Bull or Bust

a bull's view

The Bottom – Watch For It

birthdayHappy Birthday Jim Cramer! I am dedicating this post to Mr. Cramer because he inspires me every night and has made me a significant amount of money. Thank you!

I was just inspired by a comment he made on tonight’s show and I must admit it proves I am not crazy. This is something I have been thinking for several weeks as I watch the market fluctuate daily. It’s important and if you have a group of companies / stocks that you watch constantly like I do then what I’m about to tell you becomes easy.

In fact, having a group that you monitor daily is a requirement, but don’t have more than ten (10). You cannot monitor, research and track more than ten (10) and feel comfortable. Trust me.

Having a group and watching them daily forms a bond between you, the company, the stock and the price of said stock. It’s important you become familiar, almost one with the stock price. At any moment if that company is mentioned by anyone you should know what the current stock price is. This bond, this knowledge allows you to do the most important thing in trading…

Find the bottom.

Everyone complains about the market today. The violent fluctuations, the “flash crashes” and how the algorithms, God and even Santa Clause is at fault (we all waited for the Christmas rally that never came – thanks Santa). BUT, this volatility makes finding the bottom almost easy IF you’re paying attention.

Take McDonald’s [stock_quote symbol=mcd] for example. During Mad Money tonight someone called in regarding McDonald’s and everything he said was exactly right. The caller noticed McDonald’s was doing well, had a good dividend and while everything was crashing around it McDonald’s found a bottom and held. It not only happened with McDonald’s, but with many other stocks as well.

This week the market has been hammered and many stocks have dropped dramatically in value – have you seen Tesla? McDonald’s traded at $124 just a week or so ago and I purchased it at $115 Monday. The novice trader or investor would be scared to enter at this time or this price, but did you watch the stock? Did you notice the bottom? Again, watch any stock long enough and you can see it happen. Once McDonald’s landed around the $114-115 mark it stopped going down. It stopped going down when everything else continued to drop. Regardless of what the market did McDonald’s hovered and started going sideways and then back up and that’s when I pounced. Now, again, McDonald’s is not the only stock that did this. Home Depot landed at $110 and hovered. Ford at $11.02 last week and I knew if Ford broke $11 we were in serious trouble, but it held.

The great thing about extreme fear, volatility, a high VIX and overall bearish sentiment is when the market and individual stocks crash there is ALWAYS a price they stop going down. This sounds stupid, of course there is a price they stop going down, but it’s more than that. It’s a feeling. I’ve personally witnessed many, many stocks simply crash right before my eyes. I mean crash. I owned Disney at $112 and watched it crash to $103 within a matter of days. It just wouldn’t stop falling. Your stomach turns, your heart races, you get light-headed and think about bankruptcy and how all your friends and family will make fun of you and say things like, “this is why the middle class shouldn’t play the market” (thanks mom). You begin to realize you’re about to throw up at the very moment panic takes over. Then, it stops. You regain control of yourself, take a deep breathe and accept you’ve just lost more money than most make in a year, but it’s ok. You’re ok. You’re alive and the stock has stopped falling. This is what I’m talking about – the moment it stops going down. You just watched it happen. You felt it when your heartbeat dropped from 190 back to a reasonable 110 (ha). Now what?

There comes a moment when you realize the worst is over. Just like with SolarCity [stock_quote symbol=scty] at some point the stock becomes so cheap the buyers come back and the remaining sellers just can’t take the pain of walking away. Do not buy SolarCity you would have to be insane. I am using them only as an example.

When the sellers stop and the buyers come back in – this is the support level and what the market considers the stock to be truly worth after the carnage. That moment, that price will always be your point of entry if you want in. If you’re scared (which you will be) buy in slowly and watch it for a few days to make sure. If it bounces right back and you “lose” your chance so what. You’ve made money and there are worse things.  Viacom [stock_quote symbol=viab] is an example of why it is important to wait. If you thought $36 was a good price, you’re loving $31!

For me some of this trading “stuff” comes naturally and I don’t realize it. When McDonald’s hovered around $115 on Monday my antennas went up. When it dipped into the 114’s I said to myself, “you better buy it” and when it bounced back to 115 I bought it and it promptly fell back into the 114’s for a short period. I didn’t panic I just figured if it kept going down I would buy more around the 110-111 mark. You must have a plan and remain calm. I knew I wanted in, I knew it would go back up so really anything 115 or below was fine with me.

