Lower Open Ahead

Based on the way it petered out at the close, it is not surprising that
yesterday’s rally has evaporated overnight. New 19-year lows in Japan and
estimate cuts for
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are weighing on the market. Currently,
DJI futures are 84.0 lower, S&P futures are 10.10 lower, and the Nasdaq 100
futures are 7.50 lower. In Europe, the FTSE 100 is unchanged, the DAX is now
86.52 points, or 3.30%, lower (this basket case of a market needs to be
watched carefully because the next crisis might be developing here) and the
CAC 40 is 43.52 points, or 1.62%, lower. In Asia, renewed selling of the Nikkei
has led it to 19-year lows, closing down 169.56 points, or 1.95%, and the Hang
Seng closed basically unchanged. Interest rate futures are higher at the moment,
the dollar is lower against most major foreign currencies, crude oil
futures are about $.07 better, and gold futures are slightly higher.

The bear market has quickly reasserted itself, but we are still looking to take
further profits on this decline as we feel that this leg down may end soon.
Whether it ends with a bang or a whimper remains to be seen. It is, however, not
yet time for bottom fishing.

Update: (10/08/02)


New Recommendations


Working Orders (Old Recommendations)

BAC — Sell half of the January 50/60 put spread at $5.00 (or buy the
January 50/60 call spread at $4.95 — an equivalent trade).

Recap of open trades


Reverse Collars

CIEN — Long the January 2.5/5 reverse collar at
$.40 (25%).


HAL — Long the January 15 buy-write at $12.05 (100%).

Proxy buy-writes

DYN — Long the January 15 calls at $3.20 — left over from proxy buy-write
(50%). Left for dead.

Complex Strategies


Directional Positions

BAC — Long the January 50/60 put spread
at an average price of $2.50 (75%).

IBM — Long the January 50/60 put spread at $2.00 (25%). Sold half at
$4.00 on 10 /04/02.


Call Positions

CCU — Long the January 40 calls at $2.00 (50%).

Call Spread Positions


Put Positions


Spread Positions

MMM — Long the October 90/100/110 put butterfly at $1.45 (25%).


BAC — $67.00, close only.

IBM — $65.00, close only.

MMM butterfly — no stop.

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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
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  • 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
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