A Little Higher?
The market is
poised to open a little higher on Wednesday, with CSCO up 6% after
an upgrade by Merrill Lynch and the reshuffling of the S&P index.
In pre-market trading the DJIA futures
are up 42 points, the NASDAQ futures are up 15 points and the S&P index is up
3.50 points.
The overall market made a strong
statement yesterday by trading sharply lower after President Bush made some mean
“bleep” comments directed at corporate CEOs. The market wants less talk and more
action. This reminds me of a line from the movie “The Good, The Bad and The
Ugly”: “If you’re going to shoot … shoot, don’t
talk.”
International markets are generally
lower this morning with the DAX -76.49 at 4293.27 -1.8%, the FTSE down -43.30 at
4499.60 -1.0% and the NIKKIE down 207.59 at 10752.66 -1.9%.
A contributing factor to the
pre-market’s rise is the reshuffling of the S&P index. Standard and Poors said
it was replacing seven non-U.S. companies in the index with U.S. businesses, to
comply with its current criteria. Some of the companies added are Atrs Inc. (ERTS),
Goldman Sachs (GS), Prinicpal Financial (PFG), SunGard Data (SDS), United Parcel
Service (UPS) and Ebay Inc. (EBAY).
For the past 30 months selling
strength has been rewarded and I don’t think that has changed. There is too much
doubt in the market concerning irregular accounting practices and the threat of
international terrorist activity for the market to stage any type of sustainable
rally. I think the 52 week low in the SOX index (343.72) and the 52 week low in
the software index GSO (100.06) are attainable.
Volatility
Two of the volatility indexes went up today, with the VXN gaining 1.04 to
59.26, and the QQV gaining 3.75 to 52.95. However, the VIX dipped downwards at
the close, closing down fractionally -.19 to 315.3 .
Trade Updates (Wed 7/10/02)
None
New Actions (New Recommendations)
None
Working Orders (Old Recommendations)
AMGN – Sell half of the January 30 /40 put spread at $5.00.
IWM – Sell half of the November 80 /90 put spread at $5.00
BAC – Continue to offer half of the August 70 puts at $5.00.
CHIR- Sell all CHIR July 50 calls at $1.00 to close.
Rolls/Adjustments:
SEBL – For those long the SEBL August 27.5 buy-write: Buy the SEBL
August 27.5 calls (to close) ans sell the November 20 calls (to open) for $2.00
credit.
Recap of open
trades:
Long-term
Reverse
Collars:
Buy-writes:
AMR – long the August 25 buy-write at $22.00 (50%). Long July 15 puts )at
$.70.
AOL – long the July 22.5 buy-write at $19.40 (50%).Long July 10 puts at $.30.
AOL -long the October 20 buy-write at $16.30 (25%).Long July 10 puts at $.30.
HAL -long the October 17.5 buy-write at $13.25 (100%).
SEBL – long the August 27.5 buy-write at $23.00 (50%).Long July 10 puts at $.35.
Proxy buy-writes:
DYN – long the January 15 calls at $3.20 – left over from proxy buy-write
(50%).
Complex Strategies:
None
Directional Positions:
AMGN – Long the January 30 /40 put spread at $3.00 (25%).
TGT – Long the January ’03 35 puts at $2.58 (75%).
Short-term
Call Positions:
CHIR – Long the July 50 calls at $3.30 (50%).
Call Spread Positions:
None
Put Positions:
BAC – Long the August 70 puts at $2.60 (100%). Sold 10% at $5.00, 6/26/02.
Spread Positions:
IWM – Long the November 80 /90 put spread at $3.00 (25%).
MMM – Long the October 110 / 120 put spread at $2.80 (100%).
SMH – Long the July / August 32.5 put spread at $.70 (25%).
Stops
None.
Note: Options trading involves
substantial risk and is not suitable for all investors. Spread strategies
involve multiple commissions and are not risk free. The investor should consult
with a tax advisor concerning the effect of taxes. Supporting documentation for
the above claims is available upon request.
Â