What's Frank Thinking? on mytrade

If the shoe fits - buy it?

Fri, 24 May 2013 09:10:38 -0400

Friday, May 24th, 2013, Prescott, Arizona, USA

High School graduation day for the heir-to-the-mortgage, and his aging father is very proud. Next year brings college in Oregon, and we can't wait to get back up to the great Northwest's City of Roses. Portland is the 29th most populous city in the United States, the biggest in the state, and third largest in the Pacific Northwest - behind Seattle and Vancouver, British Columbia. Home to an abundance of microbreweries, microdistilleries, wineries and famous for it's coffee houses, FHW and son will fit in nicely. The city has to be one of the cleanest major metro areas we have ever seen, and the wide range of ethnic restaurant choices is world class.

Nike (NKE) and Adidas (ADDYY) are headquartered in the Portland area, and we have traded Nike before and just might have to again. If there is a tour of the Nike manufacturing facility, we will be there, as you know we like to do our own personal due diligence before making any investment decisions, and seeing a product being made is better than just wearing it. Intel (INTC*) also has a major presence and is Portland's largest employer, so a high-tech chip making company tour could be in our near future as well.

Being an avid bike rider, we are also excited that Portland boasts the largest percentage of bicycle-commuters in the U.S., with approximately 8% of the work force bicycling to work - the highest proportion of any major U.S. city and about 10 times the national average. Portland is also the only city in the United States to own and operate mainline steam locomotives, with local and extended trains being pulled on the tracks of the old Oregon Pacific Railroad; managed, operated and funded by the Oregon Rail Heritage Foundation - sounds like another tour in the making!

If you can't tell, we are excited about spending some time in Portland over the next few years, and just wish Nike would take a few downticks and stabilize before we either sell some naked puts or buy some stock with a short strangle. The dividend is a small bonus, and the bid / asks in the options is pretty tight, there is enough open interest "wrapped around the money" and the 2.50 wide strikes are another positive. As the old saying goes, especially important with a shoe company, "If it don't fit, don't force it" - we won't force a position just because of a company tour, but if the price looks inviting, at least those N7 Free Forward Mocs could "fit" nicely - if not the July 60 puts.

"If the shoe fits - buy it." -- Mary Sue Ryan (thinkorswim's vertical roll Queen)

Have a great weekend. We will be driving to Wisconsin, so next week's blogs might be somewhat sporadic.

FHW
(* = FHW position)
fhwoption@hotmail.com

Humpty Dumpty - vaporized?

Thu, 23 May 2013 09:04:26 -0400

Thursday, May 23, 2013, Prescott, AZ., USA

- Last week on Thursday morning, with the SPUs (/ESM3*) trading near 1652, we talked of Humpty Dumpty and buying some In/Out put verticals because the call option premium was too cheap to sell. We also said "please be careful adding any new money on the long side of this ridiculously elevated market." Well, we hope our warnings didn't fall on rose-colored glasses wrapped around deaf ears, because the overnight futures dipped to 1632.75 and look to open somewhere 1635 - 1645 after trading over 1670 yesterday - try to get the grin off your face Tommy S.! Even the Japanese markets collapsed with the yield on their bonds (there is a yield on their bonds?) spiking above 1% at one point! The bears are clearly smiling, although after the last few years of higher markets, the few teeth they have remaining probably can't take much of a bite. Geeze, we were just rocked in our seat as a fill alert went off... huh? We weren't working any overnight futures orders, and it was a fill not simply an alert. What the... aha, it is very seldom (first time ever in fact) that we enter a GTC EXT order on anything, but being way too short Las Vegas Sands (LVS*) stock (along with a few short options positions) we entered one a couple days ago almost $3 under where it was trading. Buying the stock back at $57.55 in a small partial will lower our short delta, and, after all, the city of Las Vegas was really crowded, so how low can the gambling stocks go? Now lets see how low our other shorts can go before we buy them back. Can the SPUs hold 1600? Can SBUX* get to $60? Remember that a pull-back is healthy in any market, and we hate to say it, but we told you so!

Today is a busy day in the economic news front...
Initial Jobless Claims
PMI Manufacturing Index Flash
FHFA House Price Index
Bloomberg Consumer Comfort Index
New Home Sales
EIA Natural Gas Inventory
Kansas City Fed Mfg Survey
Money Supply
Fed Balance Sheet

Notable earnings: AAP, AINV, ALKS, BKE, BONT, DLTR, GME, HRL, QSII, RL, SLF, TD*, ARO, BLOX, CRM, GPS, MENT, MRVL*, P, ROST, SHLD, SVM, WSM, ZUMZ.

"Although it depends very much on how an object is presented and interpreted, it is conceivable that some people may interpret air-sickness bags in an artistic way." -- Greg Thomas

Have a great weekend.

FHW
(* = FHW position)
fhwoption@hotmail.com

Gamble? Not us!

Wed, 22 May 2013 09:01:50 -0400

Wednesday, May 22, 2013, Prescott, Arizona, USA

Last week we were at The Money Show at Caesar's Palace (CZR) in Las Vegas and although we have made over 100 trips to that crazy city, we have only gambled once, and that was forced on us. "Never gambled, FHW?" Nope, not on our own accord. Well, athough we have never really gambled, we have kind of "gambled" on a casino stock, and anyone that was at the November event in Las Vegas can testify to that fact. That "gamble" paid off nicely, the only problem is we left the "table" too early.

The gamble was actually an investment in Caesar's stock right around the time of the November 2012 trade show, and actually while right at the booth in the exhibit hall. The stock was just under $5.00 and the short straddle (short $5 covered call and short $5 naked put) was what we felt extremely "juicy" for such a low cost underlying. The roll was done on the call side along with more short sales on the put side, but for only a month, as the stock ran up and was called away. Gosh, we remember desperately trying to sell puts, first at the 5 strike and then even up at 7.50, but the stock would absolulety NOT downtick, for what seemed like (and was) months on end!

The stock price did top-out in March - somewhere around $18 - what? Did he say it went from $5 to $18 in that short of a time frame? Yes, check the chart. In fact, as we were penning this blog we noticed a still existing alert at < 5.35 on the CZR chart, that we sadly clicked off, because it sorely reminded us of what might have been. Last week, however, we were once again doing our due diligence, as we did back in November, checking how busy the legendary casino was and how all the shops and restaurants were doing. Dinners out were still very expensive, and the room service turkey club was great - but still $40.00 (thanks for the tip Tommy Sosnoff). The stock has dropped quite a bit and a "gamble" on some short puts might soon be in the cards. But, after talking to a couple of Caesar's employees last week, we now might be thinking of a short play on the stock. We will keep you updated.

"Are you a trader or a gambler?" "Same thing, ain't they?" "Not even close - I give ya six months." (two OEX floor traders - one lasted decades, the other WAS gone in months!)

FHW
(* = FHW position)
fhwoption@hotmail.com

Higher Tuesday? Again? Still?

Tue, 21 May 2013 08:59:23 -0400

Tuesday Tidbits

Tuesday, 05/21/13, Prescott, Arizona, USA

- We don't know why or if FHW was stuck in some sort of Tuesday time-warp, but our last Tuesday tid-bit was back on 4/23. Yes, we were in Vegas last week, but what about the others? Of course it doesn't really matter because the markets only go higher on Tuesdays, so no real need to report anything - but here goes anyway...
- The SPUs (/ESM3*), which were in the 1550 range just four Tuesdays ago are now bubbling up around 1665 - yes, that IS 115 SPU handles in just four weeks. The Russell 2000 (RUT), Donny Kaufman's bane, busted through 1,000 after dipping under 900 a month ago, another major market index monthly move! The Dow ($DJI), who cares, but it too is making almost stupid moves to the upside. The 30-year bonds are hanging near the 144 level, after taking a tempting try at 150 just weeks ago, and oil (/CL*) is back near $97 after dipping under 86 on 4/15. So yes, the markets - all of them have been very active, to say the least. The metals finally started a rally on Monday, after taking a bath over those same weeks, but if you are long term on anything, does any of this really matter? Gosh, we remember in the early 1990s actually cheering for the SPUs to get up over 500!
- What's next, you ask? Well, if we knew that even for just one day, we would certainly be looking for a whole new set of friends! We do recall, sometime in the mid-'80s, asking a good friend on the CBOE trading floor, who, by the way, was said to have been the first to "figure it out" becoming the original "delta neutral trader", why the OEX seemed like it wanted to go to a certain level, he said "don't need a reason, just more buyers or sellers." He also told us, at a later date, to ONLY "buy what you like and short what you don't, because eventually busy company's make money." Clearly words of wisdom from a floor trader who flew over 100 people to the Bahamas for his wedding, before crashing and burning because of what he called "demon drugs."
- Home Depot (HD) announced and of course looks higher, but a few others also reported somewhat weaker numbers. There are a few more earnings reports today: ADI, AZO, BBY, CPWR, DCIX, DKS, INTU, MDT, NTAP, NM, SKS, TJX; but as you can see, no asterisks, so we couldn't care less.

