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Options Expiration Friday – Anything Can Happen

Posted on the 16 May 2014 by Phil's Stock World @philstockworld

SPY 5 MINUTEAnother crazy day ahead

What else is new in this market?  As you can see from Dave Fry's SPY chart, the pattern is holding up of high-volume (relatively) sell-offs following low-volume run-ups.  This is how the Institutional Investors manipulate the markets to dump unwanted shares on retail investors.  I've been telling you all week how it works and now we can see it in action.  

Of course, it's nice to have this knowledge ahead of time – that's the edge we strive to give to our Members at Philstockworld.  Even if you are just reading us for free and don't have access to our Live Member Chat Room, you would have done very well to follow our advice on Tuesday and go with the DIA puts at $166.80 and the DXD longs at $26.20 – it was right there on top of the morning post (which you can have mailed to you every day, pre-market by SUBSCRIBING HERE)!  In our Member Chat, the previous day, our trade ideas were:

A 5% pullback on DIA is 8.3 points (830 Dow points), back to $158.40 from here.  The June $161 puts are .95 so, if you have $100K to protect against a 10% drop, you can buy $5K worth of the June $161 puts and a 5% drop pays you back $8,000 and a 10% drop to $150 (15,000) would net you $11 per contract so a 10x return is $55,000 back – that's overhedged actually!  

On DXD, the July $25/28 spread is $1.10 and is $1.25 in the money so you get all the upside on DXD up to a 140% profit on a very small move down in the Dow.  We already have July $28 calls in the STP and it's a little too soon to roll but we will.   

On a new trade – you can just get out if the S&P holds 1,900 for more than a day – that's not too far from here.  

INDU WEEKLY$5,000 worth of June $161 puts were cashed out by us yesterday at $1.40, which would be $7,240 on 53 contract, up 50% in 3 days and the Dow has barely even pulled back!  That's $2,240 in your pocket to compensate for any longs you may have left on the table.  The reason we cashed them out is that we expected a bounce today – into the close of options, but we still have our DXD spread, now $1.45 and up 32% out of a possible 172% – so just on track to our goal

So $5,000 in each trade as a hedge would have returned $3,840 in 3 days – aren't ideas like that worth the $1 a day an Annual Report Membership costs?  I know $1 is a lot of money, in our Live Weekly Webinar on Tuesday, I pointed out to our Members that every $1 you spend today costs you $5 in your retirement – but that math only works if you instead invest it wisely.  Of course, the $3,480 you didn't MAKE this week by not spending $7 cost you $19,200 in your retirement – so I think it's a pretty good value proposition, don't you?

Options Expiration Friday – Anything Can HappenAnyway, so how did we know the market was going to turn down.  Well, I posted the link above to the week's post, where I laid out our bear case as strongly as I possibly could but I think this chart sums things up very nicely.  Institutional Traders (ie. Banksters) have been dumping out of the market while their pet Media Clowns (ie Cramer) herd the Retail Sheeple in to buy up the shares.

The "smart money" has left the building and is still leaving every day we have volume while their TradeBots pump the market back up on slower days – so they can get as much as they can for those last few shares in their portfolio.

I've been telling you this for months, David Tepper told you yesterday (see yesterday's post) but, sadly, even just 6 years after investors got very badly burned chasing a stimulus-induced rally – they are jamming their hands right back into the flames that are being fanned by the same Media Assholes that screwed them over the last time.  

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This entry was posted on Friday, May 16th, 2014 at 8:08 am and is filed under Immediately available to public. You can leave a response, or trackback from your own site.

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