16
Aug

Expiration Friday

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I'm out of pocket Friday so have fun and try to play nice! I'll try to check in but no promises.

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If I don't check in it means I couldn't get to a wi-fi hotspot and/or I'm stalled in hip deep water somewhere in the Houston area. I'm sure I'll be around on the weekend and will post again in full on Tuesday.

Have a great weekend,

Best Regards,
Z

84 Responses to “Expiration Friday”

  1. 1
    Sambone Says:

    Looks like another ugly open today. The Dow yesterday swung 365 points and the S&P swung 40 points. Wow!

  2. 2
    Sambone Says:

    Still watching the spin east of Florida. If it gets over FL into the GOMEX still spinning, watch out. It’s almost 90 degrees in that water, with low shear.

    http://www.ssd.noaa.gov/goes/east/carb/loop-wv.html

  3. 3
    Stephen Says:

    Looks like Cramer got his wish on the discount window. I wonder what this and Dean will do to energy stocks and MDR, which I bought more of last night, and which is down 11% in 3 days.

  4. 4
    Sambone Says:

    With the Fed cutting the Discount rate, then we’ll see a spike in prices, including Energy. MDR up 74 – 77 premarket. COP at 79

  5. 5
    MMarkkk Says:

    Hopefully this will give us all a nice little pop. I’ll be playing this as great opportunity to unload/unwind a bunch of positions. I think we see a nice bump up until the reality of the market hits again and we continue our correction downward. Still see many E&P companies as oversold. Just wish I had another week on some of these options and not another day.

  6. 6
    Brian08 Says:

    Hate to say it MM but I think you could be right…Something like open up 100-150 on the Dow and whipsaw back into negative territory…I don’t trust any gains in this market…

  7. 7
    KL Says:

    From Rigzone: China’s Ministry of Land and Resources certified PetroChina Co.’s (PTR) Nanpu oil discovery as having only half the reserves of market estimates.

  8. 8
    MMarkkk Says:

    KL: Be careful putting too much stock in a government certification of reserves. Just look at how ridiculous our wonderful SEC guidelines are at reserves calculations! Prices drop, “reserves” have to be written off the books and in the case of El Paso, they go after the company for violating some arcane law. Prices drop, there’s still oil/gas down there. Just a matter of time. I think the Chinese don’t suffer a similar foe like the SEC, but they are generally going to be conservative.

  9. 9
    Brian08 Says:

    I’m getting a quote of NFX +12.31 after being +9…That can’t be right????!?!?!?

  10. 10
    Sambone Says:

    Lesson One – Just because a market or a stock is oversold doesn’t mean it can’t go lower.
    Lesson Two – Don’t fight the trend.
    Lesson Three – Don’t anticipate a reversal. Wait.

  11. 11
    Sambone Says:

    NFX up 10 to 55.80

  12. 12
    Brian08 Says:

    What the hell is going on??

  13. 13
    Brian08 Says:

    I’m showing a bid of 45.00 and an ask of 52.00…

  14. 14
    Nicky Says:

    Samborne – any thoughts on landfall for Dean.

    DT is showing Texas and straight into the main oil rig region.

  15. 15
    Sambone Says:

    NFX now up 1.47, bad bid

  16. 16
    Sambone Says:

    N-I’m looking for TX as a Cat 4 or 5, but it really is too early to tell yet

  17. 17
    Sambone Says:

    I expect this current market to shake out the shorts, an then roll over. I’m still bearish

  18. 18
    Nicky Says:

    Agree with you re wider markets. Wave 2 – gut wrenching as predicted.

  19. 19
    El Diablo Says:

    Sambone, When you say you’re still bearish, are you referring to the energy stocks or the commodity prices? (I assume you’re talking about the stocks…)

  20. 20
    El Diablo Says:

    Good list, how about-

    Lesson 4: Anything can happen

  21. 21
    MMarkkk Says:

    Lesson 5: The market can remain irrational much longer than you can stay liquid.

  22. 22
    Sambone Says:

    I’m bearish across the board, including Energy, and the market. Not as much on metals. Looking to go back into POT, FCX, PCU when they get really cheap.