Today's Economic News:
ICSC Retail Store Sales
Redbook Chain Store Sales
Fed's Bullard: Monetary Policy

"Be like the bird that, pausing in her flight awhile on boughs too slight, feels them give away beneath her, and yet sings, knowing that she hath wings." -- Victor Hugo

FHW
(* = FHW position)
fhwoption@hotmail.com

Long term utilitys etc...

Mon, 20 May 2013 08:55:04 -0400

Monday, May 20, 2013, Prescott, Arizona, USA

We will be making our cross-country drive next weekend and have our fuel costs fairly well hedged (XOM*,COP*, IOC* and a few more immediately rewarding /CL scalps). And, speaking of what some would consider crazy personal hedges, here is an article from back in 2007, and the hedges listed above are, not surprisingly, still in our long-term portfolio, and doing quite well - thank you. But remember, even in a long term portfolio of dividend paying stocks, some prudence on initial entry might be considered. And, since 2007; now at these incredibly lofty levels, we could be due for a pull-back. However, if you have 20-years or so, perhaps 100 shares and a covered call with a naked put stangle would not be out of the question - at least to begin amassing a longer-term plan and basket of stocks.
2007, Prescott, Arizona, USA
No, not another personal hedge. Why not?

Most of you know that we are firm believers in hedging our positions. Whether it be long stock, and simple covered calls; some crazy combination of option positions with stock and/or futures; metal futures versus coins, bars and GLD*; General Motors (GM*) against our new Yukon and old Pontiac; our unleaded gasoline fill-up vs. long oils (XOM* & COP*); even Best Buy (BBY) in some form because of all of our electronic shopping trips - we usually have ourselves somehow "covered."

In the days of our youth (not by Led Zepplin), we remember certain family discussions as to the value of Commonwealth Edison, or as the turkey was being passed around the Thanksgiving table, an uncle or two arguing about ComEd. Well, that once famous Midwest utility has been merged into the mega energy provider Excelon (EXC), and we no longer have any business dealings with them. But we do pay a few other energy related firms, for a few properties in both Arizona and Wisconsin. And, although we migrate from one-to-the-other when the climate dictates, commonly cutting our utility costs, we do still pass some hard-earned FHW dollars on to them each-and-every month.

Wisconsin Public Service is now part of the Integrys Holding Company (TEG*), based out of Chicago, and servicing certain parts of the north central part of the United States and Canada. Our Arizona homes use the power provided by UniSource Energy (UNS), whose main subsidiaries are Tucson Electric Power and UNS Gas and Electric, who distribute gas and electric to dozens of some of the fastest growing areas in Arizona, with a customer base expanding by approximately 4% a year. Although the growth in areas like the Upper Peninsula of Michigan and Northwoods of Wisconsin aren't as stunning as in Arizona, TEG recently declared a quarterly dividend of .66 cents per common share, payable on September 20, 2007, to shareholders of record August 31, 2007. This will mean the company has paid dividends for 67 consecutive years and increased its dividend for 49 consecutive years (now.68 cents). So much for needing substantial growth in the utility business!

Then there are the home and cell phone providers. We were recently asked how we could possibly use 2100 minutes a-month on our cell phone, but our plan covers four different phones, and yes, we have actually gone over the monthly provided service! A blooming teen-aged heir-to-the-mortgage; blonde better-half, and her equally as blonde mom; along with our frequently used phone, and pretty soon 2000 minutes or-so is a thing of the past. That monthly telephone stipend goes to none other than Verizon (VZ*). Home phone services are provided by Frontier (FTR*) in Wisconsin, and QWest (now Centruy Link - CTL) in Arizona. We understand that many are ridding themselves of the old-fashioned, hard, home phone lines, and although we spend a lot more time on our cell phones, we don't plan on tearing out the old kitchen phones any time soon, and one or two telecommunication stocks is not a bad idea.

So, what is our point? We started off by talking of personal hedges, and have just found a few more for ourselves, some that wealready own, and others that we have never heard of. But, you ask, so what if we write a monthly check to some public service or telecom company for a couple hundred bucks, why buy their stock? Hello! Do you think you are the only ones tied into VZ, TEG, or UNS, or whatever company in your particular part of the country (world) is bringing you electric, gas, telephone, or some other monthly service or utility? There are thousands of them! Now may be as good-a-time as any to look into some of these dividend paying giants (or wait for a pullback!). Next time you write a utility or telecom check, just think of it as coming back to you in the form of a stock dividend, options premium or capital appreciation. Not necessarily a bad plan, 2100 cellphone minutes or not!

" 'Marginal utility'? What's that? Just get me a good shortstop." -- Anonymous

FHW
(* = FHW position)
fhwoption@hotmail.com

Monthly expiration Friday

Fri, 17 May 2013 09:04:01 -0400

Monthly expiration Friday, May 17, 2013, Prescott, Arizona, USA

"Nuttin' doin'." It is indeed monthly expiration Friday, but over the past couple of monthly cycles we have rolled further out in time (and sometimes price), so we wouldn't be as concerned on this and next months expiry. So, here we sit; just back from the Vegas trade show, with a week to go until our heir-to-the-mortgage graduates from high school, followed immediately with our arduous 2,000 mile weekend drive to Wisconsin. Expiration Friday with nothing to do? One more week in Prescott and we have nothing to do? Actually, we have about 10 million things to do, and with no options to roll, what better time to do the "close-the-home chores...

Have a great weekend. Monday begins what might be one of the longest monthly cycles of our options career - the dreaded five-week June expiration. Why so long? Well, it is summer, the interest in anything market related will wane as we get deeper into the elongated June cycle, and it isn't just FHW that attempts to avoid the summer doldrums. A lot of kids will soon be getting out of school, so the parents are preparing themselves for the soon-to-come summer onslaught of kid-related events. While on the CBOE tradeing floor, we used to poke fun at the big NY traders heading to the Hamptons as the reason for the slower summer cycles, but that isn't that far from the truth.

Chicago traders too would use the summer time to avoid the city and some trades, with north side Chicagoans mostly going to Wisconsin, and south siders heading to their homes in Michigan and Indiana - both directions having to do with their relative proximity and which way they would go around Lake Michigan. Our entire summer-time life has been spent somewhere in Wisconsin, and that was the driving factor in our wanting the heir-to-the-mortgage to experience the same kind of summer fun. Speaking of Cheeseland, how about some fun Wisconsin facts:

- Door County has 250 miles of Lake Michigan shoreline - more shoreline than any other county in the country.
- The first hydroelectric plant in the U.S. was built in Wisconsin in 1882 - on the Fox River.
- Harley-Davidson (HOG) is headquartered in Milwaukee, with other facilities located around the state.
- Monroe is the Swiss Cheese Captial of the world.
- The Freshwater Fishing Hall of Fame is in Hayward.
- Eagle River is known as the Snowmobile Capital of the World.
- Sheboygan is the Bratwurst Capital of the World.
- Green Bay is the Toilet Paper Capital of the World - look it up if you don't believe us!

"Washington, DC is to lying what Wisconsin is to cheese." -- Dennis Miller

FHW
(* = FHW position)
fhwoption@hotmail.com

Humpty Dumpty Market?