As your skill level and experience grow you will be able to find the bottom. I’m just glad to know I wasn’t crazy in thinking when a stock holds strong when everything else is crashing it’s a good time to buy and my boy Jim Cramer reaffirmed that tonight.

Thanks pal…Happy Birthday

February 10, 2016

Where’s the love Mickey asks…what did I do wrong he wonders? Sad to watch him wonder aimlessly through the “Leave a Legacy” attraction hearing him mumbling about the best quarter in company history – Walt Disney’s legacy never stronger.

My objective with this blog when I first started typing was to keep it real. No bullshit about making millions or the fast road to riches. I wanted and had tried to find a real website with real-world experiences. This is why I’m going to use Disney as my “human nature” post this week because, well, it’s human nature to shoot for the stars!

Disney [stock_quote symbol=dis] as you can see did not perform as I had expected. I am man enough to admit I was way wrong. I knew they would beat earnings, but I miscalculated the markets reaction. I noticed the option statistics yesterday were almost 50/50 CALL to PUT meaning half of traders thought it was going up and half thought it was going down. I’m a natural bull (hence the site name) and I’m always thinking when a company makes history their stock should go up. Silly me I suppose.

What you must understand is why it went down.

Disney investors are a little (a lot actually) touchy about ESPN and the dreaded phenomenon of “cord-cutters” – those that are leaving paid cable subscriptions for the new form of television like Netflix, Hulu and pay-as-you-watch platforms. Hulu, by the way, is owned by Disney and has yet to turn a profit. I discovered why just this past weekend when I tried to catch up on one of my new favorite tv shows “The Grinder” with Rob Lowe and commercials kept interrupting! How dare you show me commercials! I did a little research and realized you could buy out of the commercials for an additional $5 per month. This made no sense to me when I could just buy the entire season on Amazon Prime and be done – no monthly fee. I digress…

Disney investors are pounding the stock and fleeing like roaches after turning the lights on because they now believe Disney can do no better. This was it. The grand finale of revenue and profits so they’re out. It’s a good argument and I’m not saying I don’t understand, but really? Of all the media conglomerates you choose to abandon Disney? Foolish at best. I can remember at Thanksgiving when it was $122 per share. It will be there again – guaranteed.

Yes, to keep this site real I will admit I lost money this morning. Not much, I’m not that stupid, but I did put $800 on the FEB 19 2016 110 CALL and I just watched it dwindle to zero. I knew it was a gamble. I knew the risks and I knew it was a 50/50 shot. I understood the risk and I went with it. No reward without risk right?

This is the reality of trading and no book or online course or training video will prepare you for the human factor. Humans are impulsive, greedy and most of all dreamers. We hold little self-discipline in the heat of the moment and with trading you must be rock solid and have no fear at all times – try this when the underlying is crashing hard before your eyes. You will win big on some days and lose big on others and if you cannot swallow this fact you need not try. We as amateur investors far, far away from Wall Street really have a snowballs chance in hell of being correct all the time. We are lacking the most important, fundamental element: information.

Ok, enough with the preaching and negativity. Now for the trades I made this week that kicked ass. This is another part of trading that people find hard to handle: when you’re down and losing money on one you must keep buying and playing the game with others. It’s your choice to keep going or give up and it takes years to conquer this emotional side of trading. But below should make you feel better. Notice most of the below trades are stocks, not options.

Starbucks [stock_quote symbol=sbux]

All I can say is wow. When I saw Starbucks hit $52.63 the other day my neck was tingling and I knew I had to be in on that. It was like time travel – it was March 2015 all over again and I was back! The flux capacitor was firing on all cylinders (or Mr. Fusion) and I was scooping it up like candy. Purchased 1500 shares of stock at $53.00 – perfect. Purchased another 100 of the APRIL 16 2016 60 CALL at .55 cents (currently trading at $1.00). I was a mad man and it paid off. Disney who?

Home Depot [stock_quote symbol=hd]

The sky was blue, the sun was out and Home Depot was hovering at $110 per share. Was this heaven? Did I take stage left and didn’t realize it? No, it was just a down day on the market and yet again, I was scooping it up. Purchased 700 shares at $110.90 and based on the above quote – right on, right on…

McDonald’s [stock_quote symbol=mcd]

Anyone who has been through a McDonald’s drive-thru lately probably noticed it’s better. Not only is the ordering and accuracy better, but the food is better too. McDonald’s is doing well and I respect a company that can turn it around. Therefore, I purchased 100 shares at $115.48 and plan to hold long-term. It was $124 just a week or so ago…

Nordic American Tanker [stock_quote symbol=nat]

Anyone who witnessed the amazing interview with NAT’s CEO the other afternoon at 2 pm on CNBC bought this stock immediately (also why it jumped almost 10% during the interview). I’ve never seen a more amazing interview or inspirational, down-to-earth CEO. I liked him so much I went with my gut and bought 1000 shares at $11 that very minute. Not to mention the dividend is currently yielding 15%!!! This is not a typo – it’s 15%. The CEO made it very clear the dividend was safe, they had paid their dividend for 74 straight quarters at an average of 11% and he enjoyed making his shareholders money. Something he also said that I found very interesting was the fact they hold roughly 5 million of debt on each tanker and the scrap value of each tanker is 12 million. Think about that a minute. If they scrapped it and said screw it, they’re still in the black. He said the number one problem with CEO’s and other companies is they take on too much debt. I’m a firm believer in this and agree completely. He has my support…long-term.

So there are winners and there are losers, but the bottom line is: if you don’t try you will never succeed. Happy trading!

AHY Alert! – Viacom

viacomViacom [stock_quote symbol=viab] reported weak earnings this morning and has now tumbled more than 10%! Trading at just 6.21x forward earnings and yielding a not-too-shabby 3.82% before the downward spiral I would say this is definitely an AHY candidate.

Today Viacom with reach a 5 year low and IF you are interested in the large cap consumer discretionary sector this would be a good time to buy. Start small – 100 shares today and see where she goes tomorrow.

No matter the direction she will become an accidental high yielder (AHY) today yielding 4.4% if the stock stabilizes at the current price of $36.70 as of this writing. 12-Month target price currently $40.

The Viacom announcement is currently punishing all media companies including FOX [stock_quote symbol=fox], Time Warner Cable [stock_quote symbol=twx], and, of course, Walt Disney [stock_quote symbol=dis]. Somebody tell Mickey something positive! Quick!

Disney FEB 19 2016 100 CALL currently trading at .05 BID / .08 ASK and .075 MARK. Come on baby…

February 9, 2016

moneyIt’s earnings day! Well, really just about every day is earnings day during earnings season, but today is the day I’ve been waiting for personally.

Today we hear from several of my favorite companies including: CVS [stock_quote symbol=cvs], Coca-Cola [stock_quote symbol=ko], Goodyear Tire [stock_quote symbol=gt], Viacom [stock_quote symbol=viab] and, of course, our beloved Walt Disney [stock_quote symbol=dis]. A big day full of excitement, a few laughs, probably more tears than anything, but entertaining at the very least.

So let’s just punch the elephant in the room and get it over with: the Burbank, California media giant Walt Disney is scheduled to report its fiscal first quarter earnings after the closing bell this afternoon. Here’s what you need to know: the analyst God’s are predicting $1.45 EPS compared with $1.27 reported a year ago. I believe I stated this as $1.46 in another post, but I’m seeing both. Analysts also expect revenue of $14.76 billion, compared to $13.39 billion reported a year ago. The conference call is scheduled for 5 PM EST.

Currently Disney trades at a P/E ratio of 18.8x forward earnings. If my calculations are correct and $1.45 EPS is reported for the past quarter AND the sentiment is positive looking forward AND the tone towards ESPN turns positive then I estimate the stock to be worth roughly $109.

The number one issue on the minds of all Disney investors is the viability of ESPN and the future of cable television. ESPN and the fear associated with cord-cutters is simply sucking the life out of Disney. If not for this dark cloud hovering over Mickey all the damn time the stock would be much higher. Poor Mickey just cannot escape the doomsday scenarios for pay-tv and whether or not this is the beginning of the end for ESPN as we know it. Since an August revelation that earnings growth was somewhat slower than the company previously predicted, analysts have been debating how much cord-cutting is really hitting the sports giant; how bad are higher long-term fixed costs; and when or whether it should launch a spectacular online, subscriber-based offering of some kind.

