Keep An Eye On Volatility
Futures are trading better at the moment,
pointing to a higher opening on the back of strong overseas markets. In Europe,
the FTSE 100 is up 59.10 points, or 1.35%, the DAX is 106.86 points, or
2.84% higher, and the CAC 40 is up 79.82 points, or 2.32% .
In Asia, the Nikkei gained 21.92 points, or .23%, while the Hang Seng lost 5.75
points, or .39%. The dollar is a shade higher, fixed income is lower, crude is
sharply lower, and gold is close to unchanged.
On the corporate front, Radio Shack has warned that they will earn about 30%
less in Q3 than current forecasts of $.33. The stock is sharply lower in
pre-market trading, dropping by about $6.00 from last night’s close. This news
is also pressuring other consumer electronics retailers (BBY, CC, etc.).
Volatility
Yesterday volatility got a small pop on the back of the selloff, but
still remains in a solid downtrend. With today’s higher opening, volatility
should once again be offered, but it is now down to a level that should be able
to attract some buying interest. Keep an eye on volatility as a leading
indicator of market direction today. A higher opening with rising volatility may
indicate a selloff later in the day.
Trade Updates (8/20/02)
None.
New Actions (New Recommendations)
None. Watching retailers for shorts.
Working Orders (Old Recommendations)
None.
Working Rolls/Adjustments
None.
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%).
Short-term
Call Positions
None.
Call Spread Positions
None.
Put Positions
None.
Spread Positions:
(
C |
Quote |
Chart |
News |
PowerRating) — Long the December/August 30 put calendar spread at $1.70 (25%).
August puts expired worthless, now long the December puts at $1.70.
C — Long the December/September put calendar spread at $1.00 (25%).
C — Long the January/September 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.
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Click
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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