Dollar Under Pressure Again
The big story this morning (at least
to me) is the continued markdown of the dollar. The Bank of Japan is intervening
to support the dollar again this morning — to little effect, and the dollar is
making fresh lows against the euro and Swiss franc. The BoJ has purchased
dollars from about the Y 121.20/30 area up to the 122.30 -122.70 area. Before
the intervention, the dollar had fallen as low as Y 120.99. This is sure to put
pressure on the markets (particularly the DJI) right on the open.
Currently, DJI futures are 47 lower, S&P futures are 4.40 lower, and Nasdaq
100 futures are 18.50 lower. Russell futures appear to be a shade higher. In
Europe, the FTSE was down 1.3%, and the DAX was down hard, losing 2.6%. In Asia,
the Nikkei was up 1.1% while the Hang Seng gained 6%.
Volatility was oddly mixed Friday. The VIX dropped 1.22 points to
31.28, the VXN cruised to new highs for the move and levels not seen since last
fall, gaining 1.37 to 59.30! Last November’s high was 63.14 — phew! The QQV was
more or less unchanged today, settling at 50.74, +.03. The QQV made an intraday
high of 53.42, levels not seen since last October/November.
Volatility is screaming and there should be a climax in here somewhere — but
never stand in front of a freight train.
Trade Updates (6/21/02)
PowerRating) — We sold the July/October 17.5 call calendar spread (buying
the July 17.5 calls to close, selling the October 17.5 calls to open) at $1.00
to “roll” our buy-write position. This leaves us long the HAL October
17.5 buy-write at $13.25 (100%).
PowerRating) — We sold the JNJ January ’03 50/60 put spread today for $5.00. This
closes our January ’03 60 put position (long 37.5% at $3.30), and rolls us into
the January ’03 50 puts at $1.70 credit!
PowerRating) — We bought another 25% of the TGT January ’03 35 puts at $2.80
(after missing them at $2.20 yesterday). This raises us to a 50% allocation at
an average cost of $2.40.
New Actions (New Recommendations)
Working Orders (Old Recommendations)
PowerRating) — Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the JanuaryÂ 15 calls, short the June 20 calls at $3.20),
buy the JuneÂ 15 calls (to open) and sell the September 17.5 calls (to open)
for $1.00 credit (to you).
Recap of open trades:
AOL — Long the October 20 buy-write at $16.30
Call Spread Positions
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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
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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.
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