ESPN and the concerns surrounding its future, I believe, is directly responsible for the 25% drop in Disney’s stock price since November (and my loss of a great deal of money). Disney moving forward, and especially today with the conference call, must change the tone related to ESPN. Today’s conference call is a prime opportunity to do just that and I am anxious to hear what is said. For the love of Pete, please, change the damn tone!

Star Wars merchandise and the Shanghai Park are other Disney investor concerns. The much anticipated Shanghai Park is scheduled to open on June 16, 2016, at a cost of $5.5 billion and investors are eager to see what effect, if any, revenue generated from the new park will have on the bottom line.

Disney is a great company and there is no denying that. It has been hammered lately and reached a new 52-week low yesterday when it hit $89.51. I was watching it closely and felt $90 was a great entry point for any long-term investor (like me). The direction of Disney stock in the next 24 hours will be directly related to ESPN and what, exactly, is said during the conference call. If the market likes what it hears I definitely see the price bouncing higher. However, if the tone of ESPN remains negative we might just see a bloodbath regardless.

TAKE COVER! FIND SHELTER!

bombDrama has never been my thing, but if you’re watching the market today thinking, “holy cow, I need to find somewhere safe to hold my cash for awhile” then you’re not alone. It’s always good to have a certain amount of your portfolio stashed away and typically people use Gold. However, if you are interested in stocks and the idea of being paid to wait (dividends), I have compiled a list below of stocks that barely move during days like today. I have also included the opposite and high risk stocks if you’re willing to risk some cash. Enjoy!

Stable. Safe. Predictable.

AT&T [stock_quote symbol=T] – Hands down the most stable over the past few years. It barely moves, pays a great dividend and even on terrible days like today it has only dropped .16% or .06 cents.

US Bank [stock_quote symbol=USB] – I’m slightly biased on USB. In the past, I’ve had many accounts, loans and mortgages with USB and I have always loved them. With that said, over the past three (3) or four (4) years it has remained between $35 and $45 per share. In the past year during increased volatility and our new bear market it has remained around $40. The dividend is not that great, but pretty damn good for a financial institution at 2.54% yield.

Coca-Cola [stock_quote symbol=KO] – Someone once said you do nothing with Coke but own it. I agree. Dividend is currently yielding 3.11% and during the 2015 high volatility it has held strong.

Volatile. Risky. Scary Shit.

Facebook [stock_quote symbol=FB] – Up one day, down the next. Fortunes have been made and lost on Facebook, but it always recovers and I believe we will look back in years to come and wish we had purchased more. Where to buy? No one knows, but fun to play.

Home Depot [stock_quote symbol=HD] – I really cannot believe I’m including this company in my volatile list, but whoa boy has it come down! I haven’t seen it this low since this time last year. With Spring coming I would be a buyer anywhere around $110.

Alcoa [stock_quote symbol=AA] – I have always liked Alcoa and they pay a modest dividend that could be subsidized with covered calls if you really want to go long. I have seen Alcoa at $15 and $6.50 in the last year. The is no predicting this stock, but fun to trade!

DISNEY – Here we go!

Walt DisneyHonestly, I gambled (literally it was a gamble) on Disney back on opening weekend of Star Wars. Yeah, I thought that faithful Thursday that I was going to get rich when Star Wars made box office history and I really think I would have been correct had it not been for that moronic analyst that decided to downgrade Disney [stock_quote symbol=DIS] the next morning – the Friday before opening weekend. So Disney crashed and I watched my hard earned cash disappear. Personally I still believe that analyst and his firm were upside down with Disney and probably purchased a ton of PUTS before releasing such negative thoughts before that weekend, but who am I.

Back to the story: I knew it was a gamble. I knew it was gambling. There was no strategy, no planning, no “ejection point”, just an impulse buy (never do that). I just had a hunch that the movie would do well so the stock would do well and went with it. Ouch. Fast forward to today and we have a much different story.

