Sunday/Monday, June 16/17, 2013, Washington, DC. USA

Monthly expiration Monday, and usually at this point in the cycle we have either already rolled, have covered way out-of-the-moneys, or are somewhat frantically entering rolling and/or closing orders, with expiration week always our busiest of the month - just for over 3 decades! But this month is slightly different in that there are very few June monthlies on our sheets and for the last several days we have been in Wisconsin, Illinois, Indiana, Ohio, Pennsylvania, New Jersey, New York, Delaware, Maryland, Virginia and the District of Columbia. Whew - tomorrow and Tuesday it will be much of the same but in the other direction. Our east coast golf tour will be over by expiration Wednesday.

If you remember a couple of months ago, sometime in either April or May, we mentioned that the old adage "sell in May and go away" actually meant sell "around" May and go away. By this we meant to sell premium sometime further out in time and possibly even in price, with one of the main objectives of avoiding the summer doldrums. Another reason, this summer, was we knew that we would be taking at least two of these extended trips - taking the heir-to-the-mortgage to some places that he has never been. The US Open golf tournament outside Philadelphia was great, New York City was crazy, D.C. is under construction, and every place we stopped was as busy as possible - even finding it difficult at many spots to get motel rooms and/or tee times!

Yes, there are some June monthlies that will have to be acted on - Apple (AAPL*), General Motors (GM*), Groupon (GRPN*), InterOil (IOC*), Pilgrims Pride (PPC*), Sina (SINA*), iShares Silver (SLV*) and Youku (YOKU*), but these are all basically either too "juicy" on a month-over-month basis or too low in price to avoid any one month. Our overall goal is to maximize the annualized rate of return (ROR), and even if our short-term plan of avoiding a certain time frame; whether for stock reasons (like a dividend) or time reasons (summer), the main objective of ROR still supercedes our somewhat lazy reason to avoid the nice weather months. I guess this means we are such a believer in options premium and positive theta (read: greedy) that being a portfolio fair weather fan is usually out-of- the-question. That is unless we can achieve a similar price by skipping a month or two with a slightly wider strangle sale.

In this market you absolutely must keep your eyes on the goal, although sometimes, if you can achieve similar gains, you can move the target back slightly in both time and price. Your game plan and parameters are key, and sticking to them is mandatory. But, it is just as important that you give yourself enough latititude to travel, sleep at night, and enjoy your life. And what better time than summer? Now where are those AAPL June 450 calls?

"Where you going this weekend?" "New York." "Why New York?" "I need a good corned beef Reuben." -- KCH and BAM (OEX pit circa 1986)

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

Wednesday, June 12, 2013, Rhinelander, Wisconsin, USA

"What about the rest of the chicken?" We heard a youngster ask at a recent Fisher's Wing Night, and of course that got our whacky mind a-workin'. If there are two wings per chicken and Buffalo Wild Wings (BWLD) sells millions of wings per year, what ABOUT the rest of the chicken? Okay, there are probably a few million other dining establishments and taverns that sell some wings - whether barbecued, fried, boneless, hot or mild, there are a lot of "joints" - so to speak, that offer wings. But with over 40 BILLION chickens "produced" annually, does that mean someone is eating 80 billion wings? Holy Tabasco Sauce Batman, did he really say 40 BILLION?

Going to some chicken industry websites we found that at any given time there are about 30 billion "broilers" alive worldwide; 60% of those in China, Brazil and the U.S., and this count is increasing about a billion a year. At the same time, there are also about 5 billion egg-laying hens worldwide, with China and the U.S. having the largest amount of these "squawkers". Of course now we are wondering about the chicken and the egg - which does come first?... Anyway, back to BWLD; where they don't serve eggs, the chicken obviously comes first, and second, etc...

But this chicken website is so interesting... Who knew the average wild hen produces about 30 eggs a year, but the ones raised by the chicken industry are good for about 300 per year. Wow, that is some up-tick in egg production. The problem is the company-owned hens get exhausted (do you blame them?) and go to slaughter after only one year, wherein a new egg-laying hen cycle begins with replacement hens. The exhausted hens, about 5 billion of them, usually end up in pet food (don't tell our dogs). And if you do the big egg math, it means about 50 - 60 million tons of eggs are produced annually. So, next time you are having eggs for breakfast or feeding your pets some chicken based food, just think of the hens that gave their all for you - and they only had one year to "enjoy" their little coop.

Okay, talking chickens, where is Pilgrims Pride (PPC*)? Yes, we have a chicken position, and yes we know we are leaving a bunch of cheap shot opportunities out there, although it may only be our Chicago friends who know what we mean by "cheap shot". Everyone else right now is wondering, cheap chicken, shot of soup, egg in your face - what is FHW talking about?? Anyway, we do know our chicken facts and still like PPC, and the recent (6/7) "flight" of over 2.00 was tastier than the wings at Legend Larry's in Sheboygan, Wisconsin! So, we eat a lot of chicken, but we also eat a lot of ham (apologies to our Jewish and vegetarian friends), but we also like their stuff and the stock of Smithfield Foods (SFD*), after having traded it for years and enjoyed at least as much of their savory pork products - we consider ourselves somewhat of an expert. Not quite as expert as thinkorswim's AMTD*) Steve Quirk, but we still know and trade our favorite food products.

Okay, time for breakfast - how about, you guessed it, ham and eggs anyone. How about a coffee? Starbucks (SBUX*) - maybe some other day.

"Let's go to lunch." "Are you kidding, I gotta get outta this put spread or I might get sick even thinking about food." JMY and GUR (OEX pit circa 1987)

We will be traveling to the east coast over the next week, so our daily missives might be missing. Remember you can like us on Facebook (https://www.facebook.com/frank.walsh.169) or follow us on Twitter (whatsfrankthink).

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

Tuesday, 06/11/13, Rhinelander, Wisconsin, USA

- The SPUs (/ESM3*), are trading well off of their closing price, looking to open somewhere between 1625 - 1640, but that is just about where they were last week (1640). We had an order in overnight to cover one of our short SPUs and were filled (at 1626.50) while we rode the bike at the downtown Rhinelander Anytime Fitness this morning (there is your plug Sue!). The real story is the 30-year bond (/ZBU3), as it has fallen dramatically and could even get into the 137 handle today, down from almost 150 at the end of April. The metals have been relatively flat, although all of the commodities have taken some big short term swings - corn (/ZCN3) for instance was as high as 674 on 6/7 and as low as 648 yesterday and is now hovering near the 650 level. Oil (/CLN3) has also had some big moves - trading almost 97 on 6/7 but now trading in the mid-94 range. Perhaps the price at the pump will downtick for our upcoming drive to the east coast. 
- LuluLemmon (LULU*) is the big news story this morning, and the stock could open down about $15 from yesterday's highs of 85. The after-hours sellers came out strong after the company announced earnings that beat expectations, but also the departure of CEO Christine Day. Hold onto your Yoga pants if you have a position in the sports apparel outfit, because today might be a volatile one.
- The recent sell-off in oil and gas might also take some of the energy firms lower - look for some selling in Exxon (XOM*), Conoco (COP), Chevron (CVX), and the USO. But someone likes pineapples, as Dole Food (DOLE) could open over $2.00 higher after the big cheese at the firm, David Murdock - no relation to Rupert, offered to take the company private, while Apple (AAPL*) looks lower on the opening.

Today's Economic News:
NFIB Small Business Optimism Index
ICSC Retail Store Sales
Redbook Chain Store Sales
Wholesale Trade
Results of $32B, 3-Year Note Auction

We will be driving to the east coast and spending about a week away from our desk, so our daily missives might be missing. The US Open at the historic Merion Golf Club in Ardmore, PA., will be one of our stops, so look for the heir-to-the-mortgage and this old guy on TV. Is this really our first vacation in years? We wouldn't really call it a vacation, just a brief get-away. We will still be watching the markets and possibly even making a few trades. The current SPU contract (M3 or June), in fact will be flipping inside 10 days, and when the volume strarts to go to the September cycle (U3) - that will be the time to roll.

"Oy, what do I do with these short 210s?" "Just shut up and roll 'em." -- GUR and BAM (OEX pit circa 1986)

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

Monday, June 10, 2013, Rhinelander, Wisconsin, USA

As most of you know, our Rhinelander neighbor is an independent Caterpillar (CAT*) salesman who loves to talk history - especially the amazing facts of his firm. Coal equipment is a big part of CAT, and some of the pictures he has of the huge machines that move the combustible mineral substance consisting of carbonized vegetable matter are incredible. Along with CAT, we actually have had a long-term position in one of CAT's mining customers for years - Arch Coal (ACI*).