Thu, 16 May 2013 09:42:47 -0400

Thursday, May 16, 2013, Prescott, AZ., USA

The SPUs (/ESM3*) were trading in the 1530 level just four weeks ago (4/18) and look to open today near 1652 after being closer to 1625 last week, as this now almost humorous rally continues almost unabated. We mentioned how many market mavens and major short players were giving their mea culpas last week, and the ones we have talked to here at the Money Show in Las Vegas are not quite ready to throw in their increasingly bloody towels. The volatilities are so low that it is difficult to sell any call premium at these incredibly lofty levels, so long put verticals and even some well out-of-the-money butterflies are now being looked at by those shorts that still have any money left. We always keep an open mind, but when a kid that used to work at our Prescott Downtown Health Club that we hadn't seen in a year calls to ask our opinion of Tesla (TSLA), and an almost giddy elderly lady at the trade show mentions Disney (DIS), all our somewhat whacky mind could think of was Humpty Dumpty, and his great fall. How much longer can that anthropomorphic egg cling to the wall? Will all the king's horses and all the king's men be able to put Humpty back together again if he has been completely vaporized by the SPUs? New parts from overblown Home Depot (HD)? Will Yoga pants from LULULemon (LULU*) help? Perhaps Pulte Home (PHM) which has gone from three bucks to almost $24 in a couple years will be hired to put the egg together again. Whew! We have clearly been in a very crowded Las Vegas too long, when our market thoughts turn to nursery rhymes, yoga pants and home improvements and builders all in one paragraph. But please be careful adding any new money on the long side of this ridiculously elevated market. Elon Musk (from Tesla) can throw more of his dough at his miniscule car manufacturing company and maybe it can get to $100, while Google (GOOG) approaches $1,000, but Humpty's wall is clearly teetering.

Today is a busy day in the economic news front...
Fed's Plosser: Monetary Policy and Economic Outlook
Fed's Rosengren: Monetary Policy
Consumer Price Index
Initial Jobless Claims
Housing Starts
Fed's Fisher: Monetary Policy
Bloomberg Consumer Comfort Index
Philly Fed Business Outlook
EIA Natural Gas Inventory
EIA Petroleum Inventories
Fed's Williams: Economic and Monetary Policy
Money Supply
Fed Balance Sheet

Notable earnings after the close: ADSK, AMAT, ARUN, BRCD, DELL, JCP, JWN, SINA*, VNET.

"I don't know what you mean by 'glory,' " Alice said.
Humpty Dumpty smiled contemptuously. "Of course you don't - til I tell you. I meant 'there's a nice knock-down argument for you!' " -- Lewis Carroll's Through the Looking Glass

Have a great weekend.

FHW
(* = FHW position)
fhwoption@hotmail.com

Feeling old and taxed?

Mon, 13 May 2013 08:48:47 -0400

Monday, May 13, 2013, Prescott, Arizona, USA

Feeling old and taxed?

- Life expectancy of Americans has increased by 10.5 years from 1950-2010, reaching 78.7 years today. Thus, since 1950, life expectancy at birth has increased by about 2 months every year.
- The 16th Amendment to the US Constitution was ratified on 2/03/1913, giving Congress the right to impose individual income taxes on U.S. citizens. The top marginal tax rate was 7% in 1913 vs. 39.6% in 2013.
- By 2030 there will be about 72.1 million "elderly" Americans (over 65) - more than twice the number in 2000.
- By 2020 the projected U.S. population of people over 85 will be about 6.6 million (we won't be 85 until 2036).
- Americans that reach the age of 65 have an average life expectancy of an additional 18.8 years (20 for females, 17.5 for males)

"The oldest trees often bear the sweetest fruit." -- German proverb
"When I was young, I thought that money was the most important thing in life; now that I am old, I know it is." -- Oscar Wilde

We will be at the TDAmeritrade (AMTD*) booth at the Las Vegas Money Show in Caesar's Palace (CZR) for most of the week, so our daily blogs might be sporadic - stop by and see us. There is also a Market Drive coming up at the Seattle Marriott Waterfront on Saturday, June 8th - info at www.tdameritrade.com/registerformarketdrive

Have a great week.

FHW
(* = FHW position)
fhwoption@hotmail.com

Sears/Kmart - 2004 reprint

Fri, 10 May 2013 08:54:07 -0400

Friday, May 10, 2013, Prescott, Arizona, USA

A reprint from 2007 which was in part a reprint from a FHW article from all the way back in 2004!

Holding Sears. Or is that Sears Holdings (SHLD)?

In June we spoke of the old Sears, Roebuck & Company and their incredible early 1900's Model Home program. That article talked more of little Carlinville, Illinois and the amount of Sears shipped homes that were built there in 1918, and how they had created an almost cult-like devotion and atmosphere around the remaining Sears homes in the small southern Illinois town. We have never owned the stock of either the old Sears, Roebuck & Company, or the newly fashioned Sears Holdings Corporation (SHLD), but after having owned dozens (hundreds?) of the company's products, and always believing in our own personal choices and indexes, it is a shame that we haven't.

The new SHLD, the parent of Kmart and Sears, Roebuck and Company, is publicly traded on the NASDAQ market, is the nation's #3 "broadline" retail firm, with approximately $50 billion in annual revenues, coming from 3,800 stores in the U.S. and Canada. Their popular brands are found in almost every home and/or garage in the country, from Kenmore appliances to Craftsman tools, DieHard car products, Lands' End, and Martha Stewart Everyday products, their goods are about as American as American can be. The company has moved from the old Sears Catalogue days of the 1800s, to one of North America's largest seller of appliances, lawn and garden equipment, and automotive repair products, expanding from their new Hoffman Estates, Illinois home in leaps and bounds.

The most recent WFT article mentioned that we wish we would have looked into the new SHLD stock when the Sears/Kmart merger took place. Checking our archives, we found an article from that same time frame that delved further into the two American firms. It was not so long ago in corporate history, although it may feel that way for Martha Stewart, as back then she was in prison, but here is a reprint of the Sears/Kmart article from December 1, 2004:

Can we get Martha Stewart on the phone please? We have heard that when the Sears/Kmart merger news was announced that the jail phones were ringing off the hook, and it wasn't the usual list of lawyers, bondsmen, gangsters, and the like, but an odd assortment of CNBC talking heads, gardeners, analysts, artists, stockholders and housewives.

Yes, Kmart is merging with Sears! Surely that isn't Chicago's tallest (1450 feet) monolith to retail - The Sears Tower - shaking! Although it may have been Bright's disease that took the life of Richard Warren Sears, in 1914, the recently announced Sears merger with Kmart would perhaps also have done physical damage to Mr. Sears - if not killed him. But the history of the two firms, and their founding fathers, have some amazing parallels, which many in the investment and retail industry fail to realize.

Sears, Roebuck Company was the brainchild of Minnesota born Richard Sears, in what went from a small seller of watches in 1886, and mail order homes in 1908, to the owner of the tallest building in the world, Sears, Roebuck Company became one of the great success stories in American retailing history. Most even in the retail world do not see Kmart in the same league, especially after their recent trip through bankruptcy, but for almost 100 years, the two retail giants were actually very much alike.

Richard Sears started working for the railroad, when in 1886, at his station at North Redwood, Minnesota, a shipment of watches went unclaimed. Permission was granted for him to try to sell the watches, and after making $5,000 in a very short time, Sears decided to go into the watch business in Minneapolis. The Sears watches were sold with a guarantee, so Alvah C. Roebuck was soon hired to oversee the rapidly growing business' service department.

Sears, Roebuck grew from a catalog house, in 1927, to launching their own Craftsman Tools and Kenmore Appliances brand names; hit the $1 billion sales mark in 1945; got into the insurance business, with Allstate, in 1931; the brokerage and real estate business with the 1981 acquisitions of Dean Witter Reynolds and Coldwell, Banker; and the credit card business with the 1985 national introduction of their Discover Card.

Sears, Roebuck (S), now headquartered in Hoffman Estates, Illinois, and ranked #32 in the 2004 Fortune 500, has: almost 250,000 employees in the U.S. and Canada; over 900 full-line Sears stores, with an additional 1,100 specialty stores; more than 48 million active Sears customer households; makes over 5 million product deliveries a year and, thanks to the firms longstanding "Satisfaction guaranteed or your money back" promise, over 14 million yearly calls for service and repair. Oddly enough, about the same time that Richard Sears was getting into the watch business, Sebastian Spering Kresge was, in 1899, opening the first of his five-and-dime stores, with $8,000, in Detroit, Michigan.

From Kresge's original five-and-dime store in 1899, the company has grown from a store selling all of their products for .05 and .10 cents, at the turn of the century; to S.S. Kresge's first $1 stores - in the 1920s; the first suburban shopping center store, in 1937; and, when, due to some major retailing changes, and corporate problems, throughout the 1950s, new President, Harry Cunningham, was brought on, in 1959. Under the new President, in 1962, the first of it's kind discount department store, named Kmart, opened in Garden City, Michigan, and by 1966, sales at the 162 Kmart and 753 Kresge stores topped the $1 billion mark. In 1977, with 95% of the company's sales being generated by the Kmart stores, the S.S. Kresge Company officially changed it's name to Kmart Corporation, to fully emphasize its discount based retail business.

