Lower And Slower
Futures have a
negative bias this morning although they are improving as I write
this. Initial jobless claims have come in a bit better than expected at 382k vs.
expectations of 388k. At 09:00 CDT June ISM services will be released, expected
to come in at 58.5, and May factory orders expected up .6%. Currently, DJI
futures at the CBOT are down about 30 points, and S&P 500 and Nasdaq 100 futures
at the CME are down 2.5 points and 3.0 points respectively. The dollar is higher
against most major currencies except the yen. Currency traders are probably
covering into July 4th because that is a prime time for a central bank sneak
attack.
Investors are nervous about possible July 4th terrorist attacks which have
received a lot of media hype. I think today will be a good day to take
additional partial profits, offering half of our AMGN and IWM put spreads. It
also looks like it is time to close out the balance of our JNJ puts. As far as
initiating new positions, I prefer to wait until after the fourth because I am
also worried about a central bank intervention. Keep you powder dry and remember
the trend is DOWN!
Volatility
Volatility was extremely well bid yesterday, and I expect it will be
well bid today as investors are clearly frightened by prospects of terrorism
over the July 4th holiday. It looks as though the top might be challenged again.
Yesterday the VIX jumped 3.13 to 33.69, the VXN rose 2.12 to 59.57, and the QQV
rose 2.39 to 53.45. It looks like the highs will be challenged.
Trade Updates (Tuesday 7/02/02)
AMR – Bought the July 15 puts at $.70.
AOL – Bought the July 10 puts at $.30.
SEBL – Bought the July 10 puts at $.35.
TGT- January 35 puts should have been purchased today.
New Actions (New Recommendations)
AMGN – Sell half of the January 30 /40 put spread at $5.00.
IWM – Sell half of the November 80 /90 put spread at $5.00
JNJ – Sell the remaining JNJ January 50 puts today to close out the position.
Working Orders (Old Recommendations)
BAC – Continue to offer half of the August 70 puts at $5.00.
CHIR- Sell all CHIR July 50 calls at $1.00 to close.
Rolls/Adjustments:
SEBL – For those long the SEBL August 27.5 buy-write: Buy the SEBL
August 27.5 calls (to close) ans sell the November 20 calls (to open) for $2.00
credit.
Recap of open trades:
Long-term
Reverse Collars:
Buy-writes:
AMR – long the August 25 buy-write at $22.00 (50%).
AOL – long the July 22.5 buy-write at $19.40 (50%).
AOL -long the October 20 buy-write at $16.30 (25%).
HAL -long the October 17.5 buy-write at $13.25 (100%).
SEBL – long the August 27.5 buy-write at $23.00 (50%).
Proxy buy-writes:
DYN – long the January 15 calls at $3.20 – left over from proxy buy-write
(50%).
Complex Strategies:
None
Directional Positions:
AMGN – Long the January 30 /40 put spread at $3.00 (25%).
JNJ- Long the January 50 puts at $1.70 credit (37.5%). Sold half at $3.90 on
7/1/02.
TGT – Long the January ’03 35 puts at $2.58 (75%).
 Short-termÂ
Call Positions:
CHIR – Long the July 50 calls at $3.30 (50%).
Call Spread Positions:
None
Put Positions:
BAC – Long the August 70 puts at $2.60 (100%). Sold 10% at $5.00, 6/26/02.
Spread Positions:
IWM – Long the November 80 /90 put spread at $3.00 (25%).
MMM – Long the October 110 / 120 put spread at $2.80 (100%).
SMH – Long the July / August 32.5 put spread at $.70 (25%).
Stops
None.
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