Confusion, Lies, and the Trades They Inspire (CAT,AAPL,KSS,XLK,IYH)

Executive Lounge, Options Trader Elite / Thursday, July 13th, 2017

Confusion, Lies, and the Trades They Inspire (CAT,AAPL,KSS,XLK,IYH)


A good number of the folk you meet on a daily basis are whacked.  But it’s important to know that there are actually several types of whackos out there, including two that are regularly confused with one another.  In truth, they suffer from distinctly different maladies.


On the one hand, you have the confused individual.  He’s raised in a milieu of half-truths, modern statist brainwashing and outright lunacy and simply doesn’t know any better.  He therefore spouts his nonsense with conviction because it’s all he knows, and it’s well-nigh impossible for him to get outside the box that was built for him. He suffers for his addle-headed tripe, to be sure, and others around him also likely suffer.  And so it goes.  On and on.


On the other hand, there’s the liar.  This blackguard has no sense of integrity and speaks his nonsense for largely political reasons – to advance his own standing in the group or vis-à-vis another individual – and there’s very little that moves him outside of his ‘advancement’ agenda.  There is no genuine charity or sacrifice in him (save for furthering the cause of his self-aggrandizement), and nothing that even approaches altruism is found in his precincts.


The confused person can be generous and thoughtful.  He’s just confused.


The liar is a scoundrel and a schemer, and there is no escaping the ego-trap in which he’s ensnared.

Unfortunately, the world’s filled with both of these types, and discerning between the two is as difficult as it is important, because if our response to each is not appropriate and well-calibrated, we’ll continue to suffer from their villainy.


So, as for the goof, who doesn’t know any better, we offer our pity, and, where possible, a gentle educational nudge in the proper direction.  He may not, in the end, be educable, but there’s nothing lost in the attempt, so why not try to prod the world ever slightly toward truth?


The liar, however, is a lost cause, and our best advice is to put as much distance as you can between yourself and him – and to do it with all available haste.  It can be boiled down to something akin to a physics formula: one’s happiness is the direct product of the distance traveled from evility and the duration of the separation achieved.


Like this, sort of –

And don’t look back.


Lest you be turned to a pillar of salt.


Market Evil and Bumbleheadedness


We’re living through an era in which the crooked ones rule and the bumblers follow drunkenly, and that’s also evident in the latest sentiment numbers from the American Association of Individual Investors, where the bulls comprise 29% of Main Street’s investing cohort, the bears another 29%, and the NEUTERED a full plurality, at 42%.


And all this while we’re setting all-time highs on the indexes!


Have a look –

Now, we use the term ‘neutered’ here with the full understanding that it’s precisely what Main Street America has become – a sort of incapacitated, traumatized, snack-loving beagle, ready to do her master’s will when offered the correct pre-packaged goodie, but equally content to doze on the patio should the master be absent.




Main Street America’s confusion over which way to bark is a sure enough sign that the masses are asses, as a poignant commentator once said.


This many neutral bets is a signal that the vast majority of sheep out there are just waiting for their charismatic pipers to tell them to climb aboard and start buying like all get-out.  Because until then, it’s better for the master to keep rover dozing while the indexes rise – to keep the fear alive while his fortunes are pocketed.


When the race is almost run, you can fully expect the master to entreat his puppy to a wiener-fest, and watch the AAII bullish numbers soar.


Until then, the bull is healthy, and we’re on board.

We’re going to examine three open trades today, with an eye toward pocketing some nice profits


The first trade was opened back on the 2nd of February in a letter called Running Numbers, in which we urged you to sell the IYH July 140 PUT for $2.95 and buy the XLK September 51 PUT for $2.99.  Total debit on the trade was $0.04.


Today, the IYH PUT sells for $0.35 and, while it still has a week left before it expires, we’re going to leave it be.  With the stock at $166.75, we see little risk it’ll end up in-the-money.  The XLK trades for $0.31, and we’re selling it.


That gives us a net gain of $0.27 on $0.04 expended.  A profit of 675%.


Nice Going


Next up is our February 9th effort from a missive entitled Kissing Apples.  There, we told you to buy the KSS July 21st 42.50 CALL for $3.15 and sell the AAPL July 21st 140 CALL for the same price.


With a week to go before expiry, we see little chance of the KSS CALLs arriving at their goal, but the AAPL CALLs are now in-the-money, so we have to act.


We’re rolling them out to the September 15th expiry, and it looks like this –

- Content protected for Normandy Executive Lounge, Option Trader Elite, Executive Lounge members only]

Finally, our June 29th trade from The CAT Came Back recommended buying the CAT June 15th 105 CALL for $9.75 and selling the CAT June 15th 105 PUT for $9.80 for a total credit of $0.05.


Today, the CALLs go for $11.30 and the PUTs for $9.25.  Sell the former and buy back the latter and you net $2.10 on precisely nothing spent.  That’s 1300% in two flarkin’ weeks, and you can make a flag out of it, whistle Dixie and shout – 33,800% ANNUALIZED while you’re at it.


This Week!


We’re returning to the confusion/liar theme for this week’s bet, and playing it in the tech sector.


It looks like this –


To our mind, Tesla was found out in the last two weeks to be a liar.  Price sold off dramatically, and technically we find it hard to picture any sort of meaningful recovery over the short term.


Facebook, however, yesterday hit new all-time highs.


Tsk, tsk, tsk.  We pity the fools who are on board this one at the moment, though there’s little doubt she’s on course to outperform the self-immolating, money-flushing electric car-maker.


Have a look –


- Content protected for Normandy Executive Lounge, Option Trader Elite, Executive Lounge members only]

Many happy returns,


Matt McAbby

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