If In Doubt, Stay Out!
Goldman Sachs has cut its rating on the chip
equipment sector to "market weight" from "market overweight"
and downgraded several individual stocks including
(
AMAT |
Quote |
Chart |
News |
PowerRating),
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
TER |
Quote |
Chart |
News |
PowerRating) and
(
NVLS |
Quote |
Chart |
News |
PowerRating). Sun Microsystems
(
SUNW |
Quote |
Chart |
News |
PowerRating) is also trading lower
after its mid-quarter call. Biogen
(
BGEN |
Quote |
Chart |
News |
PowerRating) is trading up about $8.00
pre-market on the back of yesterday’s FDA advisory panel approval of Amevive.
The Commerce Department reported that revised Q1 GDP grew at 5.6%, a bit weaker
than consensus estimates of 5.8%. The deflator came in at 1.0% vs. expectations
of 0.8%. Neither of these numbers have much of a kick, but at 09:00 CDT April
new home sales, expected to come in at 885k, will be released. This number will
be important.
The main question today will be whether the short squeeze which began yesterday
in biotech will continue, and whether Goldman’s downgrade of the chip equipment
sector will carry any weight. It will be a slow low-volume day, so if in doubt,
stay out!
Volatility
Volatility got crushed on yesterday afternoon’s rally. The VIX fell 1.24 to
20.35, close to monthly lows, the VXN fell 1.50 to 43.20, and the QQV dropped
2.16 to 36.18, also close to monthly lows.
Trade Updates (5/23/02)
(
JNJ |
Quote |
Chart |
News |
PowerRating) — We were once again unable to buy any additional January 60 puts at
$3.30 on this morning’s pop. We’ll try again tomorrow.
(
MER |
Quote |
Chart |
News |
PowerRating) — We bought the July 40 puts at $1.50 (50%). The recommendation to
buy the MER June/July 45 put calendar has been canceled.
New Actions (New Recommendations)
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Buy a 25% position in the QQQ July 33 puts if/when the
QQQs trade into the $32.50 – $33.00 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 20 calls (to close) and sell the September 17.5 calls (to open) for
$1.25 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.
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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
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- 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