Stick With The Plan
The market is set to open lower on
worse-than-consensus payroll numbers, with
non-farm payrolls -331k vs. expectations of -200k. Headline unemployment
hit 5.7% vs. expectations of 5.5%. Intel’s
(
INTC |
Quote |
Chart |
News |
PowerRating)
raising of guidance might offset the negative payroll numbers somewhat,
but the effect on the semis could be offset by Integrated Device Technology’s
(
IDTI |
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PowerRating)
negative guidance.
NEW STOPS BELOW!
Current Recommendations:
Stick with the plan: Buy-writers slowly convert or collar
positions by scale purchasing
puts. Look to complete by Christmas. Other adjustments, see
below under rolls and adjustments. Everyone
else keep an eye on the exit door. The disco is crowded, and I smell
gas.
Rolls/Adjustments:
(
BA |
Quote |
Chart |
News |
PowerRating) — Getting warm — Those of you with the Jan. ’03
35 and 40 calls from the proxy
buy-writes, leave a $1.00 offer in the market for the Jan. ’02 40s.
(
AMR |
Quote |
Chart |
News |
PowerRating) — Close but no cigar — Those of you with Jan.
’02 25 calls from the calendars,
you may:
A) Put a $1.50 offer in for the Jan. 25 calls to liquidate.
B) Put a. $.50 offer in for the Dec. 25 calls to roll
into the Jan./Dec. 25 call calendar at a net
cost of .25.
(
SEBL |
Quote |
Chart |
News |
PowerRating) — A lot of time has passed since we initiated
this trade at the 2.50 level.
The calls printed 4.40 and then tanked, and time is passing, eating
into their value. We are still bullish on SEBL, but we will now scale
out of these calls from lower levels, and average higher. Sell
25% @ 3.50, 25% @ 4.50, 25% @ 5.50, and 25% @ 6.50. Raise the stop to 21.00,
close only.
Recap of open trades:
Long-term
Airline calendar spreads
(
AMR |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .75 — Oct.’s went
out worthless, holding Jan.,
look to sell Dec. 25 calls @ .50.
(
UAL |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .70 — Oct.’s went
out worthless, holding Jan.,
looking to sell Dec. options on a bounce.
Butterflies
(
DELL |
Quote |
Chart |
News |
PowerRating) — Long the DELL Dec. 20/25/30 call butterfly
at 1.75. (Calls or Puts are
okay).
Reverse Collars
(
AWE |
Quote |
Chart |
News |
PowerRating) Jan. 12/15 reverse collar (long the Jan. 15
calls, short the Jan. 12.5 puts) @ .05 average. Stop below.
(
TLAB |
Quote |
Chart |
News |
PowerRating) March 17.5/15 reverse collar (long the March
17.5 calls, short the March 15
puts) @ .50 credit average. Stop Below.
Buy-writes
*
(
ORCL |
Quote |
Chart |
News |
PowerRating) Dec. 15 buy-write @ 12.10, rolled into Jan.
20 buy-write @ 13.10 — hold.
*
(
AMZN |
Quote |
Chart |
News |
PowerRating) Jan. ’03 10 buy-write @ 5.15 (2 units) —
hold.
*
(
JDSU |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 buy-write @ 9.60 — hold.
Proxy buy-writes
(
BA |
Quote |
Chart |
News |
PowerRating) Jan. ’03 35/November ’01 40 call calendar @ 6.00
— hold. See rolls above.
BA Jan. ’03 40/November ‘ 01 40 call calendar @ 4.00 —
hold. See rolls above.
Complex Strategies
(
JDSU |
Quote |
Chart |
News |
PowerRating) — Long 1 unit of the Jan. 10 calls and short
2 units of the Jan. 7.5 puts @
0.00 — sold 50% of the Jan. 10 calls at 3.00.
Short-term
Call Positions
(
SEBL |
Quote |
Chart |
News |
PowerRating) Jan. 25 calls @ 2.50 — hold. Stop below.
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
(
CIEN |
Quote |
Chart |
News |
PowerRating) Dec. 22.5 calls @ 1.05.
Put Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the Dec. 55/60 1:2 ratio put spread at
.30 — hold.
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the March 55/65 put spread @ 3.50 (25%)
— hold.
STOPS
(
AWE |
Quote |
Chart |
News |
PowerRating): Stop @ 12.25 close only.
(
SEBL |
Quote |
Chart |
News |
PowerRating): Stop @ 21.00 close only.
(
WCOM |
Quote |
Chart |
News |
PowerRating): Stop @ 13.95 close only.
(
TLAB |
Quote |
Chart |
News |
PowerRating): Stop @ 11.95 close only.
|
If you would like to receive Tony and his trading |
* 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