On Tuesday, February 9, 2016, Disney  will report 1st QTR 2016 earnings AFTER the closing bell. I see the same thing happening to Disney as Facebook. The stock got hammered with the terrible opening of January, with the downgrade and with the opinion that “cable cutters” would be fleeing in large numbers. Hell, even the future of ESPN was in question (Disney owns ESPN for those of you who don’t know). I’ll mention the Fast Money gentleman that said Facebook was going to $85 a share back in October one more time…

The company and the stock have been made fun of, sacrificed for “better”, more “stable” stocks such as AT&T [stock_quote symbol=T] and really just flushed by most. Speaking of AT&T…it has done very well. It is extremely stable, a safe place to store money, has an excellent dividend yield of 5.21% currently and I remember when the stock hit $33.70 not too long ago. You would be doing well had you caught AT&T on that dip. Regardless, Disney has been punished for stupid reasons long enough…

On Tuesday Disney has the chance to show the world it knows what it’s doing. Wall Street is estimating $1.46 EPS up from $1.27 for the same period a year ago and $14.76 Billion in revenue. The expectations are growing and so is my desire to take the gamble yet again. I’m looking at the FEB 19 2016 110 and 120 CALL options currently trading at .05 and .01 cents respectively. I have been watching these two options for a couple of weeks now and I can already tell you that the 110 strike trading at .05 was .02 just a few days ago. Do the math. Reminds me of a Facebook [stock_quote symbol=FB] option I purchased two weeks ago for .16, sold at .35 and watched it go to $4.25! I’m not saying Disney will do what Facebook did, but you just never know.

In the end, Disney is near the 52-Week Low and I do not see it going below $90. At this price it’s a steal for the long-term investor and pays a modest 1.51% yield (which could be subsidized by selling covered calls). I feel Disney is worth between $105-$110 per share and if they beat earnings and knock it out of the park it may very well reach $110 sooner rather than later – $100 at the very least.

Let’s hope the mouse outsmarts the bear on this one…good luck!

Stocks mentioned in this post:

DISNEY  [stock_quote symbol=DIS]
AT&T  [stock_quote symbol=T]
FACEBOOK  [stock_quote symbol=FB]

February 3, 2016 – What a day!

Today was simply fantastic for an options trader. It was literally what dreams are made of and I could only pray the rest of the year behaves the same way. As the market opened the day seemed like any other, but then things turned red…really red. The DJI dropped nearly 200 points reaching 15,900 and some change and the bears were out in force yet again. In days gone by this might have caused panic or a selling frenzy, but not today! All I saw was opportunity and when 16,000 came around I started buying everything I could get my hands on that didn’t scare me to death (NFLX) [stock_quote symbol=”NFLX”] or remain too high in my opinion.

I bought March and April CALLS on Home Depot, Starbucks, Alcoa, Ford, Facebook, Chevron…all my market darlings. The best trade I have made this week was the Alcoa [stock_quote symbol=”AA”] FEB 19 2016 7 CALL for .43 cents on yesterday. I dropped almost 10k down for 200 options and sold them at .80 cents around 2 pm. Yes children, that’s an 85.66% gain and $7,377.00 profit in 24 hours (without the juice). Now that’s trading…

Luckily I had also purchased PUTS on Chevron [stock_quote symbol=”CVX”] and Starbucks [stock_quote symbol=”SBUX”] on Tuesday anticipating more carnage and sold them at modest gains early in the day. Chevron made a good comeback in the afternoon so I missed that bullet too. How? By selling the PUT early while I was ahead and accepting the modest gain in a volatile market and buying a CALL. That’s managing volatility with two different methods during a single session. The stock went down the PUT made money – get out and buy the CALL. The stock goes up the CALL makes money – get out. The PUT cleared several hundred, the CALL was up a grand at the closing bell so I let it ride until tomorrow. That’s a gamble, but one I was willing to take today (not every day).

Seriously, getting out while you’re ahead is difficult and greed is a strong emotion. The most difficult thing you, as a trader, will ever do is overcome the impulse to let it ride and keep making money. It is strongest when you’re ahead so be very careful. Set a percentage gain that will satisfy your greed and when you reach it – EJECT! Always – no questions asked – no excuses. If there is one “secret” to trading that I can share it is to always get out while you’re ahead. Below is the best quote I ever heard a money manager say (I still laugh when I hear it):

“The best way to make money…is not to lose money”

This is so true. When you’re up get out. Regardless, this was my trading day and it was quite successful. Why you ask? Because of volatility plain and simple. The DJI [stock_quote symbol=”.DJI”] actually closed UP almost 200 points. I couldn’t believe it. A swing of nearly 400 points in a single day!! Fantastic I tell you, fantastic.

Daily Trades – Most Important

The most important and strategic trading I did today was related to Ford [stock_quote symbol=”F”]. Ford opened around $11.64 and quickly fell all the way to $11.02 before rebounding (thankfully) to $11.47 by the closing bell. This is actually typical for Ford and has happened many times while I’ve been actively trading it. I continued to add to my existing position in the APR 12.75 CALL all the way down starting at .15 and ending at .12. The option closed at .16, but I could have sold at .17 so I ended the day profitable (on paper) with the options I purchased this morning. Hopefully, tomorrow we will see $11.70 again. Fingers crossed

Deep Thoughts with James Day

Some of you might catch the SNL reference with the title, if not too bad. Here are my current thoughts regarding the top five (5) stocks I’m watching:

FORD (F)

This is just sad. To watch this stock drop and investors disrespect such a great company is almost painful. Ford has done nothing but do everything right. To put it plainly they are killing it. They’re making money hand over fist, have plenty of cash, are giving back to their shareholders, looking to the future with electric and autonomous vehicles and just keeping it real frankly. They’re well liked and they’re vehicles look great! I personally chose the new F-150 (Platinum of course – thank you Facebook) over my beloved BMW M3. Yes! I chose an F-150 over an M3. That should tell you how fantastic Ford is doing (I’m a huge BMW fan for those of you who don’t know me). Just buy Ford and shut up about the auto industry. Good lord…

STARBUCKS (SBUX)

Here is another company / stock that everyone loves to disagree on. Some say it’s going up and is the best thing to happen to consumer discretionary since Wal-Mart. Some say it’s going down because they can’t possibly keep going up (that’s the only reason I can think of that people are negative against SBUX). Ok so they have China exposure and they’re tied to the masses having money to buy latte’s and the price of coffee is always a concern. I get all that, but damn let’s be honest, everybody loves Starbucks and I personally spend so much money with them I have no choice but to own stock!! Again, it’s a buy and anyone who says it is not will be sorry in the future. Did you read about their expansion plans??

FACEBOOK (FB)

Ohhhh my, my, my. I would LOVE to get my hands around that big nosed guy on Fast Money that told everybody Facebook was going to $85 back in October. For a split second I believed him and it cost me big. People are STILL saying it is overvalued and will dive any minute. Just wait for it. Wait. Oh wait it’s going back up!! Facebook will be up there with Google in two years. You watch. It will win against the pessimist’s I assure you. Listen, I can’t stand Facebook personally. I don’t understand the need to share your entire life with your friends. Like we give a shit. What I’m saying is this company has it going on. They have figured out how to monetize their platform like no other and their ability to generate revenue in the coming years is simply unbelievable. Congrats FB…you won me over.

HOME DEPOT (HD)

I just like it. Nothing more to say. Lowe’s is terrible and Home Depot has always warmed my heart. It didn’t hurt that I made 5k back in September on an option and I’ve been trading it ever since. I believe we will see HD hit $130 again…soon.

CHEVRON (CVX)

This last one was hard. I have several more that I like, but if I had to pick the one I would invest in today with large sums of money and hold for years to come I would have to say Chevron (amongst the other five (5) listed here). Chevron, to me at least, has always felt like Home Depot. There is something about it that I just can’t put my finger on, but I love it. The current 5.02% yield doesn’t hurt either! Currently Chevron trades at $81 and some change. It had a hard day today due to the ever volatile price of oil. Who cares! I told everybody when it hit $66 last year and $75 last week to buy, buy, buy. If you already own it and you’re getting slaughtered – buy it! Lower your cost basis at the very least. Sit back and enjoy the dividend. Many years from now you will be glad you did. Anybody remember when Ford was $1.17? I do…eventually everything recovers.

Disclaimer: my opinions are just that – my opinions. I do not currently own positions in any of the above companies, but I will…

February 2, 2016

Hello everyone! I hope the market is treating you well. First, some non-market related news:

Website Redesign Coming Soon!

We will be redesigning this site over the coming weeks / months in an effort to make it look more contemporary and less 1984. However, I loved the 80’s and see nothing wrong with 1984. Regardless, the site looks rough and I understand this so I have contracted our web guru to take care of it. He is fantastic and you may learn more by visiting www.confitdesign.com.

