New Administration Doesn’t Change The Story: Call Sellers Dominate
Back from my vacation and there is a lot to do. I hope you all had a profitable week in
my absence, (and that you all got my postcard). Those of you that held open the
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CSCO |
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½-42 ½ spread until expiration were rewarded with at least a
“double,” if you
followed my previous “hints,” you either scaled out with more than a 150% return
or sold a vertical on top (original suggestion and the best of all the possible strategies
I suggested) and ended up with a butterfly (or relative of a butterfly) for less than a
$1. This butterfly went out at 2 7/8, making an approximately 400% return (if you closed
out on the close Friday).
If you did nothing Friday, you are long Cisco stock, which should be sold to close out
the strategy (CSCO is up another $1 this morning, we left you in a good spot to decide
whether you want to ride it for more, but we’re out of the strategy now). For those
holding the
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EXTR |
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earlier than they forecasted… so this was “rip up.” If you did none of the
hints during the month, you lost $1 on this play.
This month we had three entry suggestions (CSCO, EXTR and
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CIEN |
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was published as the incorrect month, so we disregarded that… anyone selling any put
spread in CIEN on that day made money, so if you were lucky enough to figure out that I
meant February when it said January in the column, you did well anyway). The two that were
legitimate gave you plenty of opportunity to trade each week, if action is what
you’re after.
But the way I look at it is that if you’re too busy with other trading, or just
other things in general to sit and watch an options strategy, this gave you two trades
that were low maintenance, high reward potential with low risk. If you did both in equal
quantities, you doubled your money without having to rack up a lot of hours in front of
the Level II screen (not to mention commission dollars).
We’re querying the search engine for other goodies for this cycle; we’ll keep
you posted when I see something I like.
Today, options players continued to march to a similar tune as they have all month,
with call-sellers coming out in force. Put sellers are also making their presence felt on
a day of moderate to heavy volume. Tech activity is heavy as usual, where call selling
clearly dominates. Indeed, pre-bell order volume is well above the 30-day moving average,
on this first day after expiration (about a 7.5 on a scale of 1-10, 5 being average).
Perhaps an auspicious beginning under our new administration!
Pre-open order volume was heavy this morning. Overall, call sellers led buyers 4:1,
while put sellers squashed buyers at 3:1. In pre-bell activity, INTC call sellers
outnumber buyers 5:1. CSCO call sellers led buyers 4:1, while put sellers led buyers at
4:1. SUNW call sellers showed up leading buyers 3:1. MSFT call sellers crushed buyers 6:1.
LU call sellers beat up buyers 9:1, and put sellers led buyers 3:1. IBM call sellers
dominated buyers 3:1 while put buyers trumped sellers 5:3.
First-hour order volume remained heavy this morning. Overall, call sellers led
buyers 3:1, while put sellers led buyers at 2:1. In first hour activity,
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sellers are destroying buyers 20:1. INTC call sellers led buyers 5:1.
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showed up leading buyers 4:1.
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put buyers led sellers 2:1. YHOO put sellers trounced buyers 4:1.
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sellers beat up their respective buyers 5:1.
My team has been compiling your email questions and our answers to them (we have
gotten to most of them and will catch up this week). Let me know what’s on your mind
and if I can tailor my comments more to your trading/investing style….