Expecting A Bounce?
Futures are indicating as slightly better open
this morning. Currently, DJI futures at the Board are up 34 points, at the Merc,
S&P futures are unchanged and Nasdaq futures are up 2 points. Futures seem
to be dropping rapidly as the rumors fly over Knight Trading
(
NITE |
Quote |
Chart |
News |
PowerRating).
Reportedly the stock traded as low as 14 cents a share before
the stock was halted! (I know trading stinks this year, but there are rumors
that Knight is going out of business!) Tyco
(
TYC |
Quote |
Chart |
News |
PowerRating) is also getting
pounded on the back of Kozlowski’s resignation under the cloud of possible tax
evasion.
Since we made it through the weekend without a nuclear holocaust, I would expect
a bit of a bounce today (put buying opportunity), but the early rally predicted
by the futures seems to be vaporizing in front of my eyes. Europe is basically
closed today for Bank Holiday Monday. In Asia, the Nikkei gained 1.2% to 11,901,
and the Hang Seng added 0.5% to 11,360. The dollar is mostly unchanged, as is
crude oil.
Volatility
Volatility was generally lower Friday, with the VIX dropping 34 to
22.80, the VXN losing .67 to 45.95, and the QQV gaining .09 to 38.21.
Trade Updates (5/31/02)
(
JNJ |
Quote |
Chart |
News |
PowerRating) — Friday we bought another 25% of the January 60 puts at
$3.30.
(
SMH |
Quote |
Chart |
News |
PowerRating) — Friday we blew a chance to buy the SMH July 40 puts at $3.00 by
being greedy and bidding $2.90! We will be back at it today.
New Actions (New Recommendations)
SMH — On a test of $40.00 in the SMH, buy a 25% allocation of the July
40 puts at $3.00 or better. These will replace the June 40 puts we sold at $3.00
on 5/30.
Working Orders (Old Recommendations)
(
DJX |
Quote |
Chart |
News |
PowerRating) — Sell half of the June 100 puts at $3.70.
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Sell all CHIR July 50 calls at $1.00 to close.
(
MSFT |
Quote |
Chart |
News |
PowerRating) — Buy the June/July 50 put calendar spread (buy the July 50 puts,
sell the June 50 puts) at $.50 (50%).
(
TGT |
Quote |
Chart |
News |
PowerRating) — Sell half of the June 40 puts at $1.70.
Rolls/Adjustments
(
DYN |
Quote |
Chart |
News |
PowerRating) — Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the January 15 calls, short the June 20 calls at $3.20),
buy the June 15 calls (to open) and sell the September 17.5 calls (to open)
for $1.00 credit (to you).
Recap of open trades
Long-term
Reverse Collars
None.
Buy-writes
(
AMR |
Quote |
Chart |
News |
PowerRating) — Long the August 25 buy-write at $22.00 (50%).
(
AOL |
Quote |
Chart |
News |
PowerRating) — Long the July 22.5 buy-write at
$19.40 (50%).
AOL — Long the October 20 buy-write at $16.30
(25%).
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the July 17.5 buy-write at
$14.25 (100%).
(
SEBL |
Quote |
Chart |
News |
PowerRating) — Long the August 27.5 buy-write at
$23.00 (50%).
Proxy buy-writes
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15/June 20 proxy buy-write at $3.20 (50%).
Complex Strategies
None.
Directional Positions
GM – Long the January 60 puts at $3.30
(20%).
JNJ- Long the January 60 puts at $3.30 (50%).
Short-term
Call Positions
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30 (50%).
Call Spread Positions
None.
Put Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August 65 puts at $1.50 (50%).
(
DJX |
Quote |
Chart |
News |
PowerRating) — Long the June 100 puts at $1.85
(50%).
(
MER |
Quote |
Chart |
News |
PowerRating) — Long the July 40 puts at $1.50
(50%).
(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the June 40 puts at $1.75
(50%). Sold 25% (half of the 50%) at $3.00 on 5/30/02.
(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the June 40 puts at $.85 (75%).
Spread Positions
(
MER |
Quote |
Chart |
News |
PowerRating) — Long the June/July 40 put calendar at $.50 (50%).
(
MMM |
Quote |
Chart |
News |
PowerRating) — Long the October 110/120 put spread
at $2.80 (50%).
Stops
None.
- 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