Success oftentimes came hard to both Sears and Kmart, proving this, was when, on May 6th, 2003, Kmart emerged from it's 15 month long Chapter 11 reorganization; reduced its debt structure; secured over $2 billion in "exit" financing; closed or terminated leases on many of their weaker store locations; and under new President Julian C. Day, developed a more disciplined, efficient organization, while lowering operating costs in newly renovated "clean" stores. In fact, after coming through wars, recessions, depressions, crashes, floods, droughts, every other sort of natural disaster, and even a Chapter 11 bankruptcy, perhaps Richard Sears and Sebastian Kresge would both be proud of their new retail conglomeration! While they may be grinning in the graveyard, we hear that Martha Stewart is also beaming behind bars!

"I'm not going to vacuum 'til Sears makes one you can ride on." -- Roseanne Barr

Have a great weekend - hope to see you next week at the Money Show in Las Vegas.

FHW
(* = FHW position)
fhwoption@hotmail.com

Faith in YOURSELF

Thu, 09 May 2013 09:05:10 -0400

Thursday, May 9, 2013, Prescott, AZ., USA

The SPUs (/ESM3*) were trading in the 1530 level just three weeks ago (4/18) and look to open today near 1626 - quite an impressive run. Last year, in this early May time frame, the futures were under 1300, so, once again, an incredible year-long rally! And yes, we remember October of 2011 when they dipped down under 1100. Our only hope is that the typical retail customer didn't listen to all the "experts" and get out of their LONG TERM equities, and the brilliant new TDAmeritrade Investor Movement Index (IMX) actually shows the everyday customer has indeed become more market "savvy" than most of the "pros". Yes, there will eventually be a pull-back in the overall market, but possibly from such an elevated level that hopefully the new retail smart money will, at most, only make some cut backs and not throw in their long term equity towel. Yes, between 2007 and the lows of 2009 the SPUs did go from 1550 down to 660, but look where they have recovered to - new all time highs. We have been in the markets for WAY longer than the amazing last six years, so we have seen a lot of these interesting year-over-year runs. If you are a LONG TERM investor, as you should be, and have the abillity to sell premium on both sides of the market (calls and puts), while collecting dividends, you should be and will be, in the long-run, just fine. Okay, sorry about the long discourse on the past, but some of the market mavens that are now doing their version of a market mea culpa have been driving us crazy! As we say every single day in the Swim Lesson Chat room - TRADE WHAT YOU KNOW AND KNOW WHAT YOU TRADE, THINK LONG TERM AND ONLY ABOUT YOUR ANNUALIZED RATE OF RETURN. No one can pick tops or bottoms, and those that think they can and tell others all about it, usually end up trying to explain their ridiculous rationale, while their followers go broke! Now that we've said that, the SPUs are downticking... So, be careful and prudent out there, stay small, nimble and risk defined with the ability to handle and manage your risk.

Today is a busy day in the economic news front...
Chain Store Sales
Jobless Claims
Bloomberg Consumer Comfort Index
Wholesale Trade
EIA Natural Gas Inventory
Results of $16B, 30-Year Note Auction
Fed Balance Sheet
Money Supply

Notable earnings before the opening: AES, AGU, ALR, AM, AMRC, APA, BAM, BCE, CBB, CNSL, CTB, CVC, DF, DISH, DNDN, GLP, GTIV, IRC, KEM, KIOR, MEA, NPSP, OWW, PCP, SNE, SNSS, SPH, SRPT, TK, TNK, VICL, VNDA, WAC, WFR, WIN, WWAV, XRAY.
Notable earnings after the close: AGO, AIRM, AL, ALIM, ANAC, ASYS, AUQ, BCEI, BID, BPZ, CALL, CPE, DAR, EGY, ET, FTK, FXEN, GXP, KTOS, LLNW, MBI, MCP*, MDRX, MDVN, NGVC, NVDA*, OPTR, PANL, PCLN, PDLI, PSA, RNDY, SF, SLXP, SQNM, TNGO, UBNT, ZGNX.

"Faith - you don't have to see the whole staircase, just the first step." -- Anonymous

Have a great weekend.

FHW
(* = FHW position)
fhwoption@hotmail.com

Earnings after the close

Wed, 08 May 2013 09:47:58 -0400

Another big day for earnings - after the close:

AHT, ALJ, ATLS, ATVI, AVNR, CF, CLNE, CLR, CTL, CTRP, CUZ, CXW, DEPO, DK, ERII, ETE, ETP, GMCR, GRPN*, GSS, HALO, HEK, HNSN, JOE, LPSN, MBLX, MDR, MED, MIDD, MM, MNST, MNTX, MWE, NWSA, OSUR, PPO, PVA, QTM, RAX, RGP, RIG, RST, SGMO, SPRD, SSRI, STEC, SXL, SZYM, TCAP, TSLA, WR, XTEX.

FHW
(* = FHW position)
fhwoption@hotmail.com

Drugs

Wed, 08 May 2013 09:09:15 -0400

Wednesday, May 8, 2013, Prescott, Arizona, USA

"I wanna new drug..."

"Hey FHW, what the heck happened to good old Chicago's Abbot Labs (ABT*)? Is that an ABBV on your account sheets?" Yes, AbbVie (ABBV*) is the new independent biopharmaceutical company composed of Abbott's former proprietary pharma business. So, Abbott is now two companies, both actively traded, each with about 1.5 billion outstanding shares that pay an industry typical dividend, and plenty of options action on both sides.

"Which one do you like better?" Well, Abbott Labs has been around for about 125 years, and I have actually been to one of their corporate headquarters just outside of Chicago. AbbVie, on the other hand, has only been around for a few months, and it is the more innovative biotech piece of the newly split Abbot healthcare company. It is difficult to get excited about a healthcare company, but we find something very surprising with the spin-off. You would think that one of the largest well established healthcare companies in the world would have relatively low volatility levels, and yes, the ABT*s, Pfizers (PFE*), Astrazenecas (AZN) and others generally do. On the other hand you would think a biopharma might have elevated volatility levels - like a Gilead (GILD) or Amgen (AMGN), and that a new bio outfit might have even higher volatilities. But youngster pharma AbbVie's volatility is just about the same as it's elderly parent.

We haven't quite figured out what this means yet, but will soon be cutting back our positions in both, as they have had incredible runs to the upside. We believe that in any diverse long-term porfolio there should be at least one healthcare, drug or biopharmaceutical company, and of course it should pay a dividend and have enough options trade and open interest to make selling options a viable means to enhance that dividend. But we also profess that anything in your long-term "cabinet" of positions should also be known, understood and even a favorite product or service. You should have done some investigating before you started to use the product or service in the first place; as to an insurance or healthcare provider, medical outfit, drug or whatever. So, now that you know and believe in the benefits of the firm manufacturing the product or providing the service, why not own a piece of the company if for no other reason that to broaden the diversity of your long-term stock portfolio.

"The drugs don't make me high, they make me neutral." -- Dr. Gregory House (TV character)

FHW
(* = FHW position)
fhwoption@hotmail.com

Old Age --

Mon, 06 May 2013 08:12:49 -0400

Monday, May 6, 2013, Chicago, Illinois, USA

Noticing an elderly gentleman at a Chicago Costco (COST) over the weekend, we tought back to an article we wrote in 2007 and wondered about old Arnie. Then we thought - why we didn't buy the stock when in June of '07 when it was $50.00, it is now over $109.00.

How old is old?

While strolling through the wide-aisles at Costco the other day, we noticed an elderly gentleman trying to grab a fairly large generator off a second tier shelf; "How about if we give you a hand," we offered, "No thanks, let's see if I can get it myself," replied the old shopper. Then, in the wine department, we noticed the same aging shopper picking out a few bottles of reds and whites, for some reason we were interested in the tough old guy and had to start a conversation.

