The market is looking basically
unchanged at this hour as there was just enough bullish news
(Unemployment Rate 5.6% vs. 5.9% consensus) and bearish news (Non-farm payrolls
-89k vs. -50k consensus and Hourly Earnings 0.0% vs. 0.2% consensus) to hold
things in check.
Short-term momentum is up, but a fair amount of that was
the contrived end-of-the-month mark-up seen the last two days.
I have mentioned this a few times before, but what I think
we’re starting to see here is a flow into older industrial stocks that will a)
benefit from the coming economic turnaround and b) people feel they can trust. I
think this might be a continuing theme for a while as funds reconfigure their
portfolios into the "CYA" formation.
The explosion at a refinery in Kuwait has sent oil higher
and oil and oil service stocks with it. We missed the oil service stocks and
will have to wait for a pullback.
We missed these trades, but just in case, we will be a
scale-down buyer of the Schlumberger
PowerRating) May 55/60 call spread, starting
at $1.50 for a 25% allocation. We will get a little more aggressive if they can
hold these breakout levels.
Buy the SLB May 55/60 call spread (buy the 55 calls, sell
the 60 calls) for $1.50 (25%).
Suspend the buy puts on rallies for the time being.
Currently unavailable due to program failure. My
Recap of open trades
None — volatility too low! Again, this is a general
recommendation. Specific opportunities always exist.
BA Jan. ’03 40/May 45 call calendar @ $2.75.
Call Spread Positions
TLAB — Long the March 17.5/22.5 call spread at $.80
credit average (50%). Note: This spread is a result of a reverse collar
Put Spread Positions
QQQ: Stop @ 39.50, two consecutive days close only.
TLAB: Stop @ 11.95, close only.
*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
*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
*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: