All posts by uranium-pinto-beans

Earnings Season Is Almost Here

Alcoa will start the earnings season off on Monday January 9th after the bell. From then and well into February earnings season will light the fire under dull option contracts.

There are many ways to play earnings announcements. You can buy into earnings and sell just before the close, taking advantage of increased premium being built into the options. You can hold through earnings, with the hope that the stock moves exactly the way you positioned yourself. You can buy the next day as sometimes stocks get over sold or overbought initially and either pull back or bounce after the earnings dust settles.

Earnings can provide the opportunity for some mind boggling gains. I always go back to GOOG's 20% move back in April of 2008 when a $.50 call bought right before the close could be sold for over $50 the next day. That is a 100 bagger, essentially a $100 would be worth $10,000. That is the homerun everyone is looking for when they trade earnings and it is possible.

I would say this: if you are buying out of the money options, always go small. The returns on an earnings trade can be big, but if you play big so can your loss. When your looking at a potential 100 or even 1,000% gain or more, there is no need to put up a large investment. A little dab will do ya.

I will have more as we inch or way closer to Monday.

Central Banks Let Their Wives Front Run Currency Interventions

The Swiss National Bank Chairman Hildebrand's wife front ran SNB currency interventions this past summer. The bottom line, Hildebrands wife scooped up over $500k in dollars vs the Swiss Franc. For those of you not attune to currencies, the franc hit record highs as the Euro crisis came to a head this year. One of the main beneficiaries of this crisis was the Swiss. The EUR/CHF plummeted as the Swiss Franc gained strength, and what has become quite common place in this centrally planned market place, the Swiss intervened in an attempt to weaken their currency. It has since worked as the Swiss have pegged a specific price to their currency.

But anyone with insider knowledge as to when and what the SNB was up to prior to their manipulations would stand to return 100's if not 1,000's of percent. With currencies you can leverage 100-1 or greater. Consider the fact that that the USD/CHF was at $.74 when the SNB's wife decided to buy $500k of USD/CHF. USD/CHF rallied some 1,000 pips and now rests 2,000 pips higher at $.94. The math is simple. A $1,000 purchase at $.74 would be worth today $8,000 at $.94. Meaning a $500k purchase would be worth $4,000,000.

Sure she thought the CHF was too strong, or the dollar was too weak. But shes the SNB chairmans wife. She's either really dumb, or she knew she would get away with it.... and I don't think shes dumb at all. Just another example of the rich standing on the pedestal, taking what they think the hard working tax payers owe them. And I doubt this the only time or place its happened.

You see stocks and currencies move prior to news. Rumors get leaked, news gets front run, mergers see option contracts mysteriously bought prior to the announcement. The rich, congress, the house, have already been front running their agendas. 60 minutes did a great piece on this a few weeks ago. Insider trading is "legal" for the rich, the privy, the elite. Remember Obama saying at the March 2009 lows how it was a great time to be buying stocks? You don't think he knew something we didn't? That the FED was ready to embark on a historic USD printing spree with the sole purpose of artificially inflating asset prices, namely those in the equity markets? There is a complete sense of entitlement! The rich feel they should be allowed to front run everything. How do you think they got there in the first place?

I hope something comes of this. And as I am stepping off my soap box I will say this... Ron Paul. We need someone to put a stop to this. The rich are rich enough. They need to follow the rules just like everyone else.

Hildebrand Battles Reputation Risk as Wife’s Trades Hurt Guardian Status

Philipp Hildebrand is under pressure to explain how he can act as guardian of the Swiss franc and allow his wife to trade the currency at the same time.

Hildebrand, head of the Swiss National Bank (SNBN), will today break his silence on his wife’s purchase of dollars in August, the SNB said yesterday. That trade came three weeks before policy makers announced their biggest franc intervention since the 1970s. While an SNB probe cleared him of wrongdoing, some lawmakers and academics say the 105 year-old institution must do more to move away from a culture of bank secrecy.

