Santa Bubble Speaks, Market Listens
We’ve got a higher opening this morning,
attributed to positive comments made by Greenspan yesterday after the close. “An
easing of global tensions would spur robust economic growth,” said Herr
Bubblemeister. Anyway, the DJI futures are 65.0 higher, the S&P futures are up
6.30, and the Nasdaq 100 futures are up 7.50. In Europe, the FTSE 100 is up
15.00, the DAX is up 9.35, and the CAC40 is up 14.98. In Asia, the Nikkei rose
19.31 points, and the Hang Seng rose 70.83. Interest rate futures are off
slightly, the dollar is slightly better, crude futures are a tad lower, but gold
futures are off $4.40.
Third quarter GDP (second revision) came in right on the nose, + 4.0%, so no
impact there. Today is expiration day for stocks, futures and options (not to
mention stock futures, too), and that will probably be the driving force behind
today’s action. As always, daytraders should look for stocks with large amounts
of open interest at a particular strike to gravitate toward those strikes (IBM
up to $80.00, etc.). Make some dough on it if you can!
Volatility
Yesterday, the VIX jumped higher, gaining 2.79 to 34.54, the VXN lost
.17 to 49.47, but the QQV gained 1.40 to 42.62.
Update:Â (12/19/02)
DIA — We sold our remaining December 80/84/86/90 condors. We were
lucky and happened to get out right during the mid-morning bulge at $3.50,
others may not have been so lucky, but after we sent out the GET OUT IMMEDIATELY
Alert! you should have been able to exit for $3.25 at the worst, so we will mark
ourselves out at that price. The position is now closed.
HD — We bought another 25% of the HD January 25 calls at $1.50, this gives us a
50% position at an average of $1.75.
New Recommendations
PG — Cancel the recommendation to buy the PG April 75 /85 put spread
at $2.00
Working Orders (Old Recommendations)
KSS — Sell half of our January 50/60 put spreads at $5.00 (to close).
QQQ — Subscribers short the January 23/26 call spread at $1.50 (25%), leave an
order in the market to purchase the spread at $1.50 to close the trade.
Recap of open trades
Long-term
Reverse Collars
None.
Buy-writes
None.
Proxy buy-writes
DYN — Long the January 15 calls at $3.20 — left over from proxy buy-write
(50%). Left for dead.
Complex Strategies
BGEN — Long the January 40/45 box (25%).
Directional Positions
None.
Short-term
Call Positions
HD — Long the January 25 calls at $1.75 (50%).
Call Spread Positions
DIA — Long the December 80/84/86/90 call condor at $1.20 (25%).
Sold half at $3.00 12/17/02. Sold remainder at $3.25, 12/19/02.
QQQ — Short the January 23/26 call spread at $1.50 (25%).
Put Positions
None.
Put Spread Positions
BAC — Long the January 60/70 put spread at $2.90 (25%).
KSS — Long the January 50/60 put spread at $2.475 (50%).
PG — Long the April 75/85 put spread at $2.50 (25%).
Stops
KSS — Two consecutive closes
over $74.00.
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- Options trading involves substantial risk and
is not suitable for all Investors. - Also note that spread strategies involve
multiple commissions and are not risk-free. Most spreads must be done in a
margin account.
- Because of the importance of tax
considerations to all options transactions, the investor considering options
should consult with a tax advisor as to how taxes may affect the outcome of
contemplated options transactions.
- Supporting documentation for claims,
comparisons, recommendations, statistics or other technical data will be
furnished upon request. One or more of the contributors to these
commentaries may have a position in one or more of the securities mentioned.
- It is important to note that the options
strategies discussed herein are not suitable to all investors. Options are
complex investment tools and involve substantial risk. Moreover spreading
strategies do not eliminate risk and involve multiple commissions.
- Note: All individuals must have read the ODD
carefully before trading options. To obtain the document, click on the OCC
link: https://www.theocc.com/publications/risks/riskchap1.jsp