Watching The Tape

Futures are a tad better at this hour. April
Personal Income and Consumption was slightly positive with income in line (+0.3%
vs. expectations of +0.3%), and consumption lower than expected (+0.5% vs.
expectations of +0.7%). At 9:00 CDT, May consumer confidence (108.8 expected)
will be released along with April existing home sales (5.4 million expected).
The consumer confidence number is the biggie…

In Europe, the FTSE was down 0.5% to 5111, and the DAX was up 0.1% to 4967. In
Asia, the Nikkei was down 0.3% to 11,936, and the Hang Seng gained 0.2% to
11,582. I honestly don’t know what to expect today because it will still be
somewhat of a holiday market. Before the consumer confidence numbers, I’d be
sitting back and watching the tape, folks. Also, the dollar is back on its heels
again…

Volatility

Volatility hung tough Friday, which was impressive given the fact that
it was in front of a three-, four- or five-day weekend. The VIX gained 81 to
21.16, the VXN dropped .34 to 42.86, while the QQV gained .91 to 37.09.

Trade Updates (5/24/02)

(
JNJ |
Quote |
Chart |
News |
PowerRating)
— We were once again unable to buy any additional January 60 puts at
$3.30. The drug sector is getting pounded (with the exception of JNJ of course),
so we may not have a chance in the near future.

No other trades today.

New Actions (New Recommendations)


(
QQQ |
Quote |
Chart |
News |
PowerRating)
— Buy a 25% allocation of the July 33 puts in the $32.25 –
$32.50 zone.

Working Orders (Old Recommendations)


(
CHIR |
Quote |
Chart |
News |
PowerRating)
— Sell all CHIR July 50 calls at $1.00 to close.

(
MSFT |
Quote |
Chart |
News |
PowerRating)
— Buy the June/July 50 put calendar spread (buy the July 50 puts,
sell the June 50 puts) at $.50 (50%).

Rolls/Adjustments


(
DYN |
Quote |
Chart |
News |
PowerRating)
— Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the January 15 calls, short the June 20 calls at $3.20),
buy the June 20 calls (to close) and sell the September 17.5 calls (to open) for
$1.25 credit (to you).

Recap of open trades

Long-term

Reverse Collars

None.

Buy-writes


(
AMR |
Quote |
Chart |
News |
PowerRating)
— Long the August 25 buy-write at $22.00 (50%).


(
AOL |
Quote |
Chart |
News |
PowerRating)
— Long the July 22.5 buy-write at
$19.40 (50%).

AOL — Long the October 20 buy-write at $16.30
(25%).


(
HAL |
Quote |
Chart |
News |
PowerRating)
— Long the July 17.5 buy-write at
$14.25 (100%).


(
SEBL |
Quote |
Chart |
News |
PowerRating)
— Long the August 27.5 buy-write at
$23.00 (50%).

Proxy buy-writes


(
DYN |
Quote |
Chart |
News |
PowerRating)
— Long the January 15/June 20 proxy buy-write at $3.20 (50%).

Complex Strategies

None.

Directional Positions


(
GM |
Quote |
Chart |
News |
PowerRating)
— Long the January 60 puts at $3.30 (20%).


(
JNJ |
Quote |
Chart |
News |
PowerRating)
— Long the January 60 puts at $3.30
(50%).
 

Short-term

Call Positions


(
CHIR |
Quote |
Chart |
News |
PowerRating)
— Long the July 50 calls at $3.30 (50%).

Call Spread Positions

None.

Put Positions


(
BAC |
Quote |
Chart |
News |
PowerRating)
— Long the August 65 puts at $1.50 (50%).


(
DJX |
Quote |
Chart |
News |
PowerRating)
— Long the June 100 puts at $1.85
(50%).


(
MER |
Quote |
Chart |
News |
PowerRating)
— Long the July 40 puts at $1.50
(50%).


(
SMH |
Quote |
Chart |
News |
PowerRating)
— Long the June 40 puts at $1.75
(50%).


(
TGT |
Quote |
Chart |
News |
PowerRating)
— Long the June 40 puts at $.85 (75%).

Spread Positions


(
MER |
Quote |
Chart |
News |
PowerRating)
— Long the June/July 40 put calendar at $.50 (50%).

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