It isn't often that our stock purchase prices range as dramatically as they do in  ACI, but the initial long stock (2012) of $9.00 and subsequent buys in the $4.00 to $5.00 area have cut the average price down as much as the naked short call and put options that have been sold over the last 18 months. Although the price of our actual stock might still be right at the breakeven levell, as long as the underlying stays in a relative range and we can roll the straddle and/or strangle every month for .30 to .60 cents - it's a no brainer. The stock's dividend has been all-over-the-place when it comes to the amount, but the 2.5% yield is still appreciated, and when added to the options premium, it makes for a great annualized rate of return. As we figure it, sometime in the next few months, we will own the underlying for a net credit, then won't care what the stock price does - as long as we can continue to sell premium and collect the small dividend.

Arch Coal is a top five global coal producer, with over 140 million tons of coal sold in 2012, so the price of the underground substance is one of the keys to it's stock price. ACI represents 15% of America's total coal supply from mining complexes in eight states, controlling 5.5 billion tons, with about 70% of those reserves in the low sulfur variety. Arch was formed in 1997 via a merger of publicly traded Ashland Oil and privately held Arch Mineral, which was originally a partnership between Ashland and the now famous Hunt family of Dallas, Texas (can you say silver speculators?).

Since its formation, Arch Coal has been in a major acquisition mode, moving from mostly an Eastern producer to a national one, with purchases from the likes of Atlantic Richfield and Thundercloud (Wyoming), Knight Hawk Coal (Illinois), Otter Creek (Montana), and after taking over mines from Rio Tintos, now the largest coal outfit in Wyoming's giant Powder River Basin. ACI is now one of the largest worldwide suppliers of coal to the steel and power generating industries in 25 countries on five continents.

So, yes, we do like to own market leaders that we have some personal relationship with (Wisconsin neighbor Tim F.), pay a more-or-less typical industry wide dividend, and have enough "juice" in their options to make for a good return on monthly (sometimes quarterly) rolls. Because we all personally use so much of it, a diverse long-term portfolio should have some energy involvement, and along with our Exxon Mobil (XOM*), InterOil (IOC*), Petrolio-Brasiliero (PBR*), Nextera (NEE*) and Integrys (TEG*) positions, Arch Coal fits in nicely. Not to mention in a few months our net price will be $0.00!

"Profits on the exchange are the treasures of goblins. At one time they may be carbuncle stones, then coals, then diamonds, then flint stones, then morning dew, then tears." -- Lope de Vega

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

Monday, June 10, 2013, Rhinelander, Wisconsin, USA

As most of you know, our Rhinelander neighbor is an independent Caterpillar (CAT*) salesman who loves to talk history - especially the amazing facts of his firm. Coal equipment is a big part of CAT, and some of the pictures he has of the huge machines that move the combustible mineral substance consisting of carbonized vegetable matter are incredible. Along with CAT, we actually have had a long-term position in one of CAT's mining customers for years - Arch Coal (ACI*).

It isn't often that our stock purchase prices range as dramatically as they do in  ACI, but the initial long stock (2012) of $9.00 and subsequent buys in the $4.00 to $5.00 area have cut the average price down as much as the naked short call and put options that have been sold over the last 18 months. Although the price of our actual stock might still be right at the breakeven levell, as long as the underlying stays in a relative range and we can roll the straddle and/or strangle every month for .30 to .60 cents - it's a no brainer. The stock's dividend has been all-over-the-place when it comes to the amount, but the 2.5% yield is still appreciated, and when added to the options premium, it makes for a great annualized rate of return. As we figure it, sometime in the next few months, we will own the underlying for a net credit, then won't care what the stock price does - as long as we can continue to sell premium and collect the small dividend.

Arch Coal is a top five global coal producer, with over 140 million tons of coal sold in 2012, so the price of the underground substance is one of the keys to it's stock price. ACI represents 15% of America's total coal supply from mining complexes in eight states, controlling 5.5 billion tons, with about 70% of those reserves in the low sulfur variety. Arch was formed in 1997 via a merger of publicly traded Ashland Oil and privately held Arch Mineral, which was originally a partnership between Ashland and the now famous Hunt family of Dallas, Texas (can you say silver speculators?).

Since its formation, Arch Coal has been in a major acquisition mode, moving from mostly an Eastern producer to a national one, with purchases from the likes of Atlantic Richfield and Thundercloud (Wyoming), Knight Hawk Coal (Illinois), Otter Creek (Montana), and after taking over mines from Rio Tintos, now the largest coal outfit in Wyoming's giant Powder River Basin. ACI is now one of the largest worldwide suppliers of coal to the steel and power generating industries in 25 countries on five continents.