“The SNB’s information policy was not very fortunate and they underestimated the momentum,” said Georg Lutz, a political scientist at the University of Lausanne, Switzerland. “If Hildebrand can’t break free from this media mess, he must consider his resignation. The loss of confidence is so dramatic that he might become a reputation risk for the central bank.”

Hildebrand’s central bank only agreed to publish rules on personal financial ethics yesterday following days of speculation and local media alleging the former hedge fund manager of using insider knowledge to his advantage. While all three currency transactions that were investigated more closely were cleared, a dollar purchase over $504,000 carried out by Kashya Hildebrand without her husband’s knowledge was considered “sensitive,” according to an investigation carried out by PricewaterhouseCoopers LLP last year.
Political Opponents

The SNB president will hold a press conference later today. The central bank hasn’t given a time or location.

The controversy is giving ammunition to Hildebrand’s political opponents led by billionaire Christoph Blocher from the Swiss People’s Party, who have tried to undermine tougher financial capital rules and have called for his resignation over 2010 attempts to stem the franc’s record ascent.

“Any central banker must be willing to pay the price of full transparency,” said Hannes Germann, a lawmaker in the upper house of parliament from the Swiss People’s Party. “The last thing the SNB needs right now is an erosion of credibility or doubts in its leadership.”

The SNB last month published a statement, saying an external probe into the conduct of Hildebrand showed he didn’t use privileged information for his personal enrichment and unspecified rumors were “unfounded.” While the central bank called the case closed, Bank Sarasin (BSAN), a Basel-based private bank, said 10 days later it fired an employee who passed confidential data on Hildebrand’s transactions to Blocher.
Dollar Transactions

Hildebrand was first informed about the allegations on Dec. 15, the day the central bank left the benchmark interest rate (SZLTTR) at zero and pledged to defend its minimum exchange rate of 1.20 francs versus the euro with unlimited currency purchases.

Documents released by the SNB yesterday show that Kashya Hildebrand spent 400,000 francs ($517,000) to buy dollars on Aug. 15 without informing her husband first, two days before the SNB stepped up liquidity provisions to the money market and three weeks before the currency cap was introduced.

Weltwoche magazine reported that Kashya Hildebrand reaped a gain of 75,000 francs on the transaction.

In March, the SNB president had carried out a currency transaction worth 1.1 million francs, following a Swiss property sale, with the report saying that “there’s no evidence of misuse of privileged information.” Under SNB compliance rules, board members are forced to maintain currency positions for at least six months. The investigation was carried out on transactions from Jan. 1 through Dec. 15.
‘Stupid’

The SNB’s policy until yesterday of withholding its ethics code contrasts with rules of other global central banks. The European Central Bank’s internal rules prevent council members from using “confidential information to which they have access” for “private financial transactions,” according to the bank’s website.

Federal Reserve Board members including Chairman Ben S. Bernanke are subject to U.S. ethics laws governing conflicts of interest and financial transactions. The Fed also has internal guidelines saying governors and regional reserve-bank presidents, along with their spouses, should avoid transactions that give “even the appearance of acting on confidential information.”

“It would be a scandal” if Bernanke’s spouse traded currencies, said Mark Calabria, director of financial-regulation studies at the Cato Institute in Washington. “There would be calls for him to resign. But what’s illegal and what’s stupid aren’t always the same thing.”

Kashya Hildebrand, a former hedge fund employee, said in a statement published on Swiss Television’s 10 vor 10 program on Jan. 3 that she purchased dollars because “it was at a record low and almost ridiculously cheap” at the time. She also said that up to 80 percent of transactions at her art gallery in the center of Zurich are in dollars.
Criminal Complaint

Weltwoche magazine said that the Bank Sarasin employee has filed a criminal complaint against Hildebrand for alleged insider trading. An official for the state prosecutor in the Swiss canton of Zurich yesterday declined to comment on whether the prosecutor received a complaint.

Blocher, a former justice minister who had called the SNB’s 2010 currency interventions “senseless speculation,” declined to comment. The Swiss government late yesterday reiterated its confidence in Hildebrand.

