Quiet
The market is quiet at this time, and most of the futures contracts are
within a few ticks of unchanged. The big news is the slide in crude oil prices
in response to Saddam’s decision to resume exports. Right now, June crude
futures are down about $.70 in pre-market trading. This should hurt the
supercharged oil service and oil stocks, hopefully providing us with a buying
opportunity at some point, and should provide a boost to the airline sector.
SOX Watch Continues
Merrill was making some friendly noises about chip stocks this morning, but JP
Morgan spoiled the mood by cutting estimates for Intel
(
INTC |
Quote |
Chart |
News |
PowerRating),
(
AMD |
Quote |
Chart |
News |
PowerRating),
and NVIDIA
(
NVDA |
Quote |
Chart |
News |
PowerRating). Once again, the SOX is the key to the entire market, and
a failure to mount any kind of rally in the SOX index spells doom for the
Nasdaq. A test of the recently penetrated 500.00 level should be in the cards,
if that fails to materialize — uh-oh!
Tomorrow — Can Greenspan Save Us?
By now that question should scare you, since he has clearly lost the
plot. The Fed is shooting their last bullet, letting down the dollar, and
they have already made it plain that they will not tighten, but loosening is no
longer an option either. Expect no action Tuesday except for some meaningless
jaw-jacking.
Volatility
Volatility in terms of the heavily watched VIX isn’t exactly screaming,
but the Nasdaq-related indices are getting warm. Considering that it was a
Friday after a major economic report, when volatility tends to sell-off,
volatility was well bid to end the week. It is telling us that there is probably
more downside in this market soon. On the day, the VIX gained .85 to 23.23, just
above its 10-day moving average at 23.18. The VXN gained 1.74 to 46.26, closing
at its highest level since late February. The 200-day moving average of the VXN
is 50.94. When we get there we can start talking about a low. The QQV gained
1.93 to 40.03, closing above 40.00 for the first time since late February. The
200-day moving average for the QQV is 43.54.
Trade Updates (5/03/02)
(
AOL |
Quote |
Chart |
News |
PowerRating) — We bought the AOL October 20 buy-write at $16.30 (25%).
(
SMH |
Quote |
Chart |
News |
PowerRating) — We bought another 25% of the SMH June 40 puts at $3.50. This brings
us up to a 50% position at an average price of $2.75.
Working Orders (Old Recommendations)
(
HAL |
Quote |
Chart |
News |
PowerRating) — Holders of the HAL July 20 buy-write, work to sell the HAL July
17.5/20 call spread at $1.00. This will "roll" the position into the
July 17.5 buy-write.
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Sell all of the July 50 calls at
$1.00 to close position.
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Sell all of the May 25 calls at $.50 to close position.
(
MER |
Quote |
Chart |
News |
PowerRating) — Buy the May/July 40 put calendar spread at $1.25 (50%).
(
MSFT |
Quote |
Chart |
News |
PowerRating) — Buy the May/July 50 put calendar (buy the July puts, sell
the May puts) at $1.25 (50%).
New Actions (New Recommendations)
None.
Rolls/Adjustments
None.
On The Horizon…
Same game plan: Biotech, broker-dealer, software shorts on a bounce,
gold, natural gas, oil service longs on a pullback.
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%).Settled at $19.60.
(
AOL |
Quote |
Chart |
News |
PowerRating) — Long the July 22.5 buy-write at
$19.40 (50%). Settled at $17.75.
AOL — Long the October 20 buy-write at $16.30
(25%). Settled at $16.40
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the July 20 buy-write at $15.00
(50%). Settled at $16.23.
HAL — Long the July 17.5 buy-write at $14.50
(50%).Settled at $15.48
(
SEBL |
Quote |
Chart |
News |
PowerRating) — Long the August 27.5 buy-write at
$23.00 (50%). Settled at $19.91
Proxy buy-writes
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15/June 20 proxy buy-write at $3.20 (50%).
Settled at $3.15
Complex Strategies
None.
Directional Positions
(
JNJ |
Quote |
Chart |
News |
PowerRating) — Long the January 60 puts at $3.30
(50%). Settled at $3.10.
Short-term
Call Positions
(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 55 calls at $3.65 (100%). Settled at $.90.
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30
(50%). Settled at $.25.
(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the May 15 calls at $.40 (50%).
Settled at $.05.
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40
(50%). Worthless.
Call Spread Positions
None.
Put Positions
(
DJX |
Quote |
Chart |
News |
PowerRating) — Long the June100 puts at an effective price of $2.75 (50%).
Settled at $2.75.
(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the June 40 puts at 2.75 (50%).
Settled at $3.80.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Long the June 60 puts at $2.50
(37.5%). Settled at $5.30
Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August/May 65 put calendar at $1.50 (50%). Settled at
$1.00.
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