So, yes, we do like to own market leaders that we have some personal relationship with (Wisconsin neighbor Tim F.), pay a more-or-less typical industry wide dividend, and have enough "juice" in their options to make for a good return on monthly (sometimes quarterly) rolls. Because we all personally use so much of it, a diverse long-term portfolio should have some energy involvement, and along with our Exxon Mobil (XOM*), InterOil (IOC*), Petrolio-Brasiliero (PBR*), Nextera (NEE*) and Integrys (TEG*) positions, Arch Coal fits in nicely. Not to mention in a few months our net price will be $0.00!

"Profits on the exchange are the treasures of goblins. At one time they may be carbuncle stones, then coals, then diamonds, then flint stones, then morning dew, then tears." -- Lope de Vega

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

Friday, June 7th, 2013, Rhinelander, Wisconsin, USA

If any of you have ever been up to the great Northwood's of Wisconsin you will understand our plight...It looks to be a perfect late Spring/early summer day in Rhinelander; the birds are chirping and there are a few deer prancing around in the front yard. There are still a lot of start-of-summer chores to do, now that the rest of the family has finally arrived, and maybe we can even get the young heir- to-the-mortgage to help.

Most of the options on out account sheets are out in the Sept or Oct monthly cycles, and it has been a long week - especially with all of Thursday's incredible movement. We are going to wait untill the non-farm payroll numbers come out at 7:30 Central time, and we will be in the Swim Lesson Chat room from 10:30 - 1:30 as well, but the hours wrapped around that may find our thoughts leading to some yard work - if the rains hold off, and maybe even a boat ride.

The SPUs (/ESM3*) are about unchanged, gold and silver look lower while oil has moved higher and is now trading over 95. The 30-year bond (/ZBU3) is flat and trading near 141, while the greenback dollar (/DXM3) continues to be in the red. The grains, corn, wheat and beans are all higher and Natural Gas (/NG) is slightly higher, but still well under that $4.00 level.

Have a great weekend, and be careful out there with Big Brother possibly watching your every move - or at least your phone calls and social sites.

"If the unemployment numbers are good, the explosion you hear might be your delta." -- BAM (OEX crowd circa 1988)

Have a great weekend.

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

Thursday, 6/6/13, Rhinelander, Wisconsin, USA

- Three weeks ago on Thursday morning, the SPUs (/ESM3*) were trading near 1650, and the same can be said for last week, as we prepared to make our 2,100 mile drive across the country - the SPUs were hanging near the 1650 number only to be smacked down to 1625 on Friday. They have been bouncing around a bit, which is good for premium sellers (read: us), and this morning they are trading about 1610 - 1615 in the early morning hours. Gold (/GC) is hanging near 1400 and our favorite Silver iShares Trust (SLV*) has been bumping 22 for what seems like forever. The 30-year bonds (/ZBU3) have also been stuck in a relative range - trading between 140 and 141 since the month of June began. Corn, wheat and beans are all looking lower, while crude oil (/CL*) has been bouncing between 91 and 95 for a few weeks. Despite oil being relatively flat, gas prices in the midwest are at or near all time highs, with unleaded 87 Octane selling for $4.14 here in the Northwood's of Wisconsin, and closer to $4.50 in Chicago. Anyone else angry about the price at the pump or your escalating utility bills? Remember there is a way to ease your energy pain and that might be to own a few shares of one of the major energy firms - especially if they pay a dividend. We currently have positions in Exxon (XOM*), Petrobras (PBR*), Integrys (TEG*), Nextera (NEE*),  and InterOil (IOC*) - if you can handle some incredible volatility, the monthly rolls in IOC are a thing of beauty!

Today is a busy day in the economic news front...
Chain Store Sales
Challenger Job-Cut Report
Initial Jobless Claims
Bloomberg Consumer Comfort Index
Quarterly Services Report
EIA Natural Gas Inventory
Money Supply
Fed Balance Sheet

Notable earnings:  ANN, BRLI, CIEN, FGP, SJM, TITN, ZQK.

"The energy of the mind is the essence of life." -- Aristotle

Have a great weekend.

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

Wednesday, June 5, 2013, Rhinelander, Wisconsin, USA

Wednesday. Hump Day? We don't know who coined this term for the middle of the week, but we have oftentimes felt its importance, as the work week makes its way past the half-way point. According to the Gregorian calendar and international standards it is the day between Tuesday and Thursday, and it comes from the Middle English, Wednes dei. Most in the modern Western world consider it as the center-day of the common 5-day work week that starts on Monday and thankfully ends with Friday (TGIF). But we see it's importance more for the weekly options as Gamma picks up speed.

