Futures Up Into Delayed Opening
Futures have rallied sharply, as
have European markets as the morning has gone on. As of an hour-and-a-half ago,
DJI futures were 43.0 better, S&P futures were 10.50 higher, and Nasdaq 100
futures were 21.50 points higher. My European counterparts here in the office
tell me that telecom and semiconductor stocks are very strong in Europe today.
Currently, the FTSE 100 is showing a gain of 53.50 points, or 1.28%, the DAX is
up 103.79 points, or 2.97%, and the CAC 40 is up 80.73 points, or 2.45%. In
Asia, the Nikkei gained 90.77 points, or .98%, and the Hang Seng dropped 3.42
points.
In other markets, interest rate futures are sharply lower, the dollar is strong
against the major currencies, crude futures are slightly lower, and gold futures
are down another $1.10. All of the outside markets are bullish at the moment.
Today the Fed releases its Beige Book report, and the release time has been
moved up to 11:00 CDT. This has the potential to be a major market-moving event,
so be on your toes.
Today is going to be a weird day. I am sure that most of us will be busy
thinking of the events of one year ago, of the friends and colleagues that were
lost, and of their families. I can look out my window and the Sears Tower is
only a few hundred feet away. It could have just as easily been me or any of us,
but it wasn’t, and for that I feel a little guilty, and not really in the mood
to trade today. I’m sure volume will be light, feelings will be enflamed, and
emotions will be running high. An emotional, defiant rally almost has to occur,
and I would not stand in the way of it. Everyone should probably focus on
daytrading and going home flat at the end of the day if you do trade.
A trade that has been on and off the front burner, buying bearish put calendar
spreads in the oil sector, is being moved back to the front burner. After
reviewing volatility structure and technical structure, we will come out with a
recommendation today.
Volatility
Volatility took another whipping yesterday with the VIX falling 1.44 to 36.96,
the VXN losing 2.40 to 53.07, and the QQV falling 1.99 to 46.10. It is looking
increasingly likely that we have seen the highs in volatility for the year.
Update: (09/10/02)
Kohl’s
(
KSS |
Quote |
Chart |
News |
PowerRating) — We bought the January 60/70 put spread at $3.00
(25%).
Sears
(
S |
Quote |
Chart |
News |
PowerRating) — We bought the January 35/45 put spread at $3.00 (25%).
New Actions (New Recommendations)
Clear Channel Communications
(
CCU |
Quote |
Chart |
News |
PowerRating) — Buy the October 35 calls at
$2.50 or better on declines into $34.75 – 35.25 support. Halt any purchases if
the stock drops below $34.50 tomorrow. This is a “nibble”
recommendation, so dip your toe in for 10% or so.
Working Orders (Old Recommendations)
(
MMM |
Quote |
Chart |
News |
PowerRating) — Sell 25% of the October 110/120 call spread at $4.00 and 25% at
$5.00 (away now).
Retailer Shorts (getting closer!)
Kohl’s
(
KSS |
Quote |
Chart |
News |
PowerRating) — On an approach to the 70.00 area, buy the January
60/70 put spread for $3.00 or less (25%). Filled!
Sears
(
S |
Quote |
Chart |
News |
PowerRating) — On an approach to the 47.00 area, buy the January 35/45
put spread for $3.00 or less (25%). Filled!
Walgreen’s
(
WAG |
Quote |
Chart |
News |
PowerRating) — On a rally into the 35 – 37 area, buy the
January 35 puts outright, beginning at the $2.50 level or less (25%).
Recap of open trades
Long-term
Reverse Collars
(
CIEN |
Quote |
Chart |
News |
PowerRating) — Long the January 2.5/5 reverse
collar at $.40 (25%).
Buy-writes
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the January 15 buy-write at $12.05 (100%).
Proxy buy-writes
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15 calls at $3.20 — left over from proxy
buy-write (50%). Left for dead.
Complex Strategies
None.
Directional Positions
(
AMGN |
Quote |
Chart |
News |
PowerRating) — Long the January 30/40 put spread at $2.50 (50%).
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the January 50/60 put spread at
an average price of $2.50 (75%).
(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the January 50/60 put spread at $2.00 (50%).
(
KSS |
Quote |
Chart |
News |
PowerRating) — Long the January 60/70 put spread at $3.00 (25%).
(
S |
Quote |
Chart |
News |
PowerRating) — Long the January 35/45 put spread at $3.00 (25%).
Short-term
Call Positions
None.
Call Spread Positions
DJX — Long the September 86/90 1:2 ratio call spread at $.50 (50%).
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the September 23/26 1:2 ratio call spread at $.50 (50%).
Put Positions
None.
Spread Positions
(
C |
Quote |
Chart |
News |
PowerRating) — Long the December/September 30 put calendar spread at $.975 (50%).
C — Long the January/September 30 put calendar spread at $1.20 (50%).
(
MMM |
Quote |
Chart |
News |
PowerRating) — Long the October 110/120 put spread at an average price of $2.65
(100%).
Stops
None.
|
|
- 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