Goldman Dropping Upgrade Bombs

The markets opened slightly
lower this morning,
although the
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upside pre-announcement
has lifted the futures in the last few minutes. Goldman is dropping upgrade
cluster bombs in the semi and semi-manufacturing sector.
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,
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and
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are getting holy water sprinkled on them this morning.

Unfortunately, continuing concerns in the mumbo-jumbo
accounting department continues to weigh on overall sentiment, with
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and once again
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being named in various publications over the weekend.

Updates

With volatility back on the lows, we are going back on the
“buy puts on strength” program, but in the
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s only.

We are monitoring the “accounting fraud” sector
for possible initiation of proxy buy-writes.

Current Recommendations

Buy the
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May 55/60 call spread (buy the 55 calls,
sell the 60 calls) for $1.50 (25%).

Traders may make scale purchases of puts in the QQQs on
strength, taking partial profits on sell-offs.

Technical Levels:

INDEX CLOSE PREVIOUS
WEEK’S CLOSE
POINT
GAIN (LOSS)
PERCENTAGE
GAIN (LOSS)
20-DAY
MA
50-DAY
MA
200-
DAY MA
DJI 9907.30 9840.1 67.20 0.68% 9903.08 9936.98 10104.03
S&P 1122.20 1133.28 -11.08 -0.98% 1137.33 1142.21 1165.84
COMP 1911.20 1937.7 -26.50 -1.37% 1969.95 1965.26 1939.78
QQQ 38.14 38.83 -0.69 -1.78% 39.53 39.95 40.19
BKX 833.26 870.97 -37.71 -4.33% 857.46 851.97 859.17
BTK 509.86 527.56 -17.70 -3.36% 533.71 566.32 546.63
DRG 377.40 375.3 2.10 0.56% 376.84 384.18 390.59
CMR 569.58 563.87 5.71 1.01% 560.77 558.35 548.43
CYC 537.92 529.75 8.17 1.54% 526.95 527.12 526.84
DOT 166.44 176.21 -9.77 -5.54% 185.40 188.84 199.73
NWX 309.55 318.45 -8.90 -2.79% 330.71 331.12 335.85
OSX 85.56 84.45 1.11 1.31% 80.81 80.92 91.98
RLX 931.01 916.82 14.19 1.55% 918.93 906.58 869.33
SOX 552.87 535.94 16.93 3.16% 551.28 544.21 554.87
XAL 91.33 92.7 -1.37 -1.48% 92.94 89.60 112.39
XAU 62.80 59.14 3.66  6.19% 58.78 55.54 55.67
XBD 498.15 510.59 -12.44 -2.44% 517.23 507.59 479.95
XCI 770.76 776.05 -5.29 -0.68% 795.11 792.09 770.10
XOI 513.37 508.9 4.47 0.88% 505.84 502.23 533.52
FOP 108.52 111.47 -2.95 -2.65% 116.83
SWH 45.36 47.07 -1.71 -3.63% 47.23 45.69
VIX 22.87 21.93 0.94 4.29% 23.60 24.33 27.37
VXN 43.08 45.67 -2.59
-5.67% 47.05 48.61 56.38
QQV 35.56 38.21 -2.65 -6.94% 39.74 41.25 48.16

Rolls/Adjustments

None.

Recap of open trades

Long-term

Reverse Collars


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— March 17.5/15 reverse collar (long the
March 17.5 calls, short the March 15 puts) at $1.50 credit average (50%),
settled at $.80 credit.


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— April 25/15 reverse collar (long the April 25
calls, short the April 15 puts) at $.05 credit (100%). Settled at $1.40 credit.

Buy-writes

None — volatility too low! Again, this is a general
recommendation. Specific opportunities always exist.

Proxy buy-writes


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Jan. ’03 35/May 45 call calendar @ $4.75 (100%).
Settled at $7.55.

BA Jan. ’03 40/May 45 call calendar @ $2.75 (100%).
Settled at $4.65.

Complex Strategies


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— Long the GILD Feb. 70 straddle at $8.00
(50%). Settled at $5.00, but we have captured $5.50 in gamma scalping profits
already!

Short-term

Call Positions

None.

Call Spread Positions


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— Long the March 30/40 1:2 call ratio spread @ $1.50.
Settled at $.55.


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— Long the March 17.5/22.5 call spread at $.80
credit average (50%). Settled at $.30. Note: This spread is a result of a
reverse collar roll.

Put Positions


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— Long the March 39 puts at $2.35 (25%). Settled at
$2.30. Stop below.

Put Spread Positions


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— Long the March 55/65 put spread @ 2.125 (100%).
Settled at $2.20.

STOPS


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: Stop @ 14.90, close only.


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: Stop @ 39.50, two consecutive days close only.


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: Stop @ 11.95, close only.

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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