The Germans word for it is Mittwoch, which literally translates to "mid-week," the Roman languages derive it from the Roman god Mercury; Miercoles in Spanish; Mercuri in Latin; Mercredi in French, and Miercuri in Romanian. Polish say Sroda; the Finnish name is also "middle-of-the-week, or Keskiviikko; while the Greek translate it to Tetarti, literally meaning "fourth." But is Wednesday, no matter how you say it, the fourth or third day of the week? If the week starts on Monday, then Wednesday is the middle, or Hump Day. However, if it begins on Sunday, it is indeed the fourth day of the week, not the middle.

Who decides if the week begins on Sunday or Monday, anyway? If you ever noticed most calendars show Sunday as the first day of the week. It sure seems, at least for us, to begin, for real, on Monday, hence Hump Day. Sunday is considered by many as a "day-of- rest" and the conclusion of the week, which would also officially start the new week on Monday, making for the Wednesday mid- section. But who really knows? Either way, whether this is the middle-of-the-week or the fourth day, we don't care, instead just being pleased that there are only two more days of work 'til the weekend, and time to start rolling the Apple (AAPL*) weeklys.

But, if Sunday is the first of the new week, does that make the weekend just Saturday? Now that we think of it, most weekends do seem like they only last one day ...Anyway - Happy Hump Day!

"The best thing about the future is that it comes one day at a time." -- President Abraham Lincoln

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

Tuesday, 06/04/13, Rhinelander, Wisconsin, USA

- The SPUs (/ESM3*), after last Friday's late day sell-off, have been pretty much steady, flat to higher. Huh? That means they are in a relative range - between 1625 and 1650, now trading at 1640 in the early Tuesday morning hours. If anyone can remember back to February, just over 3 months ago, the popular e-mini futures contract was trading in the 1485 range, as some of our Chicago Italian pals would say - "So, how's you doin'"? If you have been long throughout the first few months of 2013, you are up more than 3 times what you were up last year in the same time frame. So, I guess you are doin' pretty well. But, as we have been saying, at these lofty levels, we would think twice about adding any new money to the overblown stock market.
- The metals and grains have been trading wildly, with huge intra-day swings becoming commonplace. Gold (/GC) began the year near 1,700, dipped to 1,325 on tax day (4/15) and is now bouncing around the 1,400 level. Oil (/CL*) has also been taking some stunning swings, moving over 2.00 a day - from top to bottom. So, if you are going to short-term scalp any of the futures, be extremely careful, making sure you stick to your pre-ordained profit goals and loss limits.

Today's Economic News:
ICSC Retail Store Sales
International Trade
Redbook
Fed's Fisher: Monetary Policy

"You have to learn the rules of the game. And then you have to play better than anyone else." -- Albert Einstein

"To succeed in life you need two things: ignorance and confidence." -- Mark Twain

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

Monday, June 3, 2013, Rhinelander, Wisconsin, USA

A frosty Monday morning in Rhinelander, with the temperature right at 32 degrees. We wonder how many other early June days in the Northwood's of Wisconsin were this cold. The SPUs (ESM3*), the metals, the grains and Apple (AAPL*) all look to open higher, with the bonds (/ZBU3) trading lower. Anyway - here are some other events that happened on this day in history.

1098 - Christian Crusaders of the First Crusade seized Antioch, Turkey.
1539 - Hernando de Soto claims Florida for Spain 
1621 - The Dutch West India Company received a charter for New Netherlands (now known as New York).
1856 - Cullen Whipple patented the screw machine. 
1923 - Benito Mussolini granted Italian women the right to vote.
1929 - Chuck Barris, born ("The Gong Show") 
1932 - Lou Gehrig set a major league baseball record when he hit four consecutive home runs.
1937 - The Duke of Windsor, who had abdicated the British throne, married Wallis Warfield Simpson.
1938 - The German Reich voted to confiscate so-called "degenerate art."
1939 - Will Glahe's "Beer Barrel Polka" hits #1 on pop music charts
1955 - Stan Musial hits 300th home run
1963 - Pope John XXlll dies at 81
1967 - The Doors "Light My Fire" was released.
1972 - The Eagles' "Take It Easy" was released
1975 - Ozzie Nelson, dies at 69.
1989 - Chinese troops crush student-led pro-democracy demonstrations in Tiananmen Square.
2011 - Right-to-die activist Jack Kevorkian dies
2013 - What seems to be the longest monthly expiration cycle in history - still three weeks to go!

"History - if you can't get enough of it, you just have to live a little longer." -- Anonymous

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