Walking cart-by-cart, we chatted our way through much of the refrigerated aisles, both picking out various meats and cheeses, while discussing everything from the stock market to the World Wars. When our newfound friend, Arnie, mentioned "The Big One - WW l," it heightened our attention, "I didn't get into the fight, but would have, if I was just a couple years older," he stated. "A couple years?" I replied. "Yes, son, I will be 102-years old next month, so I have seen a lot of war and peace, and remember when a bag of apples, like this, would cost about 5 cents!" Trying to do the math, I said, "you were born in 1905?" "Yes, that's when a good pound of bacon like this would have 'run' about 12 cents, and a pound of 'real' coffee, nothing like this canned stuff, would have been less than a quarter."

What a veritable font of knowledge we had, by chance, bumped into. Of course, upon arriving home, and before unloading the car, we had to hit the laptop for some further old age digging (sorry if you see that as a pun). We recently wrote of the aging of America and the world in general, but in looking at the statistics were somewhat stunned at the odds that Arnie had beaten. The life expectancy, when born, for men of his generation was just under 47 years, and when old Arnie hit 65, in 1970, he was only supposed to be around for another 13 years. How did he do it, we wondered? Was it the red wine from Costco, or that bacon to which he compared the 100 year old price. Surely, health care had to have something to do with it, but after 100 years on this earth, old Arnie has had to survive a lot of his doctors.

Okay, let's check some health care statistics, we thought. In 2004, the United States spent 16% of its Gross Domestic Product on health care, a larger share than any other developed country that keeps the stats. An average of $6,280 per person was spent in '04, for a total of $1.9 trillion! That may seem like a lot of loot, but just wait a few years. Not only are people living longer, but the percentages (2006) of people 65 or over who smoke, are in fair to poor health, and/or overweight are higher than any other age group. So, this elderly group, who is also widely uninsured or underinsured is going to really start piling up the national medical debt, not only soon, but for a longer period of time.

The life expectancy back in 1955 was just about 69 years, while the latest U.S. statistics show longevity has reached a new high, and that a child born in 2005 can expect to live to almost 78 years of age. Heart disease is still the leading cause of death, with cancer and stroke close behind, but the death rates for all of these killers is shrinking. Because of the reductions in these leading causes of death's numbers, a numbers cruncher with the National Center for Health Statistics says that "we should continue to see improvements in life expectancy." At an average of adding about 10 years every fifty, in a century, the average life expectancy for those lucky enough to be born in 100 years, may be about 100 years. Huh? Yes, just about anyone born in 2107 may live to see 2207. Whew, that seems like a long way off, at this point, we will be happy to make it another 6 weeks to welcome in 2008, and we bet Arnie would agree!

"There is a fountain of youth: it is your mind, your talents, the creativity you bring to your life and the lives of people you love. When you learn to tap this source, you will truly have defeated age." -- Sophia Loren

FHW
(* = FHW position)
fhwoption@hotmail.com

Thursday/Friday

Thu, 02 May 2013 17:04:37 -0400

Thursday/Friday, May 2/3, 2013, Rhinelander, Wisconsin/Chicago, Illinois, USA

Chicago? Weren't you supposed to be in Rhinelander all week? Yes, but a small fraternity reunion was called in Chicago, so along with Saturday's Cubs game at Wrigley, we will be meeting up with about 20 of our best old college pals. And, as we said last week, our blogs might be somewhat whacky, but so might this upcoming weekend! The SPUs (/ESM3*) closed at highs (again!), the metals were up big, and oil (/CLM3) also made a big move higher. 30-year bonds (/ZBM3) also closed higher - now easily over 149. Is 1600 in the SPUs, 1500 in gold, 95 oil, and 150 bonds in the near future? They hated the Linkedin (LNKD) news, but they liked cheesemaker Kraft Foods (KRFT). General Motors (GM*) made a big move and Microsoft (MSFT*) liked the day as well.
Have a great weekend.

"Why can't we trade on the weekends? I need to make some more money - baby needs new shoes." RQ (OEX pit circa 1986)

FHW
(* = FHW position)
fhwoption@hotmail.com

Snow White - in May?

Thu, 02 May 2013 08:51:58 -0400

Thursday, May 2, 2013, Prescott, AZ., USA

Three weeks ago, Thursday morning, the SPUs (/ESM3*) were trading in the 1583 range, this morning they are right around 1585, so despite all of the earnings and other ECB type news, they haven't really budged. The VIX did move up over 14, but nobody cares about that volatility index anymore. There has been a sell-off in some sectors, like the drug stocks, but most others have held steady or gone higher. The 30-year bonds (/ZBM3) after trading up to the 149 overnight are also stuck in a relatively tight range - just under that number after almost touching 150 on Monday. Oil (/CLM3) which was trading over $94 a couple weeks ago, dipped into the $90 handle yesterday and is now about $91.30, so again, no biggie. Apple (AAPL*), was trading about $438 on April 2nd and looks to open today in an old Oldsmobile fashion - about 442. The metals are still the talk-of-the-town, with gold (/GCM3*) and silver (/SIN3) trending higher, whith thankfully has our long delta SLV* positions looking much better. It is another big news day and a lot of earnings numbers are being released. Warren Buffett's Berkshire Hathaway took advantage of the recent rally in shares of Moody's (MCO) and sold 1.75M shares of the ratings agency's stock over the past three days at six-year high prices ranging from $59.93 to $60.94. Berkshire was the company's largest shareholder, and we would'nt be surprised to see some downticks in the stock now that Buffett has bailed. It seem like most folks are still using their credit cards, with MasterCard (MA) and Visa (V) both coming in with pretty good numbers, which might cause some upticks in those stocks.
The futures (/ESM3 8.25 to 1585.75) and gold are trading higher in the early morning session, but there are still two-weeks to go in the May monthly cycle, so not much to do other than some Wisconsin outdoor work - even though we might get a FOOT of snow in the next 24 hours!

Today is a busy day in the economic news front...
Challenger Job-Cut Report
International Trade
Initial Jobless Claims
Productivity and Costs
Bloomberg Consumer Comfort Index
EIA Natural Gas Inventory
Money Supply
Fed Balance Sheet

Notable earnings before the opening: ABMD, ACOR, ACT, AEE, ANR, ANSS, ARG, ARQL, ATK, AYR, BDBD, BDX, BEAM, BGCP, BZH, CAH, CEVA, CHD, CI, CME, CNP, CPN, CTRX, DIN, DNR, EL, ELNK, FIG, FLY, FNP, FWLT, GEL, GG, GIL, GM*, GNRC, GOLD, HAR, HK, HSH, INCY, INGR, IP, IRDM, IT, ITT, K, LF, LQDT, LXP, MDC, MFC, MGI, MGM, MMC, MMP, MWW, NIHD, NNN, NUS, OCN, OGE, OXF, OZM, PCG, PPL, PWR, PXP, RGLD, RNO, SBH, SFY, SHPG, SNI, SPR, SRE, STRA, TEVA, VMC, VRX, WNR, WPX, WWE, XEL.
Notable earnings after the close: ACLS, ACTV, ADNC, AGNC, AIG, ALSK, AREX, ARNA, ATHN, BBG, BCOR, BERY, BRKR, CBI, CNQ, DNB, DOLE, DRIV, EGO, ELON, ELX, FBHS, FLR, FLT, GEOS, GHDX, GILD, GMED, GTY, HAIN, HI, HMA, HTGC, INVN, KOG, KRFT, LNKD, MKH, MTZ, MYL, NBIX, NFG, NILE, NSR, ONNN, OPEN, PKT, PWER, QLGC, SKUL, SPF, SPWR, SWN, TDC, THOR, TPX, TSYS, TTMI, WTW, WWWW, XL, ZAGG.

"I used to be Snow White, but I drifted." -- Mae West

Have a great weekend.

FHW
(* = FHW position)
fhwoption@hotmail.com

May Day - sell AROUND May

Wed, 01 May 2013 09:30:48 -0400

Wednesday, May Day, Rhinelander, Wisconsin, USA

May Day! We are probably doing spring-time Wisconsin yard work because we can't put the pier in the lake with the ice yet to go out! And with over 2-weeks to go in the May monthly expiration cycle - a good time to be doing stuff around the summer home. We mentioned over a month ago how many short options positions had purposely been rolled out further-in-time, so the May cycle is not as important to us as many other expiration periods. No, we are not a believer in what many consider a relevant investment adage - "Sell in May and go away." Instead, we believe that the old phrase means something more like "sell AROUND May and go away." Which, in options terminology, might mean to skip a month-or-two, avoiding some possible earnings announcements, dividends, and the much anticipated summer doldrums.

