Jittery Market
Futures are lower at this hour as the
India/Pakistan conflict ratchets up to a new level and threats of additional
terrorist attacks here in the United States has pushed all other news to the
background and completely unnerved the markets.
Currently, DJI futures at the CBOT are down about 25 points, while at the CME,
the S&P futures are 3.00 points lower, and the Nasdaq 100 futures are 14.5
points lower. The dollar is getting beat up against the European currencies,
making new lows against the euro and the Swiss franc. In Europe, markets were mostly
lower. The FTSE 100 was down 0.8% to 5157, and the DAX was down 1% to
4933. In Asia, the Nikkei rose 1.4% to 11,962, while the Hang Seng finished
up 0.4% to 11,795.
The market is now at or near last Tuesday’s opening levels, or has filled
gaps left last Monday/Tuesday. It will be key, amidst all the seemingly
nonstop gloom and doom, for it to hold last Monday’s lows. If it does not, a
test of the recent lows seems in the cards.
India/Pakistan
This conflict grows more frightening by the day. Today, India’s
prime minister visited soldiers on the Kashmiri frontier, telling them to
prepare for a "decisive battle” against Pakistan-supported Islamic
insurgents. Cross-border shelling has killed dozens and reignited fears of war
between the nuclear-armed rivals. Yesterday, a Muslim separatist
leader was assassinated. Quite frankly, this is scaring the hell out of the
markets (and me).
Volatility
I am throwing my holiday week decline in volatility prediction out the
window. There are too many negative things happening right now.
Trade Updates (5/21/02)
(
HAL |
Quote |
Chart |
News |
PowerRating) — We were unable to sell the July
17.5/20 call spread at $1.00. We will reenter today.
(
QQQ |
Quote |
Chart |
News |
PowerRating) — We sold out our QQQ July 33 puts at
$2.70 and $2.80 yesterday. We will reload on rallies.
(
TGT |
Quote |
Chart |
News |
PowerRating) — We were unable to purchase the remaining 25% of the TGT June 40
puts at $.40 on yesterday’s higher open, cancel the recommendation.
New Actions (New Recommendations)
(
MER |
Quote |
Chart |
News |
PowerRating) — Buy June/July 45 put calendar spread at
$.60 (50%). Recall that we already own the June/July 40
put calendar spread. We are adding to our arsenal on what should be a rally day
in MER.
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).
(
HAL |
Quote |
Chart |
News |
PowerRating) — Holders of the HAL July 20 buy-write, work to sell the HAL July
17.5/20 call spread at $1.00. This will "roll" the position into the
July 17.5 buy-write.
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 20 buy-write at $15.00
(50%).
HAL — Long the July 17.5 buy-write at $14.50
(50%).
(
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%).
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the July 33 puts at $1.90
(25%). Sold at a $2.75 average on 5/21/02.
(
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