Higher Open…
The pre-market
indicators are bullish this morning. Currently, the S&P
500 futures
(
SPZ1 |
Quote |
Chart |
News |
PowerRating) are 8.1
points above fair value, the Nasdaq 100 futures
(
NDZ1 |
Quote |
Chart |
News |
PowerRating) are 23
above fair value, while the Dow futures
(
DJZ1 |
Quote |
Chart |
News |
PowerRating) are up 28 points.
The
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) index is once again bumping
up against the lows of last summer’s trading
range. There will be resistance at 550.00.
We have some interesting resistance levels above
the markets in the QQQs.
The 200-day MA comes in at 41.11 (we are currently right there) and
the 61.8% retracement level of the big sell-off comes in at 42.30.
Ahead of non-farm payroll on Friday, these levels
could be stubborn.
(
AZO |
Quote |
Chart |
News |
PowerRating)
had incredible earnings after the close, beating estimates by .17.
It is going to open sharply higher, and
obviously, this is not going to benefit
our put spreads. This is why we use a scaling process. Hold off on
the balance of the put spreads while we reassess the situation and
see if our reasons for a short
position remain valid. Obviously, with the
stock making new highs, these reasons may not be currently valid, but
we need to see if it can hold these
levels.
(
TLAB |
Quote |
Chart |
News |
PowerRating) had a nice run yesterday. We filled
the last 25% of our reverse collars
at a credit of .70. This puts us in the entire position for a credit
of approximately .50.
Current Recommendations:
Hold Off! — Buy the AZO March 55/65 put spread
(buy the March 65 put,
sell the March 55 put) beginning at 3.50. Hold off on further purchases
until we see how the stock behaves.
Rolls/Adjustments:
(
AMR |
Quote |
Chart |
News |
PowerRating) — Those of you suffering with the
remnants of the AMR Jan./Oct. 25 call
calendar spread are now long the Jan. 25 calls as the Oct.’s expired
worthless. Put an order in the market to sell the Dec. 25 calls @
.50. This will put you into the Jan./Dec. 25 call calendar @ .25.
(
BA |
Quote |
Chart |
News |
PowerRating) — The Nov. 40 calls that were a part of
our proxy buy-write strategy
expired worthless last week. There is not enough “meat” on the
bones of the Dec. 40 calls to warrant
selling them. Sell the BA Jan.
40 calls @ 1.00 (you will need a pop in the stock to get this done).
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
Jan. Look to sell December 25 calls @ .50.
(
UAL |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .70 —
Oct.’s went out worthless, holding
Jan. Looking to sell December options on a bounce.
Butterflies
(
DELL |
Quote |
Chart |
News |
PowerRating) — Long the DELL Dec. 20/25/30 call
butterfly at 1.75. (Calls or
Puts are okay).
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.
(
TLAB |
Quote |
Chart |
News |
PowerRating) March 17.5/15 reverse collar (long
the March 17.5 calls, short the
March 15 puts) @ .50 credit average. Stop Below.
Buy-writes
*
(
ORCL |
Quote |
Chart |
News |
PowerRating) Dec. 15 buy-write @ 12.10, rolled
into Jan. 20 buy-write
@ 13.10 — hold.
*
(
AMZN |
Quote |
Chart |
News |
PowerRating) Jan. ’03 10 buy-write @ 5.15 (2
units) — 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/Nov. ’01 40 call calendar @
6.00 — hold. See rolls
above.
BA Jan. ’03 40/Nov. ’01 40 call calendar @ 4.00
— hold. See rolls
above.
Complex Strategies
(
JDSU |
Quote |
Chart |
News |
PowerRating) — Long 1 unit of the Jan. 10 calls
and short 2 units of the Jan.
7.5 puts @ 0.00, sold 50% of the Jan. 10 calls at 3.00.
Short-term
Call Positions
(
SEBL |
Quote |
Chart |
News |
PowerRating) Jan. 25 calls @ 2.50 — hold.
Offering 50% at 5.00, or 100% of the Jan.
30 calls at 2.50. Stop below.
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop
below.
Put Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the Dec. 55/60 1:2 ratio put
spread at .30 — hold.
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the March 55/65 put spread @
3.50 (25%) — hold.
STOPS
(
AWE |
Quote |
Chart |
News |
PowerRating): Stop @ 12.25 close only.
(
SEBL |
Quote |
Chart |
News |
PowerRating): Stop @ 18.64 close only.
(
WCOM |
Quote |
Chart |
News |
PowerRating): Stop @ 11.5 close only.
(
TLAB |
Quote |
Chart |
News |
PowerRating): Stop @ 11.95 close only.
If you would like to receive Tony and his trading team’s options ideas at
least 3 times a day, click
here.
* 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