Home On The Range
face=”arial,helvetica” helvetica>Due to a scheduling
conflict, Dave Landry will be unable to write his Options
Market Outlook tonight. Tonight’s column is written by David
Baker and Daniel P. Delaney. Dave will be back on Monday,
June 26.
helvetica>In software, Adobe Systems
(
ADBE |
Quote |
Chart |
News |
PowerRating) has held
its upward channel despite much of the recent volatility,
providing an interesting covered-call opportunity. You can
buy Adobe at 117 3/4 and sell the July 120 call for 8 1/4,
or you could sell the July 125 call for 6 1/4. The latter,
being for the more aggressive trader, would yield an 11%
return for the month. Another strategy to consider would be
to purchase the stock as it comes off the bottom of the
channel (which is converging with the 50-day MA, as well),
and to sell a higher strike, such as the July 140 call, on a
bump against the top of the channel. Of course, this
strategy is the most difficult, and there is no guarantee
that a bounce will occur.
face=”arial,helvetica” helvetica>src=”https://tradingmarkets.com/media/images/ttt/omo062300-adbe.gif”
width=”481″ height=”332″>
face=”arial,helvetica” helvetica>The Nasdaq Composite
returned to its trading range, and it took some of the major
groups with it. The Internet Infrastructure Index
(
IIH |
Quote |
Chart |
News |
PowerRating)
broke out of its trading range this week, but failed to put
in a continuation move. Option traders may want to take
advantage of this trading range by opening a strangle
position just outside the top and bottom of the range.
Another strategy would be to open a bull call spread by
buying a lower strike on a bounce off the bottom of the
range, and selling a higher strike on a return to the top.
face=”arial,helvetica” helvetica>src=”https://tradingmarkets.com/media/images/ttt/omo062300.gif”
width=”483″ height=”335″>
color=”000000″ helvetica>Best of luck with your trading on
Monday!
helvetica>P.S. Reminder: Protective stops on every trade!