stop all other direct and indirect targeted tax tricks, subsidies and loopholes for EVERYBODY. We’ll have an immediate surplus. Then let’s talk about welfare for the poor, ok?
Lopsidedly bullish sentiment on Apple – I’m looking to sell down some more of my Apple calls from purchases that I’ve outlined for my TradingWithCody.com subscribers when Apple was $150 lower. I’ve sold most of the lower strike priced calls so far which lowers my risk on the downside somewhat, but I’d like to roll some of these calls out into longer dates and higher strike prices so I can have a little bit less capital exposed to Apple.Why Japan-China territorial dispute is getting ugly – I’ve been citing this as a potential “Black Swan” event for the markets for almost a month now and this is the first time I’m seeing the story start to get traction in the US.Live: Europe’s Debt Crisis – Anybody else worried about the lack of “EU-Crisis is here, you must panic now!” headlines out there? We’ve been successfully navigating these markets for the last couple years by buying the markets when those headlines are prominent and selling the markets when those headlines are missing from the front page. Time to trim and wait for the next panic to get aggressive again. There will be another panic, you know.
