‘Sell The News’ Opportunity
Futures are slightly lower at this hour. The
PowerRating) earnings last night gave the markets an after-hours spike, but it
looks like it was a “sell the news” opportunity. Deutsche downgraded
AMAT this morning, citingÂ slowing DRAM momentum and valuation concerns.
The stock is now trading right around yesterday’s close after trading higher
last night. It could be a profit-taking day today.
It was a busy morning on the economic front. CPI, both headline and core, came
in slightly higher than expected. April CPI came in atÂ +0.5% vs. consensus
expectations of +0.4%, and the core (exÂ food and energy) came in at +0.3%
vs. consensus expectations of +0.2%. Business Inventories dropped 0.3% vs.
expectations of a 0.2% drop. April Industrial Production rose 0.4%, right on the
nose, and Capacity Utilization also came in right on the nose at 75.5%.
Sideways to lower today, a gradual ramp up into
PowerRating) earnings tomorrow is
a scenario that makes sense to me. On another note, I found out this morning
that I was filled on my bid to buy the DJX May 100 puts at $.10 yesterday. This
leaves us long the DJX June 100 puts at an effective cost of $1.85.
Yesterday the VIX dropped 1.76 to 21.75. The VXN fell another 1.78 to 44.34, and
the QQV slid 2.14 to 38.58. Look for a bounce in volatility today.
Trade Updates (5/14/02)
DJX — We covered the short May 100 put portion of our May/June 100 put calendar
spread yesterday at $.10 (late fill — I just got it now). This leaves us long
the DJX June 100 puts at an effective cost of $1.85.
I see some retailers have gotten upgrades today. Make sure you have a bid in the
market for another 25% of those TGT June 40 puts!
New Actions (New Recommendations)
Working Orders (Old Recommendations)
PowerRating) — Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the JanuaryÂ 15 calls, short the June 20 calls at $3.20),
buy the June 20 calls (to close) and sell the September 17.5 calls (to open) for
$1.25 credit (to you).
Recap of open trades:
AOL — Long the October 20 buy-write at $16.30
HAL — Long the July 17.5 buy-write at $14.50
Call Spread Positions
DJX — Long the May/June100 put calendar at an
effective price of $1.75 (“roll” on 5/9/02). Covered May 100 puts at
$.10 on 5/14/02. This now puts us long the June 100
puts again at an effective cost of $1.85.
- 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