To contact the reporter on this story: Klaus Wille in Zurich at kwille@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

December 28th Up or Down?

Since December 20th, stocks have been rallying.... the Santa Clause rally. On Friday we had a stagnant lunchtime followed by a late session ramp. The SPY rose from $126 to $126.60 in mere minutes on a day when market movements were muted.

Today we had the same type of doldrums. A pop after the open, and then stocks just hung in a tight range. I was almost expecting another big pop by the powers that be, but it didn't happen. Stocks faded into the close. What can we expect tomorrow?

The only big even is the Italian bond auction, that could be a market mover.

What has me leaning on the bearish side is currencies and the Vix point toward lower stock prices, yet stocks contniued to hold their grounds. We've seen this since last week. Stocks have been decoupling from currencies and the VIX to a degree. I think the lighter volume has something to so with this. The Fed isn't accustomed to manipulating the market with less participants.

Stock futures are already down .30% , but that can all change quickly. If the Euro can break $1.30, the AUD/USD parity, then we could see a pull back. Right now stocks seem to want to go higher on light volume and I would not be surprised to see the market gap a good .5% to .75% higher. Being a holder of puts, I would be very happy with the opposite, but since 2008/2009 the bulls have a way of ramping the markets even amid the worst of conditions.

Tomorrow volume should be light and market gyrations kept to a minimum. I think a pull back to $126 on the SPY is a distinct possibility.

RIMM – Make the Right Call

RIMM, the analysts were all over this stock in 2009 when it was $80, upgrading it, raising price targets well above $100 little did they know that a little over 2 years later this same stock would be trading at $15. It did have a wonderful run from sub $10 in 2003 to $148 in 2008. That was where the money was made and ultimately when the analysts get too giddy, that's usually the time to be moving on.

It goes the other way as well. When the crowd gets too bearish and expect RIMM to hit $5-7 a share.... well that's the time to be buying. Which is why I think this weeks high risk RIMM calls could be a very profitable trade. I see a chance that RIMM will post a 15-20% or more move to end this week. The safest bet is the $16 calls at $.47. The $17.50 are at $.16 and that strike is a good 15% gain away. The $16 strike is a little safer.

Lets see if the RIMM ANALysts get caught off guard. Either way I think the stock is in for a nice little squeeze higher.

Some of My Chart Updates/Commentary For The Weekend

I am updating some charts. Right now I am holding all puts: AXP, MS, JPM, IBM and was looking for MA, GOOG, LVS, WYNN, GMCR as the market was closing but didnt pull the trigger. Perhaps Monday will provide a better opportunity.

This same time last week the market was in meltdown mode. Those red lights were flashing, the sirens were blasting, and the emergency personnel were donning their white chemical suites. It's amazing what 5 days of centrally planned manipulation will do for the sentiment of the market. This is just another act of can kicking. Nothing has changed. No debt has been flushed down the toilet and the overall picture still reeks. Mind you I was along for the ride this week. I am a bear, and think we the world economy is doomed, but no sense letting a fabulously coordinated ramp job leave me empty handed. I noted early in the week that I was a holder of numerous calls including the CAT $95 at $.32 they went to $3.20, the JPM $30 at $.22 they went to $3.15, and the SPY $121 at $.75 they ultimately went over $4. I bought these positions based on a chart formation that I nailed with perfection. (http://investorshub.advfn.com/boards/read_msg.aspx?message_id=69452621&txt2find=jpm) It was a picture perfect week and these wild swings provide tremendous trading opportunities. While I closed out many of my positions for only 4-5X times my investment, and watched them continue to soar, I still had a fabulous week and I am very happy locking in my gains.

In this centrally planned market there is no telling when fresh taxpayer cash will hit the futures market to artificially ramp stocks, or negative news will hit the wires. You have to be nimble.


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=69401113&txt2find=jpm

Some of my my charts and commentary:

On AXP: https://www.optionmillionaires.com/forums/premium-option-trading-forum/axp/#p38

On CAT: https://www.optionmillionaires.com/forums/premium-option-trading-forum/cat/#p39