Flat Lower Open
U.S. major stock indices will open lower
in part due to pre-market analysts’ cautionary comments regarding Amazon
(
AMZN |
Quote |
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News |
PowerRating),
Microsoft
(
MSFT |
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PowerRating), and General Electric
(
GE |
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News |
PowerRating). Futures, however, are off
their pre-session lows due to strength in the storage sector.
Major Asian stock markets are fractionally higher, with Japan up 1.0%, Hong Kong
up 1.9%, and South Korea up 2.4%. European stock markets are generally lower,
with Germany down .9%, France down .1% and the United Kingdom up .2%.
On the economic calendar at 9.00 A.M. (CST), New Home Sales will be released.
Analysts are looking for an increase of 8.1% (890,000 units) vs. last
month’s 823,000 units. Should this happen, this would be the fourth monthly
increase in the last five months.
Brace yourselves for some choppy trading for the remainder of the week on lower
volume while the market awaits earnings season and end-of-the-quarter window
dressing.
Volatility
Yesterday volatility was beaten down again and we could get more
flogging today.
Trade Updates (3/26/02)
Look to enter the Bank of America
(
BAC |
Quote |
Chart |
News |
PowerRating) at or
around the $1.50 level.
We took partial profits of the
(
SMH |
Quote |
Chart |
News |
PowerRating)
puts at $2.00 against the $45.00 area which is a 50% retracement level and are
looking to exit the remainder of the puts around the $43.60 area (.618
retracement).
Rolls/Adjustments
Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Investors long the July 50 calls at $3.30 (50%)
may sell the July 60 calls against their positions at $1.00. This will roll us
into the July 50/60 call spread at $2.30.
Disney
(
DIS |
Quote |
Chart |
News |
PowerRating) — The Disney roll we have been recommending has moved away as
the stock has declined. Investors long the April 22.5/25 reverse collar at a
$1.15 credit (75%) may hold if they are willing to take delivery of the stock at
$21.35 (22.50 short put strike – 1.15 credit). If not, look to liquidate the
position on the next bounce.
Recap of open trades
Long-term
Reverse Collars
(
DIS |
Quote |
Chart |
News |
PowerRating) — April 25/22.5 reverse collar (long
the April 25 calls, short the April 22.5 puts) at a $1.15 credit (75%).
Buy-writes
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the July 20 buy-write at $15.00
(50%).
HAL — Long the July 17.5 buy-write at $14.50
(50%).
Proxy buy-writes
None.
Complex Strategies
None.
Short-term
Call Positions
(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 60 calls at $1.75
(50%).
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30
(50%).
(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the May 15 calls at $.40 (50%).
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40
(50%).
Call Spread Positions
None.
Put Positions
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the April 60 puts at an
effective cost of $2.125 (50%).
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Took partial profits on Long the
April 36 puts at an average price of $1.20.
(
SMH |
Quote |
Chart |
News |
PowerRating) — Took partial profits on Long the
April 45 puts at an average price of $2.00 .
Spread Positions
None.
Stops
None.
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- 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