MSFT Upgrades (Don’t Buy It)
I don’t claim to be smart enough to make heads or tails out of the
earnings reports that are issued these days (you need an advanced "BS"
degree), but if a company issues an earnings report that is so confusing that
the stock trades sharply lower for three or four hours after the close one day,
and then receives upgrades the next day, well, it doesn’t exactly inspire
confidence. Therefore, I’ll let others follow Merrill’s advice and buy
(
MSFT |
Quote |
Chart |
News |
PowerRating). We
are going to be scale sellers in the $57.50 to $59.50 zone.
April Expiration
We have a couple of positions left:
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the April 60 puts at $2.125 (50%) — going out worthless.
(
DIS |
Quote |
Chart |
News |
PowerRating) — For those long the remnants of the DIS April 22.5/25 reverse collar
(long the April 25 calls at $.85 credit, 75%) we have a surprise: Disney is
above $25.00 this morning. Don’t forget to sell out the calls before the end of
the day. DIS is likely to get glued to $25.00 later in the day, so get what you
can while you can.
P.S. DIS has also shown up as a buy-write candidate.
Today
The market will probably be a little choppy this morning as participants sort
out the aftermath of yesterday’s faux terrorist attack and the MSFT whipsaw.
Throw in a double witch, and you will have a lot of noise. Kick back and don’t
read a lot into anything, especially if it takes place near a strike price. As
long-time readers are already aware, the underlying tends to be drawn to the
strike price at expiration, due to the activities of market makers and the
unwinding of arbitrage positions. Keep this in mind today.
Also, keep an eye on the dollar and gold. If you cut to the chase of Greenspan’s
testimony Wednesday, he basically said (this my interpretation of course):
"To hell with inflation, we are going to keep the printing presses running
at top speed." Therefore we need to watch for additional dollar weakness
and gold strength.
Volatility
Just the idea of terrorist attacks caused a sharp intraday spike up in
implied volatilities. The VIX shot up to 22.37 before settling back to close at
21.24, up 1.06 on the day. The VXN hit a 40.86 high before closing at 39.34,
up .05. The QQV closed unchanged at 33.19, but traded as high as 34.75 intraday.
Trade Updates (4/18/02)
Nothing done yesterday.
Working Orders (Old Recommendations)
(
AOL |
Quote |
Chart |
News |
PowerRating) — Buy the July 22.5 buy-write at $19.50 (50%).
(
WMT |
Quote |
Chart |
News |
PowerRating) — Buy an additional 25% of the WMT June 60 puts at $1.50 if
WMT challenges its recent gap.
New Actions (New Recommendations)
(
APC |
Quote |
Chart |
News |
PowerRating) — Buy the May 55/60 1:2 ratio call spread as a "roll"
of our APC May 60 call position. Pay $.65.
(Note: What you are doing is selling your
long May 60 calls to close, buying half as many May 55 calls to open, and paying
$.65 for the privilege. This spread is not currently close.)
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Take partial profits on the QQQ May 35 puts
on a test of $34.00, take remaining profits on a test of $33.33.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Sell half of the June 60 puts at $5.00.
Rolls/Adjustments
Chiron
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Investors long the July 50 calls at $3.30 (50%) may
sell the July 60 calls against their positions at $1.00. This will roll us into
the July 50/60 call spread at $2.30.
On The Horizon…
More buy-writes ahead!
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%).
(
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
None.
Complex Strategies
None.
Directional Positions
(
JNJ |
Quote |
Chart |
News |
PowerRating) — Long the January 60 puts at $3.30 (50%).
Short-term
Call Positions
(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 60 calls at $1.50 (100%).
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30 (50%).
(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the May 15 calls at $.40 (50%).
(
DIS |
Quote |
Chart |
News |
PowerRating) — Long the April 25 calls at $.85 credit (result of "roll").
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40 (50%).
Call Spread Positions
None.
Put Positions
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the April 60 puts at an effective cost of $2.125 (50%).
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August 65 puts at $3.00 (25%)
— part of a spread "leg"
to be completed later.
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the May 35 puts at $1.425 (50%).
(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the May 40 puts at $1.05 (60%). Holding.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Long the June 60 puts at $2.50 (75%).
Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August/May 65 put calendar at $1.50 (50%).
Stops
None.
|
Click
|
- 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
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