    I’ll be leaving before lunch, and preobably won’t be back, so watch the spinner esat of Fl, and Dean. Once Dean hits the GOMEX, low shear, and bathtub water. Could go anywhere.

  23. 23
    Nicky Says:

    WTI – so far only a 3 wave rise off yesterdays 70.11 low – we need to see follow through for this to remain bullish.

  24. 24
    Sambone Says:

    The credit market problems and coming economic dislocations strongly suggests that a major bear market is now underway. As in the bear market of 2000-2002, it is likely that we will see a number of vigorous rallies that investors mistake for the end of the overall decline. One such rally could occur when the Fed first makes a dramatic move toward ease. It should be noted, however, that the S&P 500 soared 5% on the day the Fed first lowered rates in early January 2001, only to fall 44% over the next 21 months.

    http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&CFID=23090678&CFTOKEN=33667718&category=Market%20Commentary&newsletterid=1322&menugroup=Home

  25. 25
    El Diablo Says:

    Yea, all the headlines read “Fed fears economic crash” and stocks soar.

  26. 26
    El Diablo Says:

    I read Fed’s action as “We’re going to make sure that you can get a mortgage for a house whose value is falling”, not “We’re going to make sure that asset prices don’t fall”

  27. 27
    KL Says:

    MMarkkk thank you for the tip

  28. 28
    mdinh Says:

    Lesson Three – Anticipate
    Lesson Four – Expect the Unexpected

  29. 29
    mdinh Says:

    Looking to go back into POT, FCX, PCU when they get really cheap.

    What do you mean by cheap? POT at $72 yesterday was not cheap enough for you?

    Becareful what you wish for. I wished for $79 and lucky I did not pull the trigger at the point. Got it at 75.21.

  30. 30
    Nicky Says:

    Dow, SPX – looks like the market is tracing out a 3 wave correction. Currently in the down leg which looks likely to retrace into the gap area left by Fed announcement. Look for Dow to find support at 12800 and SPX at 1402 (both ish no’s!) and then mount a further rally. I am looking for 13400 on Dow and 1470 on SPX.

  31. 31
    sane Says:

    EL D

    Re #26 I agree, the feds need to let the market correct itself. Fueling something that is broken ( i.e. lenders ) is only going to temporarly postpone the inevitable.

  32. 32
    El Diablo Says:

    Nicky- “looking for 13400 on Dow and 1470 on SPX” timeframe? today? within a week? open-ended before we go lower?

  33. 33
    Nicky Says:

    Mark – I think I have gathered that you are in Texas – if these guys are right about Dean hitting Texas – this could be disastrous. They are talking flooding on a huge scale and this on top of land that is already saturated. Don’t mean to sound alarmist but this must be cause for great concern.

  34. 34
    Nicky Says:

    El D- correction should play out over a couple of trading days. I expect this to turn down hard again after that. Could that be all of wave 2 this morning? Its possible but not probable.

  35. 35
    Sambone Says:

    Looks like the market is turning to the downside, see TRIN

  36. 36
    Sambone Says:

    RIG pulling 92 workers off it’s most western rig in the GOMEX.

  37. 37
    mdinh Says:

    This is looking really, really bad.

    300 pts swing to the down side if market ends negative, OUCH!

  38. 38
    El Diablo Says:

    USD/JPY back to pre-Fed levels, 113.25

  39. 39
    MMarkkk Says:

    Nicky: yes I’m here in Houston. Actually out on the west side of town in the ‘burbs. But working downtown. I think yesterday’s little tropical storm gave us a rude awakening…again! We re-learn this over and over again. We’ve had record rainfall over the last month and a half in south Texas, and then we get 4-6 inches and guess what? Flooding big time.

    If Dean makes it as far as Corpus Christi, we’ll see a bunch of flooding up this way. And the Hill Country will get it even worse. Dean is modelled to go anywhere from Houston to central Mexico coast so its hard to predict at this point. Slowly starting to stock up on water, batteries, and the other essentials like lagers, ales and stouts! I grew up in the swamps of South Louisiana so I’m used to this, though.

  40. 40
    Nicky Says:

    M – as Samborne says it is still too soon to say. All a guestimate right now. Charts (!) make me think that once this has passed energy should turn down with the wider market. Doesn’t mean it is going to be a non event for wherever takes the hit though. Look at New Orleans!
    I know what the watching and waiting is like – painfully slow.
    Take care.

  41. 41
    MMarkkk Says:

    Thanks Nicky. When I look for comparisons and Katrina, though, I tend to look at the Mississippi Gulf Coast rather than New Orleans. Mississippi took a much greater hit, much more destruction from the hurricane and the people there fared far worse than those in New Orleans. Unfortunately, many went much longer without food/water/shelter than those in New Orleans. However, it isn’t as politically appealing to feature the gulf coast of Mississippi versus New Orleans. Yes N.O. was bad, but MS was worse. Looked like a nuclear bomb went off from the coast all the way inland. No houses, trees, anything. Just my pet peeve on how our media and gov’t cover storms. Go to the place that gets the biggest news jiggle, not where the real issues were.

    Agree that we could be looking at a short term plus to be followed by a bigger bear downturn. I’m hunkering down for a roller coaster ride with more downs than up’s.

  42. 42
    Nicky Says:

    Sorry everyone as this is totally off topic. But yes Mark I hear you. After Katrina I got very involved in the animal rescue side of things (a pet peeve for me!) so I was getting first hand reports from the ground so to speak. And yes as you say MS was obliterated. What gets me is apart from a few ‘fly by’s’ by the media in the days(and they were only for a minute or two) that followed that was it. It was like ‘we don’t want you to know how bad it is’. If people knew they would probably never return and furthermore it would probably kill the real estate market bubble (that has happened anyway of course!). The statistics were just sort of buried – everything from the death toll (which has never been confirmed) to the actual storm itself ie a wave that was over 20 feet tall that traveled 30 miles inland – absolutely unbelievable thought. (you may need to correct me on that one). So on a human scale (and animal for that matter) it remains a total disaster to this day with virtually no rebuilding having taken place and it having become a bureaucratic nighmare. I am constantly horrified by how censored the press is here. Unless its good news they don’t seem to think that americans can stomach it. Its the same with the financial markets – nobody has a clue how bad this really is or could get cos they are just fed a bunch of crap by the media.

  43. 43
    MMarkkk Says:

    Nicky – agreed.

    Gyrations in some of the favorites…NFX, SWN, EOG, etc. are pretty wild. lots of ups and downs along with the market. Trying to squeeze out of some expiring positions and have a few Puts that I’m taking profits on. With a sizeable amount of guts, one could make some reasonable roundtrip trades on short term in the money options. But all it takes is getting caught out just once!! Don’t think I have the cajones for that one.

  44. 44
    sane Says:

    Nicky, I agree. I had family in Gulfport MS during Katrina. I know it is sore spot for me. I had a relative kill during Katrina and family who lost everything ( home, business, and a life ). To this day that area is still a wreck and virtually ignored.

  45. 45
    DrT Says:

    what got me was how little attention there was before it hit. For days one of the biggest hurricanes ever had NO lined up and there was very little mention in national media.

  46. 46
    Nicky Says:

    Agree DrT – I remember the night it went in watching it and feeling shivers run down my spine. It was so clearly going to be a catastrophe.

  47. 47
    Nicky Says:

    Wow – bet CNBC don’t mention this again:

    customers lining up yesterday outside Countrywide trying to withdraw their deposits. Even though staff were saying they were insured up to 100k people said they still wanted to withdraw their money.

  48. 48
    rammastr Says:

    Any sense that we might roll over into the close?

  49. 49
    El Diablo Says:

    Since it has been discussed here, I do want to add this:

    While the human and personal property damage from those hurricanes was epic in its proportion, I am somewhat astounded to know that our (natural gas) infrastructure performed stellarly. Even with rigs sinking and disappearing all over the gulf, we still added natural gas to storage before, during, and after that week.

    This is an enormous testament to the strength of the ‘network’. Also the reason I’m shocked that natural gas gets a ‘terrorist’ premium–I find it hard to believe that anyone thinks a terrorist (or many of them, or even a soverign nation) could cause more damage than those storms, yet the system plugged right along.

