Greek citizens are probably feeling like their world has come to an end. The title stands for "the end of the world as we know it." That phrase has been used many times to forecast some apocalyptic event expected in the future. For Greece that has certainly come true.
Their calm orderly lifestyle has come to a screeching halt with banks closed for a week or longer. ATMs limited to withdrawals of 60 euros per day if you can find an ATM with money. Greek bankcards are no longer good outside Greece. Monthly subscriptions to things like cell phone service, cloud backups, monthly insurance drafts, etc are no longer being paid if the company is outside of Greece.
Food, gasoline, medicine are all imported in Greece and with the capital controls preventing money leaving the country the import trade is dying. If there is a no vote on Sunday there is a good chance the banks will reopen with newly printed Drachma's instead of euros and that currency will only be accepted in Greece.
Fortunately for Greek citizens the tide has turned and voter polling suggests they will vote yes to accept the bailout conditions and reopen for business at some point in the future. The market rallied on a softening in the tone of PM Alexis Tsipras but the EU ministers are still playing hardball. Nothing is going to happen until after the vote.
The markets opened higher and then sold off slightly as the headlines continued to pour in. By late afternoon it was evident how the Greek drama would likely play out and buyers came in to pick up some bargains.
Friday should see some more of the same with any opening spike sold and then a very low volume rise in the afternoon. However, there is always the possibility of an unexpected event in Greece and that could prompt some caution ahead of the long weekend.
The market downdraft on Monday was very beneficial for the portfolio since we are mostly in bear call credit spreads. Wynn Resorts was the exception. It was down hard on Monday but exploded higher the last two days to stop us out on a change in attitude by China over Macau.
Despite the market rebound from Monday's lows, we are still in a negative trend since the highs on the 22nd. This could be reversed with a positive result in Greece but today that is still a coin toss.
This will be the last week for July strikes. We will move to August strikes next week.
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Current Position Changes
Stop Loss Updates
Check the graphic above for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline.
WYNN - Wynn Resorts (Stopped)
We are cursed over Wynn. Every time we have tried to play it, there was a headline spike that stopped us out. WYNN shares declined -2.50 on Monday to close at $94. I thought we were golden at that point with Macau gaming revenue for June expected to be the worst decline on record. On Tuesday China relaxed the visa rules for gamblers to Macau. They can now stay 7 days instead of 5 and they can visit twice every 30 days rather than twice every 60 days. This was a huge deal for the casinos. When the government limits how many times you can go and how long you can stay, gamblers are at the government's mercy. WYNN shares spiked +$4.68 on the visa news.
June gaming numbers were released today and revenue declined -36%. That was slightly better than expected with a decline in May of -37.1% and May 2014 at -3.7%. Gross gaming revenues are down -37% for the year to date. Because the numbers were not worse than May WYNN spiked another $4.40 to close at $103 after touching $107 intraday.
There was a heavy short interest in WYNN for obvious reasons. Both events caused short squeezes and the best laid plans quickly evaporated.
We were stopped on the short call at $102.45 for a loss of 90 cents. The long call is up significantly and I am recommending we close it because I don't think this rally is going to stick. If I had any guts I would reenter the play but we have been burned too many times on WYNN. The headline spikes are simply too volatile.
Closed July $105 short call, entry .84, exit 1.74, -.90 loss.
Close July $110 long call, entry .33, currently .79, +.46 gain.
Net loss 44 cents.
SNDK - Sandisk (Bear Call Spread)
The Micron guidance warning has sent all the chip stocks into a dive. Sandisk is one of the worst. The stock broke support last week and is accelerating to the downside.
Earnings July 22nd.
Sell short July $60 call, currently .50, stop loss $58.85
Buy long July $63 call, currently .19, no stop.
Net credit 31 cents.
XOP - Oil Exploration ETF (Bear Call Spread)
Oil prices typically weaken after the July 4th weekend. Crude prices sank -2.50 today because of an unexpected build in crude inventories. The post holiday gain in inventories appears to have started early. The Iranian talks are ongoing and past their June 30th deadline. If any deal is made with Iran that removes sanctions there will be an immediate flood of oil on the market from the 30-40 million barrels they have stored on tankers in the Persian Gulf. They will also ramp up production by another 1.0 million barrels per day within 90 days and add to an already flooded market. There was news today that OPEC was also pumping at a record amount of 32 mbpd and 2 million over their target quotas. U.S. production was 9.595 mbpd last week and only about 15,000 bpd under the record set three weeks ago. Crude production is not falling but prices are going into decline. Energy earnings are going to be ugly.
Sell short July $47 call, currently .44, stop loss $46.25
Buy long July $49 call, currently .14, no stop.
Net credit 30 cents.
Existing Play Recommendations
Links to original play recommendation
GMCR - Green Mountain Coffee (Bear Call Spread)
HLF - Herbalife (Bull Put Spread)
Z - Zillow (Bear Call Spread)
NSC - Norfolk Southern (Bear Call Spread)
APC - Anadarko Petroleum (Bear Call Spread)
HP - Helmerich & Payne (Bear Call Spread)
WYNN - Wynn Resorts (Bear Call Spread)
Prices Quoted in Newsletter
At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.
The prices quoted in the newsletter are the end of day prices in most cases.
When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.
For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.
For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.
All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.