Web Domain Name Change

The original domain name for this site was jamesrday.com and it has served me well for this purpose to-date. However, due to the fact I am reactivating my Real Estate License and needed a personal website I have decided to use jamesrday.com for Real Estate related matters and bullorbust.com for trading and market related information. I credit James at Confit for this idea. Please make a note of this. Again, the new trading / market related website address will be www.bullorbust.com.

Now for today’s market and trading news!

If you take some time and look back at previous posts you will see where I strongly suggested buying Starbucks (SBUX) anywhere in the $56-$57 range. Shortly after writing that post it indeed traded in that range and it was a perfect buying opportunity. Starbucks is now trading at $60.69 as of close today which equates to a 6.47% gain before commissions. Not too bad and please remember that’s at close today…a very bad day. It was trading well above $61 just yesterday and profits could have been taken. Remember, in the current market conditions you take profits when you can. Several days of good will always equal at least one day of bad. If you’re trading options this means 20-30% gain is always better than 3.5%. I have a story about this below.

Starbucks at $61 is dangerous currently. It’s a 50/50 shot as to the direction it takes from this point. If you’re in it and like the company then ride it out. I believe strongly this is a $65 stock. If you’re waiting for the next entry point (like me) then I suggest anything below $60. Based on the sentence above my exit would be anything above $65 if you’re trading. If you’re investing (completely different strategy) and it hits $65 I would keep it for the long-term.

NETFLIX – Love it or hate it, but don’t own it. Trade it.

Because this site is dedicated to the reality of trading and not the bullshit you see and hear on tv I will share my sad story from yesterday. Currently, due to the tax man, I am hoarding cash so I have less than 25k in my TD Ameritrade account. What does this mean? Why is this important? Because you cannot buy and sell or sell and buy the same stock or option within the same trading session more than four (4) times in five (5) days or they will literally halt your trading for 90 days. This SUCKS! It used to be 5 / 5 by the way, but the notice I received last Friday said 4 / 5. Even worse! Stupid rules…

So my point is I have to watch very carefully what I’m buying, why and how long I intend on holding. For example (getting to the stupid part from yesterday): Upon market open when Netflix was hovering around $91 a share I noticed A) it was going to be a good day for trading and B) Netflix was going to have a good day as well. I could feel it. Therefore, I purchased a single option for the MAR 18 2016 95 CALL @ $6.30 for a total of $630. No big deal just trying to make a quick buck and knew I would sell it today (within 24 hours). I had a feeling the first day of the month was going to be good.

It was.

Netflix shot up over $97 a share and my single option went from $6.30 to $8.02 gaining 27.3% before I could blink and I even purchased late when the underlying was around $94!! But wait! I can’t sell it! I’m up 27%, but if I sell it I will get tagged a day trader (yet again) and risk losing my trading ability. Well crap…I have to wait. Now, anyone who trades knows that time, in most cases, is your enemy and I knew this. I suffered all day watching Netflix go back down. I was furious.

This morning as the market opened I was cleared to sell and thankfully Netflix remained up for a short period of time. I sold at $6.75 and cleared 3.59% AFTER commission. This sucked, but at least I remained in the black especially given the fact Netflix is now close to $91 again and that same option is hovering around $5.05.

The moral of the story? Take your profits when you can and don’t be afraid to reset knowing you missed your chance. I have enough experience to know I indeed missed my chance, but making $23 is better than being down $130!!

Trading Activity For The Day

Sold everything except my Ford. Doubled down again on the APRIL 15 2016 12.75 CALL at .20 cents each after having made 75% and selling at .34 yesterday. Have another order in for 22 more at .15 if it decides to continue falling with a current position of 38 options.

I understand the auto industry has probably peaked. I get that. However, I do not agree with the current price for Ford stock. This is ridiculous. Ford is knocking it out of the park, they’re making the best looking vehicles and they understand how to make money and stay alive. Don’t even get me started about the dividend opportunity! You would be a fool to sell Ford stock.

January 21, 2016 – Much Better!

