No Bad News Is Good News
The fact that Intel
(
INTC |
Quote |
Chart |
News |
PowerRating) had no bad news (lowered guidance,
etc.) is playing as good news this morning. Futures are green across the board
and traders will be looking for something that has been very rare of late —
follow through! The market has had a maddening propensity to reverse itself
almost every day, whipsawing traders and investors. It doesn’t seem likely
today, but with Greenspan speaking, anything could happen.
When the market has a strong day like yesterday, it can only mean one thing: the
mighty SOX index had a great day, and so it did, rocketing above the 600 level
after being on the verge of violating its September to February up trendline.
Next resistance/test area for the SOX comes in at the 614 level, followed by the
March highs at 641.
Volatility Crash Coming?
As we begin to pass through the earnings season and the market recovers
from its recent swoon, it is looking as though volatility may begin to collapse.
The market as a whole has been unable to generate any significant momentum in
either direction, and should this current upside move peter out (again), we will
have to prepare ourselves for the possibility that we are in the most annoying
type of market of them all, the low-volatility range trade. I pray that this is
not the case.
Volatility
Volatility got crushed yesterday, suffering the double-whammy of a
strong rally and the passage of another day of earnings season. The VIX was
slapped down below 20.00 at one point before ticking up to close at 20.30, down
2.08 on the day. The VXN was knocked back below 40 to 39.43, down 2.44 on the
day, and the QQV lost 1.79, dropping to 33.83.
Trade Updates (4/16/02)
(
QQQ |
Quote |
Chart |
News |
PowerRating) — We bought the QQQ May 35 puts at $1.60 (25%) vs. the 34.80
area this morning. We were unable to purchase another 25% at $1.25 against the
$35.22 area this afternoon. We will reenter tomorrow.
(
SEBL |
Quote |
Chart |
News |
PowerRating) — We bought the SEBL August 27.5 buy-write at $23.00 (50%).
(
SMH |
Quote |
Chart |
News |
PowerRating) — We bought another 20% of the SMH May 40 puts at $.60. This brings
us up to a 60% position at a price of $1.05.
Nothing else done today.
Working Orders (Old Recommendations)
(
AOL |
Quote |
Chart |
News |
PowerRating) — Buy the July 22.5 buy-write at $19.50 (50%). Solly just
cut their estimates, so we might have a chance at this trade today.
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Buy another 25% of the May 35 puts on the opening today.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Buy an additional 25% of the WMT June 60 puts at $1.50 as 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.)
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.
(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the May 40 puts at $1.05 (60%).
Scale-up buyers of more.
(
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.
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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
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