  50. 50
    KL Says:

    What about oil rigs? If we get a good hurricane boost, I assume it won’t last long?

  51. 51
    Nicky Says:

    R – not in energy I think.

  52. 52
    rammastr Says:

    Sorry, S&P.

  53. 53
    MMarkkk Says:

    Nicky: re Countrywide, one of the larger financial radio programs here in Houston yesterday discussed this. The host, who manages money for rich folks who made/make their money through conservation of principal, said he had been asked many times what to do with CD’s and money market accounts at Countrywide. His advice was to pull it out of there and put it in another institution that had less of their total risk exposure in mortgages. His point was that even though you are insured, if Countrywide goes belly up, you will find many delays in getting your money. Why have a money market account if you can’t get to your money for months??

  54. 54
    El Diablo Says:

    Oil (and gasoline) completely different animals. Hurricanes can ‘more significantly’ impair short-term supplies, whether by closing rigs, vital ports, or refineries. Storage argument holds some there too though–we’re well reserved for several weeks, enough time to repair/rebuild. This cushion excludes the SPR which I’ve hypothesized that the DOE will be quicker to release this time, given the heat the admin took over the last ‘unpreparedness’. So while I agree that it would be short-lived, it could be a large spike.

  55. 55
    Nicky Says:

    R – In all honesty I am undecided looking at the chart where we go short term. At the moment the move up off the 1421 low this morning still looks corrective which implies we will roll over again.

  56. 56
    Nicky Says:

    I don’t disagree Mark – just considering the chaos it could cause. Sounds like Mary Poppins!

    Yes agree totally El D with #54.

  57. 57
    MMarkkk Says:

    Biggest risk to the energy complex vis a vis hurricaines really is in the refining side of things. We have more crude oil than we can refine. Now, we’ll lose domestic supply, but that can be replaced by more risky middle east supply. But if the refineries go down, we can’t make the drug of choice…gasoline/diesel/heating oil. Also, a lot of the import facilities are in the gulf so there could be a risk there. Overall, crude oil will go up as you may lose less risky crude from the gulf of mexico with imported crude from the middle east. But El D is right, there will be enough crude.

    nat gas could be more problematic if we lost 5-10% of our national supply. Not in the short term, it will just be taken out of storage. May be an issue in the winter when there isn’t as much storage volume as we might like to have. Over the last few years, our storage has dipped down to 600 BCF (2003) but has been as high (on the lowest of the cycle) 1700 BCF (2006).

  58. 58
    rammastr Says:

    Nicky – Thanks.

  59. 59
    KL Says:

    Very much appreciate the insight everyone.

  60. 60
    Big H Says:

    Why no body did what I did a week or so back and buy some calls n the S+P and an IB ( mine was LEH ) , when I posted it Zman..posted back GTLY and I don’t really know what it ment!….but the following tues and wendsdy…..I was able to sell them all for a triple, thats 300+% gains…..now I did the same thing yesteday….and sold all today…in and out at the right times, everyone knew then and thursday the risk was great to the upside!

  61. 61
    Nicky Says:

    I don’t agree H – the big risk is to the downside! Maybe you just got lucky.

  62. 62
    Big H Says:

    The first time I played the bounce buy buying friday, after a wooshie of selling and news that week, and after some small amt of news that priced in short term the weeks decline, not to metio the effort of trying to find that biunce by the markets those last few days…heance came momday,. whatever it was a fresh start – yesterdays reversal was a single coupled with stks stopped falling,( IB”S) ( Banks) and all money pumped into the system this week, one other fact was live or die, the smell was in the air.!

  63. 63
    Big H Says:

    I REALLY DON”T THINK MANY RADERS R SURPRISED BY TODAYS EVENTS AT ALL_

  64. 64
    umagumm Says:

    Dean was upgraded to a 3 a few minutes ago…

  65. 65
    umagumm Says:

    just claimed its first fatality as a 62 year old man disappeared into a river trying to save a cow

  66. 66
    Big H Says:

    Anyone else have quote confusion this week and still today….? What The Heck is up with them and all the realtime ticks on the platforms?

