Buyers Will Materialize
Post-close warnings from Motorola
(
MOT |
Quote |
Chart |
News |
PowerRating), Alcoa
(
AA |
Quote |
Chart |
News |
PowerRating),
TriQuint Semi
(
TQNT |
Quote |
Chart |
News |
PowerRating) and a miss by Micron
(
MU |
Quote |
Chart |
News |
PowerRating) have put the market under
pressure pre-opening.
Currently, Dow futures are down about 90 points, S&P
futures are down about 7.7
points, and Nasdaq 100 futures are down about 21 points.
Given the time of year and lack of volume, look for buyers
to materialize and try to push
this thing up. A subsequent failure would set
the table for a few days lower.
The VIX and VXN are LOW, LOW, LOW — Short-term buy writers
with profitable positions, hit
the exits! Note — this refers to general buy-write activity,
not the specific trades we have in the buy-write section.
Updates:
(
AZO |
Quote |
Chart |
News |
PowerRating) (AutoZone) — We were filled on our $1.50 bid for the
remaining 50% of the AZO March
55/65 put spread. This brings us up to a 100% position at
a cost of $2.125.
(
BBY |
Quote |
Chart |
News |
PowerRating) (Best Buy) — We were filled on our $2.70 bid for 25%
of the BBY Jan. 60/70 put
spread. This brings us up to a 50% position at a cost
of $3.00.
(
GENZ |
Quote |
Chart |
News |
PowerRating) (Genzyme) — We were filled on our $6.50 bid for a 50%
position in the Jan. 60
straddle. We may be jumping the gun a little in terms of timing,
but we find this one too attractive to resist.
Current Recommendations:
*AZO — Filled! — Buy an additional 50% of the March 55/65 put spread @
1.50. This will bring us up
to a 100% position.
*BBY — Filled! — Buy an additional 25% of the Best Buy
(BBY) Jan. 60/70 put spread for $2.70.
This will bring us up to a 50%
position.
*GENZ — Filled! — Buy the Jan. 60 straddle at $6.50 or
better (50%).
*Buy-writers and other option sellers — time to exit!
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
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/Nov. ‘ 01 40 call calendar @ 3.00 — hold.
Complex Strategies
(
JDSU |
Quote |
Chart |
News |
PowerRating) — Long 1 unit of the Jan. 10 calls and short 2
units of the
Jan. 7.5 puts @ $1.00 credit.
(
GENZ |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 60 straddle at $6.50, (50%)
— hold.
Short-term
Call Positions
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
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 @ 2.125
(100%) — hold.
(
BBY |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 60/70 put spread @ 3.00 (50%)
— 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
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