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Randoms: Goldman, CIT and Moral Hazard


The bank hit the Street with blowout earnings.

Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community.

Gate Sniffage!!! - 10:15 am

  • I had a timely, proactive Buzz ready to roll and the dog ate my homework. I mean, uh, my systems froze and I lost the content. Usually, I would take a deep breath and brush it off. Given I got my arse kicked at a 6am kickboxing session, my crank-o-meter wasn't as forgiving (sorry Sudeer).

  • A gap higher opening (to fade, or make a sale) would have been too easy and nothing is easy in this tape. Well, almost nothing.

  • Be that as it may, I nibbled on some more Research in Motion (RIMM) $60-line puts ($73ish is my defined risk so I'm operating as a function of time and price) and snuck in a schnitzel of Amazon (AMZN) puts (north of $85 remains my cut bait level). Nothing crazy size wise but directionally relevant and always honest.

  • I also took a short-side stab at Goldman (GS) above $150 for two reasons. First, my risk is a buck (I'll stop it out over our aforementioned level). Second, IF it doesn't squirt through to the upside (and it very well might), I would imagine the "insider sales" window will soon open, as it often does after earnings.

  • I'm well aware that until proven otherwise, we're in the lower end of a well-defined range. That is why I continue to trade with a scalpel rather than a sword but make no mistake... If I see the whites of their eyes, I'll channel Braveheart in a big, bold way.

  • How tenuous would social mood be if we traversed the other side of the "W" back towards S&P 760?

  • You know what's awesome? When I offered that "truth" and "trust" are precious commodities and asked what the symbols were, a slew of folks wrote back "(MV)" and "(MVIL)."

  • Good traders know how to make money but great traders know how to take a loss.

  • Expiration influences (increased volatility) typically manifest in the sessions prior to the actual option burials. Keep that in mind when sizing your positions and remember there are a ton of unforeseen catalysts in our midst.

  • And think positive-profitability begins within!

Of Shims and Shams - 11:30 am

  • Is it scary, sad or downright crazy that four people (I'm close with or who are immediate family of people I'm close with) were diagnosed with cancer in the last week alone? Perspective, Minyans, for there is indeed a difference between loss and loss.

  • Hurry Up and Wait! The most anticipated earnings report of the year came and went with nothing, uh, arising as a result. All eyes now turn to the Mother Chip (INTC), which has basically traded in a $2 range for the last four months.

  • Tonight's report has obvious implications for the SOX (Intel is a 6% weighting) so keep half an eye peeled to that multi-year downtrend that would be violated with a move through SOX 275ish.

  • In terms of today's tea leaves, it's pretty quiet in the City of Critters. The dollar? Flat. Breadth? Flat. Super-tell Bank America (BAC)? Flat. Bikinis? Tall. Heels? Small. She said she liked the ocean

  • I've got ten (count 'em!) meetings today, including some double secret Minyanville rehearsals that I'm not allowed to discuss. Please keep that in mind as we edge through the dew and eyeball the Hump.

  • In terms of my trading, I've communicated my risk as well as the levels of relative definition (Goldman Sachs $151, Research in Motion $73 (yikes on the dandruff, eh?) and Amazon $85. We don't do advice in the 'Ville (we don't know your risk profile and time horizon) but we'll always be forthright with how we roll and why.

  • I will share that IF we were gonna trade off (lower) today, it likely would have already happened (why I wanted to see a pop higher on the opening, which I would have laid into). "Setting stops" remove emotion, I know, so consider this a stream of consciousness as we attempt to use price to our advantage.

  • Finally, and of course, this makes all the sense in the world. Some nights I'm happy to have half a cheek on the bed!

  • As always, I hope this finds you well.

More Answers I Really Wanna Know... - 1:05 pm

  • Did you hear that?

  • I believe it was the sound of front-month premium slowly leaking from the option market ahead of Friday's expiry?

  • If you wanna play earnings, but volatility in a particular name is too expensive (let's be careful out there), why not look at tertiary plays along the food chain or in a contemporary company (that aren't as "pumped")?

  • How much "church and state" truly exists with regard to editorial independence at big media?

  • Did I ever mention that Minyanville turned down our very first advertising account because we believed the "brand message" was inconsistent?

  • Do you have any idea how difficult that was to do as a start-up?

  • To Minyan Peter's salient point, did today's two top headlines-"GOLDMAN BLOWS OUT EARNINGS!" and "CIT ON THE ROPES"-pretty much sum up the issue of moral hazard?

  • Does this qualify as a "dull tape" (that we aren't supposed to short)?

  • Are big feet over-rated?


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Positions in RIMM, AMZN, GS
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