So, "skip" we did, with many of our short series all the way out to September - especially in the lower priced underlyings, where sometimes going further out in time is needed in order to collect enough premium in the first place. Collecting premium is, after-all, what we have always done and what is THE most important element in our constant goal of inproving the annualized rate of return on our accounts. If selling a stangle on a $15 underlying a couple months out to collect 1.50 is needed, then by all means. DO THE MATH!
If you can collecct 1.50 a few times a year on a low cost stock that you totally understand and have some personal interest or relationship with - how do you NOT do that? Then, in a few years, it could be you at your summer home trying to get the boat in the water!

Have a great rest of the week.

"No, don't tell me you've got 1,000 of these damn little puts. I gotta buy 1,000?" "Yup, sold you 1,000 at a teenie." Frankie, I just gave away $6.25 a thousand times." (FVM and FHW in OEX 1987 - a day before the crash - he sold them crash day at $8,600.00 EACH)

FHW
(* = FHW position)
fhwoption@hotmail.com

Gold to 1500 / SPUs to 1500?

Fri, 26 Apr 2013 08:48:31 -0400

Friday, April 26, 2013, Prescott, Arizona, USA

Friday, Friday, Friday... the week after the monthly expiration, we are on our way to Chicago and Wisconsin and have nothing to say but adios. The markets will be here on Monday - from Chicago, and we have a ton of stuff to do before our weekend departure. No, this isn't the weekend of our 2,200 mile drive, we are just flying into Chicago, then driving up to Rhinelander for the week. The long drive will take place Memorial Day weekend, and we are still looking for some downticks in oil (/CLM3) to hedge that arduous trek. Although we do have long deltas in ExxonMobil (XOM*) and InterOil (IOC*), we usually also get long some form of oil to help offset the ridiculous gasoline prices.

Our positions look great, SPUs (/ESM3*) are lower, gold (/GCM3*) is higher, the alerts are set, and all we need is for the overall markets to either go up, down or stay stabile. Most of our underlying equities look relatively flat at these much higher levels, and a fairly strong overall sell-off would actually be nice. Can the SPUs reach down and test 1550? If so, can 1520 hold? How many stops will there be on both the buy and sell side at 1500? Actually, thanks to our "stuff" being relatively wide and out a couple months, we don't really care. Yes, THAT is one of the beauties of the options game!

Have a great weekend. We will be in Chicago and Rhinelander over the next week-and-a-half, so our daily blogs might be a little out-of-whack.

"If you wish success in life, make perseverance your bosom friend, experience your wise counsleor, caution your elder brother and hope your guardian genius." -- Joseph Addison

FHW
(* = FHW position)
fhwoption@hotmail.com

M-M-M- Metals moving higher!

Thu, 25 Apr 2013 09:04:32 -0400

Thursday, April 25, 2013, Prescott, AZ., USA

Two weeks ago, Thursday morning, the SPUs (/ESM3*) were trading in the 1583 range, they are now right around 1581, so despite all the crazy stuff that went on (can you say Twitter hack?), they haven't really budged. The VIX is still under 14, so even with just about everything at or near all time highs, there is still no panic to be seen. The 30-year bonds (/ZBM3) after trading up to the 148 are also stuck in a tight and higher elevation - just under 148 at this early hour. The soft commodities got totally beaten down over the last couple of weeks, but seem to have stablized or are moving higher, with Corn (/ZCK3), wheat (/ZW) and beans (/ZS) all looking marginally higher. Oil (/CLK3) was trading over $94 a week ago, dipped down to $88, but is now back to just under $92, and Natural Gas (/NG) has been hovering near $4 for quite some time. Apple (AAPL*), after Tuesday's earnings, traded like a drunken sailor yesterday - staggering all over the place, and although tagging the same spot it was last week (430 in the Tuesday after hours) is now back under $410 - looking to open higher than the 400 mark it was wrapped around all day on Wednesday. The banks and brokers are still stuck mostly higher, with the XLF* topping 18.50. Microsoft (MSFT*) has made an incredible move higher to almost $32, and might cross highs not seen in over a year. Intel (INTC) has also had a nice run - starting the month near $21, it looks like it might open near $23.80. The metals could be the story, however, and we can't remember a time when so many people were talking gold ((GCM3*), silver (/SIK3*) and copper (/HGK3) - all looking to open higher, and with gold trading as low as 1321 on 4/16, today's $1450 level is really impressive. Ain't that right JVP?! If the /SI contract can get over $25 you might hear some sreaming from Prescott, Arizona, as SLV is one of our largest long delta positions. This is one of the bigger days for news and earnings, so hang onto your hats and be careful.

Today is a busy day in the economic news front...
Initial Jobless Claims
Bloomberg Consumer Comfort Index
EIA Natural Gas Inventory
Kansas City Fed Mfg Survey
Results of $29B, 7-Year Note Auction
Money Supply
Fed Balance Sheet

Notable earnings before the opening: ABC, AIXG, ALK, ALXN, AME, ASPS, AVT, AZN, BC, BG, BIIB, BLL, BMS, BMY, BSX, BWA, CAB, CAM, CCE, CELG, CFX, CL, CMS, CNX, COP, CRR, CSH, D, DAN, DLX, DNKN, DO, DOW, DST, EQT, ESI, ETR, FAF, GPK, GTI, GTLS, HERO, HOG, HP, HSY, IDCC, IMAX, JBLU, KKR, KMT, LEA, LINE, LKQ, LLL, LUV, LVLT, MDP, MJN, MMM, MO*, NBL, NLSN, NMM, NYT, O, ODFL, ORI, OXY, PCS, PDS, PH, PHM, POT, PRLB, PTEN, PVR, RCL, RDWR, RRD, RS, RTN, RYN, SCG, SIAL, SUI, SWK, SWY, TASR, TSRA, TWC, UAL, UPS, UTHR, WBC, XOM*, YNDX, and ZMH.
Notable earnings after the close: AEM, ALTR, AMCC, AMKR, AMZN, BIDU, BJRI, BLDR, BMRN, CALX, CAMP, CB, CBG, CENX, CERN, CINF, CLWR, CRUS, CSTR, CTCT, DECK, DLB, ELY, EMN, EXPE, FII, FR, FSL, GERN, IGT, IM, INAP, INFA, KBR, KEG, KLAC, LEG, MCRS, MXIM, N, NR, NTGR, OLN, PFG, PKI, PMCS, QLIK, RMD, RRC, RSG, SBUX*, SIMO, SPN, SWKS, SYNA, TCO, THRX, TLAB, UHS, VPRT, VRSN, WRE, WYNN.

There is a Market Drive event on Saturday in Atlanta - still time to sign up - go to www.tdameritrade.com/registerformarketdrive.

"The greatest part of our happiness or misery depends on our dispositions and not on our circumstances." -- Martha Washington

FHW
(* = FHW position)
fhwoption@hotmail.com

Invest long term

Wed, 24 Apr 2013 09:01:25 -0400

Wednesday, April 24, Prescott, Arizona, USA

We are preparing for our trip to Chicago and Rhinelander, beginning this weekend, so our daily blogs might be somewhat sporadic over the coming couple of weeks. Speaking of travel...the flights weren't cheap, the motel rates in Chicago were also near all-time highs, and the rental car - well, we all know how they "get ya" on those! If you haven't traveled recently and you have any receipts from past trips, compare the prices on airline and lodging websites - you might be surprised to find at least 30% - 50% hikes in most travel expenses. This could be why just about anyone in the travel business is doing very well - at least their stocks have been!

We haven't had a plain old Hotel and Motel position in quite some time (other than being in one overnight), and a couple of our favorites might be in play. Marriott (MAR) and Starwood (HOT) have been in our portfolio before, but not recently - we may have to give them another look. We do have a few positions in Las Vegas Sands (LVS*), and of course there are the airline plays (DAL* and RJET*), so we are "in" the travel and leisure industry. We also look at our very long-term long stock / short strangles positions in Exxon Mobil (XOM*) and InterOil (IOC*) as kinda/sorta travel and leisure plays, but also as one of our mandatory oil and/or dividend collecting positions in the long-term portfolio.

We think every investor should have a "stable" of stabile stocks and every-single-one of them should be of interest to that particular long-term investor. We can't stress enough how important it is, over the long haul, that if each individual investor only invested in underlyings that pay a dividend, have options, and are somehow connected to their personal life, they would be fine! We of course don't know anyone's risk tolerance, goals, or time frames, but unless you are almost on your death bed, there is still time to make some long-term investments. As we always stress; check the stack of bills on your desk, your kitchen and bathroom cabinets, your garage, your telco devices, how your kids spend their time and your money, the stores you frequent most, etc., THAT is as good-a-place to start as any.

