Sharply Unchanged…
The market looks steady to slightly lower this morning. Currently, DJI
futures are unchanged, as are S&P futures, with the Nasdaq 100 futures
showing a 3.00 point gain. Stocks got pounded overseas in response to our late
selloff yesterday. In Europe the FTSE 100 was 54.20 points, or 1.27%, lower, the
DAX was 91.43 points, or 2.48%, lower, while the CAC 40 was 75.64 points, or
2.23%, lower. In Asia, the Nikkei held up fairly well with a 50.20 point, or
.52% loss, but the Hang Seng got hit for 138.71 points, or 1.37%. Brazil is a
bit higher at the moment. Treasury bond futures are screaming and the yield
curve is flattening — not good, and the dollar is down against the major
currencies and down HUGE against the yen, its biggest drop in seven weeks vs.
the JPY, and nearing its lows. Crude oil futures are $.30 higher and gold fixed
$2.45 higher in London at $316.25/oz.
Normally I wouldn’t be too worried about the market because I am skeptical of
follow through in any direction in August, but the movement in the other
financial markets (currencies, bonds, gold) has me worried that we might be
heading for another slide. In addition, everyone will be sweating out the Aug.
14 deadline, so it will undoubtedly be a very nervous trade today.
We will again focus on looking for ratio call spreads on selloffs (if we get a
stiff one with rising volatility) and purchasing bearish calendar spreads and
vertical spreads on rallies. We just missed on a group of spreads yesterday, and
that was a big disappointment, but stuff happens.
Volatility
Even though the market tanked yesterday, volatility slid a bit after
the FOMC. On the day, the VIX lost .67 to 39.79, the VXN gained 1.39 to 57.68,
and the QQV slipped .17 to 49.26. Short of a complete blowout to the downside,
volatility should begin to soften up in the next couple of weeks.
Trade Updates (8/13/02)
Nothing! (Damn it!)
New Actions (New Recommendations)
(
IBM |
Quote |
Chart |
News |
PowerRating) — Buy another 25% of the January 50/60 put spread at $1.50.
(Was close today.)
Working Orders (Old Recommendations)
(
C |
Quote |
Chart |
News |
PowerRating) — Buy the January/September 30 put calendar spread at $1.20 (50%). (Was
very close today.)
(
MMM |
Quote |
Chart |
News |
PowerRating) — Buy another 25% of the MMM October 110/120 put spread at $2.00.
(Was close today.)
MMM(2) — Sell half the MMM October 110/120 put spread at $5.50. Far away now.
Working Rolls/Adjustments
None.
Recap of open trades
Long-term
Reverse Collars
(
CIEN |
Quote |
Chart |
News |
PowerRating) — Long the January 2.5/5 reverse
collar at $.40 (25%).
Buy-writes
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the January 15 buy-write at $12.05 (100%).
Proxy buy-writes
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15 calls at $3.20 — left over from proxy
buy-write (50%). Left for dead.
Complex Strategies
None.
Directional Positions
(
AMGN |
Quote |
Chart |
News |
PowerRating) — Long the January 30/40 put spread at $2.50 (50%).
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the January 50/ 60 put spread
at an average price of $2.50 (75%).
(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the January 50/60 put spread at $2.50 (25%).
Short-term
Call Positions
None.
Call Spread Positions
DJX — Long the August 86/90 call ratio spread 1:2 for $.50 (50%).
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the August 26/28 1:2 call ratio spread for even money (25%).
QQQ — Long the August 26/28/30 "Christmas tree" at $.35 (25%).
Put Positions
None.
Spread Positions
(
C |
Quote |
Chart |
News |
PowerRating) — Long the December/August 30 put calendar spread at $1.70 (25%).
C — Long the December/September put calendar spread at $1.00 (25%).
(
MMM |
Quote |
Chart |
News |
PowerRating) — Long the October 110/120 put spread at an average price of $2.87
(75%).
Stops
None.
|
Click
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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