An Important Bond Market Development
We are looking steady to slightly lower on the opening.
Dynegy
(
DYN |
Quote |
Chart |
News |
PowerRating) is going to
take a Q4 charge of 125 MM due to Enron
(
ENE |
Quote |
Chart |
News |
PowerRating) exposure and has lowered guidance to EPS 2.30 – 2.35 vs.
previous 2.50 – 2.60. The stock is
trading about $2.00 lower in pre-market trading.
The meltdown in the bond market continues. This is an
important and disturbing
development for the market. We can pretty much forget any spending
lift due to refinancing now.
Tomorrow on the economic front, we have November housing
starts. The big numbers will be
Friday, with Q3 GDP (expected -1.1%), personal income (expected
+.2%), personal spending (expected -.5%), and then the U of M sentiment
numbers.
Best Buy
(
BBY |
Quote |
Chart |
News |
PowerRating) and Circuit City
(
CC |
Quote |
Chart |
News |
PowerRating) earnings
tomorrow.
Due to a software glitch, the Fibonacci and moving average
levels for the major indices in
this weekend’s IV were somewhat garbled. Below is a reprint:
| Index |
20-day MA |
50-day MA |
200-day MA |
61.8% |
50% |
38.2% |
| DJI |
9899.5 |
9589.3 |
10117.4 |
10094.10 |
 9706.15 |
9318.20 |
| S&P Cash |
1143.07 |
1113.60 |
1171.62 |
1174.14 |
1130.34 |
1086.54 |
| QQQ |
40.31 |
37.32 |
40.62 |
42.30 |
39.42 |
 36.54 |
| COMP |
1950.8 |
1822.2 |
1935.2 |
1968.54 |
1857.50 |
1746.46 |
Updates:
We are working to buy the Autozone
(
AZO |
Quote |
Chart |
News |
PowerRating) March 55/65
put spread at $1.50, currently
unable. This will bring us up to a 100% position in the spread.
Current Recommendations:
We recommend scaling into ONE of the following
short positions in retail stocks:
*
(
WMT |
Quote |
Chart |
News |
PowerRating) — Buy the Jan. 55 puts @ 2.35, 50% position.
*
(
BBY |
Quote |
Chart |
News |
PowerRating) — Buy the Jan. 60/70 put spread @ 3.50 or
better, 50% position.
*
(
TGT |
Quote |
Chart |
News |
PowerRating) — filled 12/13 — Buy the remaining Jan. 35
puts @ 1.1.0-1.20, go to a 100%
position.
*
(
AZO |
Quote |
Chart |
News |
PowerRating) — working — Buy an additional 50% of the
March 55/65 put spread @ 1.50,
this will bring us up to 100% position.
*Buy-writers in general — scale purchase protective puts.
Complete by Christmas.
Rolls/Adjustments:
(
AMR |
Quote |
Chart |
News |
PowerRating) — Those of you with Jan. ’02 25 calls from the
calendars you may:
A) Put a $1.50 offer in for the Jan. 25 calls to liquidate
B) Put a. $.50 offer in for the Dec. 25 calls to roll
into the Jan./Dec. 25 call calendar at a net
cost of .25
(
JDSU |
Quote |
Chart |
News |
PowerRating) — Filled! Put a $1.00 bid in for the JDSU
Jan. 10 calls that we previously
sold for $3.00. These calls were a part of the original JDSU Jan.
7.5 put/Jan. 10 call reverse-collar strategy.
Recap of open trades:
Long-term
Airline calendar spreads
(
AMR |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .75 — Oct.’s went
out worthless, holding Jan. See
rolls above.
(
UAL |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .70 — Oct.’s went
out worthless, holding Jan.
Butterflies
(
DELL |
Quote |
Chart |
News |
PowerRating) — Long the DELL Dec. 20/25/30 call butterfly
at 1.75.
Reverse Collars
(
AWE |
Quote |
Chart |
News |
PowerRating) Jan. 12/15 reverse collar (long the Jan. 15
calls, short the Jan. 12.5 puts)
@ .05 average. Stop below.
(
TLAB |
Quote |
Chart |
News |
PowerRating) March 17.5/15 reverse collar (long the March
17.5 calls, short the March 15
puts) @ 1.50 credit average.
Buy-writes
*
(
AMZN |
Quote |
Chart |
News |
PowerRating) Jan. ’03 10 buy-write @ 5.15 (2 units) —
hold.
*
(
JDSU |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 buy-write @ 9.60 — hold.
Proxy buy-writes
(
BA |
Quote |
Chart |
News |
PowerRating) Jan. ’03 35/Jan. ’02 40 call calendar @ 5.00 —
hold.
BA Jan. ’03 40/November ‘ 01 40 call calendar @ 3.00 —
hold.
Complex Strategies
JDSU — Long 1 unit of the Jan. 10 calls and short 2 units
of the Jan. 7.5 puts @ $1.00
credit.
Short-term
Call Positions
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
(
CIEN |
Quote |
Chart |
News |
PowerRating) — Long the Dec. 22.5 calls @ 1.05, exited at
.05 — total loss.
Put Positions
(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 35 puts @ 1.15 (100%) — hold.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 55 puts @ 2.35 (50%) — hold.
Put Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the Dec. 55/60 1:2 ratio put spread at
.30 — hold.
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the March 55/65 put spread @ 2.75 (50%)
— hold.
(
BBY |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 60/70 put spread @ 3.30 (25%)
— hold.
STOPS
(
AWE |
Quote |
Chart |
News |
PowerRating): Stop @ 12.25 close only.
(
WCOM |
Quote |
Chart |
News |
PowerRating): Stop @ 13.95 close only.
(
TLAB |
Quote |
Chart |
News |
PowerRating): Stop @ 11.95 close only.
|
If you would like to receive Tony and his trading |
*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