"Common sense is not so common." -- Voltaire

FHW
(* = FHW position)
fhwoption@hotmail.com

Earnings Tuesday Tidbits

Tue, 23 Apr 2013 09:08:11 -0400

Tuesday, 04/23/13, Prescott, Arizona, USA

- Yes! The NBA playoffs - finally professional basketball games that we might be interested in watching, the NHL playoffs start soon also, and the NFL draft begins Thursday night - good thing, because we just can't get into baseball just yet...
- The SPUs (/ESM3*) have been all over the place in the early morning session, trading as low as 1548.75 and up just over 1564 - they are now in the 1561 handle, and we will see if they can stay over 1560 or sell-off with some of the big-time earnings numbers being released. Last week, at this time they were hovering just under 1560 - so even with all the short term swings they are just about where they have been for quite some time. The VIX has also been stuck, and although it did pop higher as the SPUs dropped to almost 1530 last Thursday, they are back under 15. The 30-year bonds (/ZBM3*) were over 148 last week, and they too look to open where they have been, we just wonder if 150 will soon be seen. Once again, the metals were the big movers over the last few days, with Gold (/GCM3*) struggling near 1,355 at this time last week, but now back over 1,400 - currently trading at 1416.50 (6:00 AZ time). Oil (/CLM3) looked like it wanted to see 90, but is off by almost a buck this morning - trading just over 88.15, just about where it was last week, so we have yet to take our cross-country drive / long oil hedge. All of the "soft" commodities have been stuck in a relative range all week, with Corn (/ZCK3), wheat (/ZWK3) and soybeans (/ZSK3), about unchanged from last week's prices. Apple (AAPL*) ended last week near $385, but has rallied looking to open somewhere north of $402. The earnings announcements being released both before the open and after the close might make for some interesting movement in many of the big name underlyings. Please check out the list below and if you have any positions in an announcing firm make sure you are prepared. Not only if you are "in" one of the stocks releasing their numbers, but if you have positions in the same industry - you should also take note. Netflix (NFLX) came out with great numbers after Monday's close and popped up big time after hours, we hope you are long because it is trading up over $40.00.

Today's Economic News:
ICSC Retail Store Sales
Redbook Chain Store Sales
PMI Manufacturing Index Flash
FHFA House Price Index
New Home Sales
Richmond Fed Mfg.
Results of $35B, 2-Year Note Auction

Some of today's notable earnings - before the opening: ACI*, AKS, AOS, APD, ARMH, CIT, CNC, COH, DAL, DD*, DFS, EAT, ECA, FMER, FRX, GCI, GNTX, IDXX, IIVI, IR, IRWD, ITW, JCI, JNS, LCC, LECO, LMT, LXK, MOLX, PCAR, PCH, PII, PMT, PNR, R, RAI, RF, RSH, SNV, ST, TRV, UTX, WAT, XRX.
Some of today's notable earnings - after the close: AAPL*, ACC, AMGN, AWAY, BCR, BRCM, CREE*, DV, EW, FBC, FTI, HA, HBI, HLIT, HTS, IRBT, ITC, JNPR, LIFE, NBR, NFX, NSC*, OI, OII, OMI, PACB, PLCM, PNRA, RFMD, RHI, T, UIS, USNA, VMW, WRB,YUM, ZIXI.

"You have to be very careful if you don't know where you are going, because you might not get there." -- Yogi Berra

FHW
(* = FHW position)
fhwoption@hotmail.com

Summertime - get ready

Mon, 22 Apr 2013 08:56:29 -0400

Monday, April 22, 2013, Prescott, Arizona, USA

April monthly expiration has come and gone, and the old investment adage "sell in May and go away" should now be not only quoted but acted upon. No, no, no, we do not feel that it is time to get out of all positions or to get naked short, but being in the options "game" for over 35 years, we feel the oft-mentioned saying means to avoid the summer from an options standpoint - which of course would be to sell "stuff" further out in time. Pick your poison, but if the usual monthly straddle is sold, that might be adjusted to a couple buck wide strangle - possibly (because of the time factor) at about the same price - but with more room for the undlying to move. If it is a monthly two to three buck wide strangle that is usually sold (to open), then perhaps widen that out another buck-or-two on each side - once again for perhaps about the same amount of credit (time premium).

Doing this can also be somewhat more directional, in that if the underlying has had an incredible run-up, like most have, you might sell the calls a little closer to the underlying price and the puts a little further out (in price). So, for instance, if your stock has gone from 15 to 25, and seems to be running out of steam, you might sell the 27 calls and the 21 or 22 puts - giving you two bucks to the upside and three - four to the downside. Whatever you are most comfortable with, and returns enough premium to make it worth doing. What month? Once again, some might be Julys some all the way to Octobers; whatever keeps your sleep habits similar, and adds enough premium to keep your annualized rate of return goals in line.

Setting up your summer-time stuff in this fashion, and setting alerts on the underlying somewhere close to the short strike prices on both sides, will also allow more time for your golf game, fishing, boat or bike rides, travel, yard work, tennis, or whatever way you enjoy this wonderful time of year. There are oftentimes more days of very little overall market movement (read: doldrums) in this two to four month time frame, and what better way to take advantage of that than to simply avoid it and spend some quality family fun time. Remain diligent and be careful with short calls if there is a dividend inside the summer period, always making sure that the dividend amount is less than the value of the same strike puts and/or that there is more extrinsic value in the short call. And always remember, the positions should STILL be checked at least once a day. But, with all of the mobile capabilities of thinkorswim (AMTD*), this can be done from out on the lake or on hole #4's tee-box - don't ask us how we know that!

"Live each day like it was the first day of your honeymoon and the last day of your vacation." -- Anonymous

FHW
(* = FHW position)
fhwoption@hotmail.com

Friday 4/19/13

Fri, 19 Apr 2013 09:03:39 -0400

TGI Friday, April 19, 2013, Prescott, Arizona, USA

Whew - we are glad that is over! What, April Expiration? Nope. What then? HELLO - can you say T-A-X? Most Americans pay about 10% of their income on state and local taxes. In some states, however, the local tax burden can differ dramatically. In some U.S. states, the tax burden on some residents, based on their income, has been rising substantially. And, as highlighted recently by the varying amounts paid by profession athletes (Joe Flacco and Phil Michelson in particular), the difference from state to even relatively close states (sometimes neighboring) can be incredible.

Oddly enough, the most salient fact in how much each state demands in taxes from their residents is how much cash it brings in from outside the state. No, we aren't talking about trading up for a better quarterback or luring a PGA player! For instance, the states with the lowest in-state resident tax bases, such as Alaska, Wyoming and Louisiana, are the very same ones with large oil or some strong mineral resources. Those states collect more than 46% of their "taxes" from outside sources. While sales and excise taxes along with out-of-state corporate taxes have the potential to "export" a certain percentage of the state's tax burden to out-of-state people, for the vast majority of states, it is still property tax, income tax, and sales taxes that are more likely to fall on residents and pay the lion's share of the state's debt load.

So, bottom line, the states with the highest tax burden on their residents are the ones that are not capable of exporting their tax load, but these states are also generally high-tax states anyway. And some of the states with the lowest in-state taxes but without any way of exporting their tax load are low simply because of smaller debt, which comes with smaller population bases. Not only are the lower taxing states smaller in residents, but they also have smaller governments - which include smaller state run dependency programs. Among the five states, for example with the lowest tax burdens, three are also in the bottom 15 for total tax collections relative to population, simply because they run with smaller governments and pay-out less to their residents in state freebies.

If deciding a move from one state to another, and unless you are a sports super-star where you are traded from one low taxable state to another; choose your state wisely. The old successful motel quotation about "location, location, location" might be adjusted to "location, taxation, location."

"To succeed, jump as quickly at opportunities as you do to conclusions." -- Benjamin Franklin

Have a great weekend.
Follow us on Facebook (FB*)-- http://www.facebook.com/frank.walsh.169
Or like us on Twitter-- https://twitter.com/WhatsFrankThink

FHW
(* = FHW position)
fhwoption@hotmail.com

What's in a name?

