Be Nimble, Be Agile, Buy Agilent?
Another mushy day on Wall Street today, as traders stay on
the sidelines. General Electric
PowerRating), LSI Logic Corp.
and Lucent Technologies
PowerRating) top several most-active option lists, but there
isnâ€™t much happening here on the floor. LSI volatility is popping, as the
stock is down 5 3/8 and the vol has jumped to 95% near-term. Likewise, Lucent is
down to a fresh 52-week low, down 3 3/16 to 17 3/4 and the near-term volatility
is up to 80% from an average 65%.
Still, the bears are in charge, so why catch the falling
knife? Instead we looked at one of the tech stocks that seems to have turned
The electronics testing and manufacturing companyâ€™s shares
are up 5 3/8 to 50 (as of 11:25 am CST) and the near-term volatility is down to
63% from the high 80s yesterday
If you look at the chart, you see the unsustainable gush of
buyers back in February that sent the stock to $160, but the corresponding slump
to several bounces down at $40.
February 50 â€” 60 bull-call spread is trading for 3 5/8, if they buy the Feb 50
call for 7 3/4 and sell the Feb 60 call for 4 1/8. Most traders like the upside potential
and the fact that the Feb volatility is still hanging in the mid-70s. The
bull-call allows the buyer to play that upside without the same drawback of time
decay and or volatility contraction that hurt the naked option buyer.