PMCS On A Tear And We’re Taking Profits In SEBL
Perhaps
even more beneficial to the market’s psychology than the Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) news yesterday has been Wall Street’s reaction to PMC-Sierra
[PMCS|PMCS]
and their announced earnings revision. The usual culprit,
Regular readers of this column may remember the repair strategy we spoke of last
Friday (June 22) for PMCS. A number of you have written me thanking
me for describing just how the repair strategy works, so thank all of you for
the e-mails! Let’s look at what’s gone on with this repair and why:
PMCS has bounced from $28 back to $32.40 in the past week. That’s a recovery of
$4.40, or $4,400 on our example of a 1000-share position. Our long 25 calls have
rallied from $6 to $9.25 for a gain of $3,250 on a 10-lot position. Our short 30
calls have rallied from $3.80 to $5.70, a loss of $1.90, or $3,800 on that
20-lot short position. Net, the repair has helped us recover $3,850 so far. Why
only so far? Well, because if PMCS closed here at $32.40 a share, our long 25s
would have an intrinsic value of $7.40 ($32.40 – $25 (strike price) and our
short 30s would be worth $2.40 * 20, or $4,800 against us. When you take the
original credit we generated by that spread ($1,600) and add in the net of the
$7,400 gain on the 25s and the $4,800 loss on the 30s, you see that this repair
would have helped recover a healthy $4,200 more than if we just held the stock!
As far as other positions we’re watching, the information we passed along
about the institutional buying of SEBL July 35 calls on Tuesday (June 26)
has really borne fruit. SEBL has surged from $26 on Tuesday to hit a high of $48.25
today. As you may notice, SEBL options are no longer popping out on our $
weighted call scans, indicating the buyer has left the building. Well you
don’t have to hit us over the head with a shovel to get the point across, so
we are taking profits and waiting for another big buyer or seller to be the
catalyst for another trade. I hope everyone has a great weekend!
Heaviest
$ Weighted Call Volumes:
| Symbol
|
Call
Volume
|
Put
Volume
|
$W
Call Vol
|
$W
Put Vol
|
| QQQ
|
56,160
|
45,096
|
114,395
|
45,166
|
| INTC
|
36,289
|
10,916
|
53,261
|
16,132
|
| CSCO
|
28,901
|
6,803
|
51,594
|
15,963
|
| SOX
|
1,305
|
1,891
|
43,719
|
9,793
|
| PMCS
|
5,727
|
3,471
|
32,929
|
6,714
|
| BRCM
|
5,823
|
2,182
|
36,066
|
6,141
|
(1010WallStreet.com has licensed
the use of Hamzei Analytics proprietary options analytics)
Heaviest
$ Weighted Put Volumes:
| Symbol
|
Call
Volume
|
Put
Volume
|
$W
Call Vol
|
$W
Put Vol
|
| SPX
|
27,372
|
22,732
|
387,353
|
610,639
|
| HON
|
65,404
|
39,232
|
58,341
|
103,127
|
| OSX
|
2,169
|
4,290
|
7,356
|
51,253
|
| MO
|
5,135
|
18,404
|
17,555
|
47,307
|
| MNX
|
1,247
|
2,936
|
13,196
|
25,197
|
| GS
|
598
|
3,102
|
1,419
|
22,539
|
| PFE
|
1,404
|
22,777
|
2,613
|
19,656
|
| BA
|
766
|
5,052
|
1,061
|
19,179
|
| CMVT
|
723
|
2,679
|
1,642
|
19,092
|
(1010WallStreet.com has licensed
the use of Hamzei Analytics proprietary options analytics)