Wed, 17 Apr 2013 08:58:33 -0400

Wednesday, April 17, 2013, Prescott, Arizona, USA

What's in a name? A reprint from 2011...
Talking to an old Chicago pal's mom over the holiday, she mentioned that she bought her turkey at the local A & P, to which our 17-year old heir-to-the-mortgage questioned "is that anything like an A & W?" Of course these company names got our wandering mind wondering, and we figured - why not grab a laptop and check-out where some company names came from.The A&P and A&W names were already known to us as coming from the Great Atlantic and Pacific Tea Company, and of course the famous root beer drive-in name came from founders Roy Allen and Frank Wright. Delving into various online sources, we literally found tens of millions of Google possibilities, so we had to narrow it down to interesting companies, even some with which we have positions (*) and some that are long-gone, but still with interesting etymologies.

3Com (3COM) - their 3 "coms" were Computer, Communication and Compatibility, acquired by HPQ.
Adidas (ADDYY) - from the name of founder Adolf (Adi) Dasler
Adobe Systems (ADBE) - from the Adobe Creek running behind the house of co-founder John Warnock
Apple Computer (AAPL*) - either for Steve Jobs favorite fruit or one of his early jobs working in an apple orchard.
BHP (BHP) - Broken Hill Property, named for the town, Broken Hill, Austalia, where it was founded.
Cadillac (GM*) - named after French explorer, Antoine Laumet de la Mothe, sieur de Cadillac - the founder of Detroit.
CVS (CVS) - Customer, Value, Service
eBay (EBAY) - founder Pierre Omidyar thought echo bay sounded cool, but the name was already in use by Echo Bay Mining
EMC (EMC) - not after founders Egan and Marino, but for Einstein's E = mc2
Google (GOOG) - an original misspelling of the word googol, to show the company's goal of its immense amount of online info.
Groupon (GRPN*) - short for Group Coupon
InBev (BUD) - like a corporate black & tan combination of Belgian Interbrew, Brazilian Ambev and Budweiser
Intel (INTC*) - Integrated Electronics
Kinko's - (FDX) - named after founder, Paul Orfalea's curly red hair (bought by FedEx in 2004)
Kroger (KR) - after founder Barney Kroger
Microsoft (MSFT*) - coined by Bill Gates for microcomputer software.
Nabisco - National Biscuit Company
Nike (NKE) - the Greek goddess of victory
Pepsi (PEP) - after the digestive enzyme pepsin
Reebok - alternate spelling of an African altelope - rhebok
Sprint (S) - from its parent company Southern Pacific Railroad Internal Communications
Starbucks (SBUX*) - after either Starbo, a mining camp north of Seattle, or a character, Starbuck, in Moby-Dick
Sun Micro (SUN) - Stanford University Network
Taco Bell (PEP) - after founder Glen Bell
Volvo (VOLVY) - "I roll" in Latin, Volvo was formerly a ball bearing maker
thinkorswim (AMTD*) - you will have to ask founders Tom Sosnoff and Scott Sheridan

"What's in a name?" "A lot's in a name - especially when it's something like 'Goofy'" -- GUR and RQ (OEX pit circa 1988)

FHW
(* = FHW position)
fhwoption@hotmail.com

Tuesday's Tidbits

Tue, 16 Apr 2013 09:18:38 -0400

Tuesday, 04/16/13, Prescott, Arizona, USA

- Our thoughts and prayers are with all the families affected by the cowardly Boston Marathon bombing, and we are thankful that the TD Ameritrade team that was in Boston last weekend for the Market Drive event all made it home safe and sound.
- The SPUs (/ESM3*) have been trying to recover from Monday's downticks and are relatively strong in the pre-market currently (6:00 AZ time) in the 1558 handle. At this time last week they were wrapped around 1560, so despite the moves of the last week, they have been stuck in a relative range for about a month. The VIX popped on the sell-off and after being under 13 moved all the way up to test the 18 level. The 30-year bonds (/ZBM3*) were over 148 on Monday, but have dropped to the mid 147 handle overnight and are now trading right around that number, this too is right where they were last week. The metals were the big movers over the last few days, and the stories abound with why they were sold at record breaking rates. Gold (/GCM3*) which was trading near 1575 last week dropped all-the-way down to 1321 - on huge volume, and Silver (/SIK3), which was as high as 32.00 to begin the year, dropped to the 22 level, but both are in full rally mood this morning - gold is up 35 bucks and silver could open near 24.00. Oil (/CLK3) was over 97 just two weeks ago, but has also gotten severely beaten down and looks to open even lower this morning - somewhere near 88.50. We have yet to take our drive-across-the-country gasoline hedge, but might sell some oil puts very soon. All of the "soft" commodities have also been beaten down, with Corn (/ZCK3), wheat (/ZWK3) and soybeans (/ZSK3), all losing ground from last week, but possibly opening slightly higher this morning. Apple (AAPL*) was near 426 at this juncture last week, and dropped under 420 on Monday, but it too looks to open higher - somewhere near 422.50. Old time favorite, and one of the first CBOE pits that we traded in, Johnson & Johnson (JNJ) came in with better results and the stock looks to open higher, and after having been in the 62 range in mid-2012, today's opening over $82 is indeed amazing. (Sorry Jeff B.)

Today's Economic News:
ICSC Retail Store Sales
Consumer Price Index
Housing Starts
Redbook Chain Store Sales
Industrial Production
Fed's Duke speaks at American Banking Association
Fed's Kocherlakota: ''Improving the Outlook with Better Monetary Policy'
Janet Yellen discussion on Monetary Policy

Today's notable earnings: AMTD*, BLK, CMA, CSX, GS, GWW, IBKR, INTC*, JNJ, KO, LLTC, NTRS, URI, USB, WWW and YHOO.

"What's wrong with this world is that a few sick individuals can have such a devastating impact. What's right with this world is that there will always be more who run towards the the havoc they wreak than away from it." -- Anonymous

FHW
(* = FHW position)
fhwoption@hotmail.com

Tax day and St. Patrick?

Mon, 15 Apr 2013 08:57:48 -0400

Monday, April 15, 2013, Prescott, Arizona, USA

Tax day, tax day, tax day... alright, enough already about taxes, we just wish we had paid the tax bill in gold and/or silver! The corporate stuff was already sent in a month ago (gold was at $1600) and the usual yearly extension stuff or payments have been sent in again this year - so not to worry. It has now been a month since St. Patrick's Day, and yes we are fully recovered from that Irish time of happiness AND the tax crap! Although it is monthly expiration week, we don't really have anything to talk about in the options rolling world. So, looking back to St. Pats, we always think of one of our all-time favorite St. Paddy's Day people; other than our father, U.S. Irishman - President Ronald Reagan. And, considering it is tax day, we are looking for something to smile about anyway, so ...

It was back in 1988 that then President Reagan paid an unexpected St. Patrick's Day visit to a popular local Irish pub, Pat Troy's in Alexandria, Va. President Reagan and his entourage arrived shortly before noon, where he enjoyed a Harp beer and some home made corned beef and cabbage. Saloon owner, Troy, stated "He had an energy about him that put you instantly at ease." Despite his age and being the most powerful man in the world, who took down Communism while restoring American optimism, he still had a youthful innocense, finding pleasure in the young bar patrons acting out 'The Unicorn Song'".

The President took the microphone before leaving the Irish tavern and told this story: "When I was a little boy, my father proudly told me that the Irish built the jails in this country," pausing like a story telling pro. "Then they proceeded to fill them." When the uproarious laughter quieted down, he also spoke of a recent trip he had taken to Ireland in which he passed a cemetery where he saw an ancient tombstone with an inscription that read; "Remember me as you pass by, for as are you so once was I, and as I am you too will be, so be content to follow me." As he paused, he then said; "Then I looked below the inscription, where someone had scrached in these words: "To follow you I am content, I wish I knew which way you went." The crowd roared, to which Mr. Reagan said: "Why didn't I find this place seven years ago?"

Smile, even as you drop your IRS envelope in the mail box, think of something funny, like a quote from America's greatest Irishman; President Ronald Reagan...
"There are no constraints on the human mind, no walls around the human spirit, no barriers to our progress except those we ourselves erect."
"We don't have a trillion dollar debt because we haven't taxed enough; we have a trillion dollar debt because we spend too much."
"The most terrifying words in the English language are: I'm from the government and I'm here to help."
"Freedom is never more than one generation away from extinction."

FHW
(* = FHW position)
fhwoption@hotmail.com