I had a sneaky suspicion yesterday may have been the bottom. Is it possible? Could over a 1,000 stocks hitting 52 week lows trigger a rally? Maybe, just maybe. The rise in oil didn’t hurt that’s for sure, but will it hold is the million (or billion) dollar question. I doubt it, at least not right now. I’m sure, much like everything else, it will continue to bounce around in the weeks to come. More than likely all the “shorters” out there are simply covering their shares thinking everything is pretty damn low and it’s just not worth the risk. Tomorrow and definitely next week will be a very important indicator as to how February will go.

I began buying options yesterday before lunch (thankfully) and pretty much sold them all this morning at significant profits. I indeed sold my Starbucks during early trading and right before the closing bell when the underlying stock price was around $59.22 I bought a bunch of the SBUX MAR 16 55 PUT. I believe this was a good call (or PUT haha) based on what the stock did after closing and after the earnings report came out. Whoa boy! Man…did the stock fall. Last I looked it was hovering around $56.80 again which seems to be its recent support level. Tomorrow morning should be interesting. Will it hold steady? Continue to plunge? Who knows, but my PUT may very well be ITM (In The Money) come 8:30 AM. It was high risk yesterday to buy a CALL the day before earnings, but it goes to show you sometimes the underlying is just too damn cheap to pass up. Implied Volatility becomes your enemy after an earnings report – you may experience a “volatility crush” which I will explain another day.

Some of you have noticed my trading strategy or habits have changed recently. It’s true and I am trying hard to desensitize myself to actually selling something. It goes against everything in my body to sell especially when I’m on a roll or up 83% like I was with SBUX this morning. Something inside me just wants to hold on and let it ride. I suppose it’s the risk taker in me and I imagine those of us who trade options probably all have this problem considering you have to be half crazy to do this. My significant other pointed out many months ago that when I run around the house screaming I just made 83% I’m actually full of s***. You don’t make the profit unless you actually SELL IT and turn it back into cash. It turns out I have a huge problem with this. Submitting a sell order has been hard for me and the inability to execute has cost me a significant amount of profits (cash). In fact, had I always sold when ahead I would have roughly $75,000 more in the bank today just from screw ups in 2015.

Disclaimer: there are times when selling is a horrible mistake. I have an infamous story about selling F, GE and AA on September 28, 2015 at 10:30 AM  and taking a freaking red bath with a $33,000 loss when six (6) business days later those same options were worth over $260,000. Yeah, I stopped trading and stayed in the dark eating pringles for a month after that. As Jim Cramer once said, “panic is not a strategy” and I panicked that day – right before October began a fantastic rally. So my rule about panicking is simple: don’t do it. If you find yourself panicking and you can feel your heart beating through your chest and you are picturing your spouse packing his or her bags and leaving forever do NOT do anything. Walk away and give it a day. No matter what. In my defense, I was sick and had fever on September 28th while attending a continuing education real estate course so I was not in the best position to be trading and should have done what?? Walked away. It was a Monday and by Friday I could have bought a Ferrari.

I let it ride too much and I need to AT LEAST take some off the top when ahead. I should write an entire article about taking some off the top. I have been practicing this week and it has worked out very well. Everyone needs to adhere to this most important rule. So yes, I sold ALL of my SBUX at an 83% gain this morning. Am I sorry? Hell NO! Have you seen the stock price tonight?? This is exactly what I’m talking about. Sure, it was a MAR option so I had plenty of time for it to recover, but why claw your way back to where you were this morning two weeks from now? Sure, it could have shot straight up and never looked back which is what it did last year, but I don’t believe 2016 is the year for taking risks when you’re UP 83%. I could have taken some off the top, but I knew earnings would go South. I just knew it because so far YTD this market hasn’t liked anything anyone has said and I was right.

Another fun fact: Back in October of 2015 I was up 223% on an SBUX option and foolishly didn’t sell it. I was watching its little life drain away and even when it was back down to a mere 64% gain and falling I still thought it would go back up. I ultimately sold it at a 30% loss. DUMB! As a trader you can get into this toxic mental state of convincing yourself of anything and it will eat you alive. Trust me. Better to SELL, take the profit, reset your bank account and live to fight another day. On rare occasions you will look back and say, “well s***, had I held on to it I would have made 130% instead of 60%” (actually happened), but it is more likely you will look back later and be damn glad you got out.

It is my amateur opinion to BUY SBUX if it gets anywhere near $56.00 or below and hold it forever. This is not a trade…it’s a lifer.

Stock and Option Trading