  67. 67
    andy Says:

    anyone have a good hurricane stock. i think texas still in big danger. bot DEEP 2 days ago but didnt know earnings were that nite and they were lousy.

  68. 68
    MMarkkk Says:

    andy:
    – find a refining company with none of their plants on the Gulf Coast (small list!)

    – nat gas co’s with limited to no exposure on gulf coast (many: NFX, CHK, SWN are my fav’s right now but I’d also add EOG and XTO as they have limited exposure. However, depending on where it goes and the rain patterns, the Barnett Shale players may have trouble moving rigs due to flooding and rain in the DFW area which would impact CHK, EOG and XTO. Bill Barrett is also a pure rockies gas player for the most part but Rockies basis differential is eating up prices. I like NFX and SWN and they have been hammered as of late.

  69. 69
    MMarkkk Says:

    dumb question: what is the latest you can trade an expiring option contract? stock option.

  70. 70
    rammastr Says:

    It seems relatively calm going into the final hour. Stuck in a short range.

  71. 71
    Lije Says:

    Mark – I think you have till the Mkt. closes unless it is an index option like SPX or DJX, which expire in the morning. I don’t really trade options so I could be wrong

  72. 72
    andy Says:

    mark good question not dumb as i am not sure either and i have a bunch of them. i know u can exercise up till sat at noon if not automatic. thks for stks. would crude or nat gas be more affected by direct hit on texas?

  73. 73
    El Diablo Says:

    Technically, options do not expire until tomorrow. However, you can only ‘sell’ the option while option exchanges are open, so the cut-off is today’s close. If its in the money, you technically can ‘exercise’ until tomorrow morning, but most brokers do not allow this unless you make prior arrangements. Stock options also have automatic exercise rules for options that are at least $0.25 in the money, however, I don’t know what the outcome is if you do not have sufficient capital in your account to cover the exercise.

  74. 74
    MMarkkk Says:

    In reality, I’m coming to believe El D’s line of thinking…its mostly a fear factor on the commodities at this point. I think crude just because the market worldwide is so tense already with Nigeria, VZ, etc. We have a ton of gas in storage so less impact. However, both will get a very quick jump to the upside leading up to and following a hit. I hope we don’t see any of it as making a buck isn’t worth the devastation. Of course, these things have to go somewhere. My favorite track: out into the mid atlantic where it hits nothing!!!!

  75. 75
    DrT Says:

    PCZ a good hurricane play. Integrated with no refinery near gulf and very little prod from there!

  76. 76
    DrT Says:

    And cheap, little downside!

  77. 77
    El Diablo Says:

    Everyone has the ‘fear’ not because of supply shortages during past hurricanes, but rather because of sharp price spikes (me included). I only balance that against the belief that many of those ‘responsible’ for the price spikes in the past (Brian Hunter@Amaranth and yen-fueled leveraged players) have had their wings clipped recently. So the price action may not be as severe this time around.

  78. 78
    DrT Says:

    Yes, but if there is any refinery damage the crack spreads will be good for a while.

  79. 79
    El Diablo Says:

    One last thing on option sales if you’re new to it: in the last 5 mins of trading, options market makers will often take advantage of you. If you have an option that is $1.00 in the money, it will be bid $0.90 and offered at $1.10, in which case, you give up 10% of its value just to sell it.

  80. 80
    Sambone Says:

    Back for a minute. This is NOT good. Click forward on the right side.
    http://moe.met.fsu.edu/cgi-bin/gfdltc2.cgi?time=2007081712-dean04l&field=Sea+Level+Pressure&hour=Animation
    135 Knots = 155 MPH, right through the rigs

  81. 81
    DrT Says:

    Yes, El D, you’re right, but if you exercise it instead, most brokerages burn you pretty bad, so you’re hosed either way.

  82. 82
    rammastr Says:

    Finally no windshear into the close. Longs can actually make money.

  83. 83
    andy Says:

    sbone wow nothing in its way to slow it!!!
    el d its now .05 is an automatic exercise changed recently

    dr t online brokers just charge a regular commision which is hardly any thing thks for ptz

  84. 84
    rammastr Says:

    Nicky, this close seems pretty tame for expiry.

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