Can This Hold Up?
Slightly better this morning. It will be important to see
if this opening can hold after
Friday’s beating. Focus on the
(
$SOX.X |
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Chart |
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PowerRating) index and
(
IBM |
Quote |
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PowerRating).
The VIX/VXN/QQV all ticked up Friday, and we have probably
seen the lows there. Naturally,
that would not bode well for the market given their
inverse relationship.
Updates:
NONE.
Gamma Scalping:
(
GENZ |
Quote |
Chart |
News |
PowerRating) — GENZ is going to gap lower today, and this
should put a top in the pattern,
given the action in the other biotechs is rather smelly.
Standard deviation levels today based on a 45% annual
volatility are 58.17-61.55.
This means that we will be looking to buy some stock in or
near the 58.20 area against our position. For every 10 straddles you
own, you will be short 200 shares of stock at
that price.
Naturally, if you think GENZ has broken down and is going
straight into the toilet, you
don’t have to buy ANY stock on this break, and you can let
it ride.
(
BBBY |
Quote |
Chart |
News |
PowerRating) — We bought the Jan. 35 straddle Friday for
$2.85. The daily standard
deviation levels there are 32.95-34.85.
I will be giving a running commentary as we continue to
trade against these positions.
Current Recommendations:
GENZ — Continue Gamma scalping the GENZ straddle.
BBBY — Continue Gamma scalping the BBBY straddle.
Rolls/Adjustments:
(
TLAB |
Quote |
Chart |
News |
PowerRating) — Place an order to buy the TLAB March 15
put/March 22.5 call collar for
$1.00 (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 the Jan.
25 calls.
(
UAL |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .70 — Oct.’s went
out worthless, holding Jan. 25
calls, looking like rip-ups.
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. Note: We have covered the Jan.
12.5 puts at $.05. This effectively leaves us long the Jan. 15
calls at $.10.
(
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 (100%) — 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 — Long 1 unit of the Jan. 10 calls and short 2 units
of the Jan. 7.5 puts @ $1.00
credit.
GENZ — Long the Jan. 60 straddle at $5.95 average cost,
(100%) — hold.
BBBY — Long the Jan. 35 straddle at $2.85 (100%) — 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.
(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 120 puts @ 2.60 (50%) — hold.
Put Spread Positions
(
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.
-Joe Corona
|
|
*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