Payroll Non-Event, Market Lower, Dollar Falling
Futures have ticked up a bit on the payroll
numbers. The headline unemployment rate for October came in at 5.7% versus
consensus estimates of 5.8%, non-farm payroll came in at -5k versus expectations
of unchanged, and personal income and spending came in 0.1% lower than consensus.
A little soft, but not a complete disaster. We have another 09:00 CST number
that has movement potential, the October Manufacturing ISM, expected to be
unchanged at 49.5.
Currently, DJI futures are 25.0 lower, the S&Ps are 6.50 lower, and the Nasdaq
100 futures are 10.50 lower. Europe is softer with the FTSE 100 down 49.40
points or 1.22%, the DAX down 79.66 points or 2.53%, and the CAC 40 is off 78.03
points or 2.48%. In Asia, a rare uptick in the Nikkei, gaining 45.24 points or
.52%, and the Hang Seng fell 33.57 points or 0.36%. Interest rate futures are
mostly unchanged, but the dollar is getting body slammed in anticipation of next
week’s rate cut. The euro is knocking on the "parity" door again, and gold
futures are up $2.30 at the moment. Crude futures are up slightly.
I have been commenting on the dollar situation for the last few days. Obviously,
the Fed is almost out of ammo on the interest rate front, and deliberate
depreciation of the dollar is the next move. I have been praying for a test of
$300 in the gold market so we would have a chance at snatching up some gold
shares on the cheap, but it now is looking like gold may be about to explode.
Volatility was unchanged yesterday, and it should get hammered today,
all things being equal. Yesterday the VIX fell .18 to 35.90, the VXN rose 1.70
to 52.99, and the QQV gained .50 to 44.72.
Nothing Done — close on the November DIA butterfly.
Buy the DIA November 80/84/85/89 call condor (buy one November 80 call,
sell one November 84 call, sell one November 85 call, and buy one November 89
call) for $1.50 or less (25%).
Buy the DIA December 80/84/86/90 call condor (buy one December 80 call, sell
one December 84 call, sell one December 86 call, buy one December 90 call) for
$1.20 or less (25%).
Working Orders (Old Recommendations)
BGEN — Those who bought the January 40 calls at $2.10 (25%), sell an
equal amount of the January 45 calls at $1.10 to flip into the January 40 /45
call spread at $1.00.
QQQ — Those who sold the January 23/26 call spread at $1.50, bid $1.80 for the
January 20/23 call spread (somewhere near $23.00 should get you done).
WAG — For those long the January 35 puts ($2.50, 50%), sell an equal number of
the January 30 puts at $1.50 to flip into the January 30/35 put spread at $1.00.
Recap of open trades
CIEN — Long the January 2.5/5 reverse collar at
HAL — Long the January 15 buy-write at $12.05 (100%).
DYN — long the January 15 calls at $3.20 – left over from proxy buy-write
(50%). Left for dead.
BGEN — Long the January 40 calls at $2.10 (25%).
CCU — Long the January 40 calls at $2.00 (25%). Sold half at $4.00 on
Call Spread Positions
QQQ — Short the January 23/26 call spread at $1.50 (25%).
WAG — Long the January 35 puts at $2.50 (50%).
- 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
- 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