Trading With Meat Cleavers
Stocks look set to open lower as
Greenspan looms…
The
(
HWP |
Quote |
Chart |
News |
PowerRating)/
(
CPQ |
Quote |
Chart |
News |
PowerRating) merger took a major blow as the D.
and L. Packard foundation voted
against the deal…
(
JDSU |
Quote |
Chart |
News |
PowerRating) warned this morning.
Earnings to focus on this week: 12/13
(
CIEN |
Quote |
Chart |
News |
PowerRating)
pre-opening, and
(
ORCL |
Quote |
Chart |
News |
PowerRating) after the
close.
We exited our ORCL buy-writes today at 15.55. Not an
elegant exit, admittedly (I have
been trading with meat cleavers for hands all week), and
the chart still looks positive, but it is time to start tiptoeing toward
the exits for the short-term stuff.
We were unable to sell the
(
SEBL |
Quote |
Chart |
News |
PowerRating) Jan. 25 calls for
2.50. We are going to unload
these at a scratch, very disappointing because at one point they
hit 4.40, but that’s the way it goes on the upside.
We were extremely close in
(
BA |
Quote |
Chart |
News |
PowerRating) and
(
AMR |
Quote |
Chart |
News |
PowerRating) to
getting filled on the adjustments
(below) that we are working. The charts look good in those stocks,
so we continue to hold and may raise our offers.
The FOP (Philadelphia Fiber Optics Index) flopped -3.3% on
the day. Naturally, this didn’t
do our positions in
(
TLAB |
Quote |
Chart |
News |
PowerRating), JDSU or CIEN any favors.
These trades are a bit different, as they are very low-level price
trades and are easier to hold. We continue to hold and may add more
on further weakness.
Current Recommendations:
Sell 100% of the
(
SEBL |
Quote |
Chart |
News |
PowerRating) Jan. 25 calls at 2.50
(breakeven). Right now, they are
2.15 – 2.30.
Buy-writers in general — scale purchase protective puts.
Complete by Christmas.
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) — Sell the Jan. 25 calls at 2.50 (breakeven).
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. Took profits at a $1.05 average on
50%. Stop Below.
Buy-writes
*
(
ORCL |
Quote |
Chart |
News |
PowerRating) Dec. 15 buy-write @ 12.10 rolled into Jan. 20
buy-write @ 13.10 — exited at 15.55 today.
*
(
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/Nov. ’01 40 call calendar @ 6.00 —
hold. See rolls above.
(
BA |
Quote |
Chart |
News |
PowerRating) 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 January 10 calls at 3.00.
Short-term
Call Positions
(
SEBL |
Quote |
Chart |
News |
PowerRating) Jan. 25 calls @ 2.50 — hold. Sell at 2.50
(breakeven). Stop below.
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
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.
|
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