Stronger Opening Ahead — Semis, DELL Propel
Better-than-expected DELL
(
DELL |
Quote |
Chart |
News |
PowerRating) earnings (DELL is trading up about $.80
pre-market) and a jump in the Semiconductor Equipment Industry’s April
preliminary book-to-bill ratio to 1.20 ($120 worth of new orders received for
every $100 worth of product billed for the month) from 1.05 has a good bid under
the market at the moment.
Currently, DJI futures are up 43, Globex S&Ps are up 6.10, and Globex Nasdaq
futures are up 23.00. Today is expiration day, and that may add a little fuel to
the upside fire. At about 08:45 CDT the University of Michigan preliminary May
consumer sentiment will be released, expected to come in at 93.0.
Now Entering Summer…
Although it is still below 40 degrees here in Chicago, we are now entering the
summer slow period. A week from Monday brings the Memorial Day holiday, so next
week and the week after are both quasi-holiday weeks. Volatility will likely
remain under pressure, and the markets may begin to drift a bit. Ultimately, we
expect the market to resolve itself to the downside, but timing is an issue, so
we will be looking to establish bearish-oriented calendar spreads if the market
begins to chop sideways/higher.
Volatility
Volatility got hit yesterday, with the VIX losing .68 to 21.45, the VXN fell .88
to 44.52, and the QQV dropped 1.50 to 37.15. Now that we are essentially
finished with earnings season and heading into a semi-vacation period,
volatility may underperform for a while (unless the market goes back into the
tank).
Trade Updates (5/16/02)
Nothing done yesterday.
New Actions (New Recommendations)
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Traders long the QQQ July 33 puts take profits on a test of the
$30.98 – $31.87 gap area left Monday/Tuesday. (Make scale sales if the QQQ
travels into that zone.)
Working Orders (Old Recommendations)
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Sell all CHIR July 50 calls at $1.00 to close.
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Sell all MLNM May 25 calls at $.50 to close.
(
MSFT |
Quote |
Chart |
News |
PowerRating) — Buy the June/July 50 put calendar spread (buy the July 50 puts,
sell the June 50 puts) at $.50 (50%).
Rolls/Adjustments
(
DYN |
Quote |
Chart |
News |
PowerRating) — Holders of the DYN January 15 call/June 20 call proxy
buy-write (long the January 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).
(
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.
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%).
(
AOL |
Quote |
Chart |
News |
PowerRating) — Long the July 22.5 buy-write at
$19.40 (50%).
AOL — Long the October 20 buy-write at $16.30
(25%).
(
HAL |
Quote |
Chart |
News |
PowerRating) — Long the July 20 buy-write at $15.00
(50%).
HAL — Long the July 17.5 buy-write at $14.50
(50%).
(
SEBL |
Quote |
Chart |
News |
PowerRating) — Long the August 27.5 buy-write at
$23.00 (50%).
Proxy buy-writes
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the January 15/June 20 proxy buy-write at $3.20 (50%).
Complex Strategies
None.
Directional Positions
(
GM |
Quote |
Chart |
News |
PowerRating) — Long the January 60 puts at $3.30 (20%).
(
JNJ |
Quote |
Chart |
News |
PowerRating) — Long the January 60 puts at $3.30
(50%).
Short-term
Call Positions
(
APC |
Quote |
Chart |
News |
PowerRating) — Long the May 55 calls at $3.65 (100%).
(
CHIR |
Quote |
Chart |
News |
PowerRating) — Long the July 50 calls at $3.30
(50%).
(
CPN |
Quote |
Chart |
News |
PowerRating) — Long the May 15 calls at $.40 (50%).
(
MLNM |
Quote |
Chart |
News |
PowerRating) — Long the May 25 calls at $2.40
(50%).
Call Spread Positions
None.
Put Positions
(
DJX |
Quote |
Chart |
News |
PowerRating) — Long the June 100 puts at $1.85 (50%).
(
QQQ |
Quote |
Chart |
News |
PowerRating) — Long the July 33 puts at $1.90
(25%).
(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the June 40 puts at $.85 (75%).
Spread Positions
(
BAC |
Quote |
Chart |
News |
PowerRating) — Long the August/May 65 put calendar at $1.50 (50%).
(
MER |
Quote |
Chart |
News |
PowerRating) — Long the June/July 40 put calendar
at $.50 (50%).
(
SMH |
Quote |
Chart |
News |
PowerRating) — Long the May/June 40 put calendar at
an effective price of 1.75 ("roll" on 5/9/02).
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