A Good Old-Fashioned Rinsing
The market is set to open higher this morning on the back of good
economic data, and some happy-talk from Novellus Systems (NVLS). Initial jobless
claims came in better than expected at 364k versus an expected 383k, while
personal income and personal spending came in up 1.0% and up 0.4% respectively,
both 0.1% better than expected. Later this morning we have a boatload of economic
data including durable goods orders (exp. + 1.8%), consumer sentiment (exp. at
85.0), Chicago PMI (exp.48.5), the help wanted index (exp. 44), and the Fed’s
Beige Book report. Enough for you?
Last night, semiconductor-equipment maker Novellus Systems affirmed its fourth-quarter outlook Tuesday, saying it expects
lower revenue but higher net income thanks to cost-cutting. The company said net
bookings have "firmed" and are targeted at $200 million to $210 million, up
about 5.0% from previous expectations.
Currently, DJI futures are up 50.0, S&P futures
are up 8.50, and Nasdaq 100 futures are up 19.50. In Europe, the FTSE 100 is up
42.20 points or 1.04%, the DAX is up 63.14 points or 1.98%, and the CAC 40 is up
47.27 points or 1.47%. In Asia, the Nikkei gained 51.89 points or .59%, while
the Hang Seng fell 50.93 points or .51%. Interest rate futures are under
pressure this morning in response to rising stock index futures, the dollar is
showing a slight rise against the major foreign currencies, and crude futures
are $.36 higher, while gold futures are unchanged.
Today is a half-day at most futures exchanges, with the exception of stock index
futures of course, so it will be thin and choppy this afternoon. Try to avoid
establishing new positions and manage what you have. Any of the economic data
rolling out between 08:45 and 09:00 CST have the power to move the markets
greatly, don’t get caught asleep at the wheel!
Those subscribers long the SMH December 30 calls, sell them into this
morning’s opening!
Volatility
Yesterday, volatility came back from the grave. The VIX rose 1.79 to
29.31, the VXN jumped 2.31 to 47.99, and the QQV rose 1.71 to 41.24.
Update: (11/26/02)
GILD — Bought the January 40 calls at $1.85
(25%), and $1.35 (25%). Use a $34.50 closing only stop on this position.
SMH — Close, but no cigar. This recommendation is now cancelled. Those who were
able purchase the December 30 calls at $1.00 earlier in the week, sell them into
a higher opening, hold them into a lower opening tomorrow.
WAG — Close, but no cigar.
New Recommendations
BGEN — Sell the remaining January 40/45 call spreads at $3.00 (to
close).
SMH — Subscribers long the December 30 calls, sell them into this morning’s
opening and close the position.
Working Orders (Old Recommendations)
HAL – Sell the Halliburton January 15 buy-write at $14.50 to close.
WAG — Sell the remaining January 30/35 put spreads at $4.00 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
HAL — Long the January 15 buy-write at $12.05 (100%).
Proxy buy-writes
DYN — Long the January 15 calls at $3.20 — left over from proxy buy-write
(50%). Left for dead.
Complex Strategies
None.
Directional Positions
None.
Short-term
Call Positions
None.
Call Spread Positions
BGEN — Long the January 40/45 call spread at $1.25 (25%).
CIEN — Long the January 5/7.5 call spread at $.05 (25%).
DIA — Long the December 80/84/86/90 call condor at $1.20 (25%).
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%).
WAG — Long the January 30/35 put spread at $1.00 (25%).
Stops
GILD — $34.50 closing only.
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