Homebuilders Come In Better Than Expected
Futures are lower at the moment, basically giving
back the late gains made yesterday ahead of the Novellus Systems
(
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PowerRating)
mid-quarter update. Since the market didn’t really like what it heard (nothing
about Q3), we are poised to open on or near yesterday’s lows. There has been
some attempt to hype retailers on the back of the "Harry Potter" CD
sales, and homebuilders Toll Brothers
(
TOL |
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PowerRating) and Hovnanian Enterprises
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PowerRating)
came in with much better than expected earnings, but there has been little
effect on the market.
On the minus side, the SEC, frantically trying to gain some sort of credibility,
has announced that it is conducting a preliminary investigation of Halliburton’s
(
HAL |
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PowerRating) accounting, and (gasp!) JDS Uniphase
(
JDSU |
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PowerRating) has been
downgraded by CSFB. They also downgraded buggy whip companies, the Edsel, and
lowered their outlook for Nazi Germany and The Soviet Union.
The dollar is slightly lower as is crude oil.
Volatility
Volatility on yesterday’s sell-off. The VIX gained 1.27 to 22.43, the
VXN picked up 2.25 to 45.11, and the QQV gained 1.82 to 38.91.
Trade Updates (5/28/02)
No trades today.
New Actions (New Recommendations)
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Buy a 25% allocation of the July 33 puts in the $32.25 –
$32.50 zone.
Working Orders (Old Recommendations)
(
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%).
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 |
Quote |
Chart |
News |
PowerRating) — Long the January 60 puts at $3.30 (20%).
(
JNJ |
Quote |
Chart |
News |
PowerRating) — 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%).
(
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%).
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