Upgrade Cluster Bomb
The market is set to open higher
this morning. Non-farm payrolls declined a
less-than-expected 124k (estimates ranged from -130k to -170k), and
Hourly Earnings were up .5% vs. a consensus
estimate of .2%.
Brokers have cluster-bombed us with upgrades this morning,
too many to list, but some
notables:
(
EMC |
Quote |
Chart |
News |
PowerRating),
(
SEBL |
Quote |
Chart |
News |
PowerRating), and the brokerage sector.
We will be challenging/taking out the December highs this
morning. If these levels are
held, it will be a whole new ball game, and we will have to
adjust our game plan.
Even though the market has demonstrated exceptional
volatility the last two days,
implied volatility is still relatively cheap. Therefore, whichever
way this market chooses to move from here, buying options makes
sense.
Updates:
(
TLAB |
Quote |
Chart |
News |
PowerRating) — We bought the March 15 put/22.5 call collar
for $.90 yesterday (25%). This
puts 25% of the position into the March 17.5/22.5 vertical call
spread for a $.60 credit. We will step aside for the moment to see
what the market does from here.
Gamma Scalping:
(
GENZ |
Quote |
Chart |
News |
PowerRating) — We bought some more stock in the 54 area
yesterday and will be sellers
between the 56-58 area today. We are backing off the buys until 50.62
— a 50% retracement of the 9/19 to 12/19 (ooh, what symmetry!) rally.
Today’s bands are 54.29 +/- 1.71, or 52.58 – 56.00.
(
BBBY |
Quote |
Chart |
News |
PowerRating) — Today’s bands are 33.68 +/-
.95, or 32.73 – 34.63.
Current Recommendations:
GENZ — Continue Gamma scalping the GENZ straddle.
BBBY — Continue Gamma scalping the BBBY straddle.
Looking at reverse collars in:
(
AMD |
Quote |
Chart |
News |
PowerRating),
(
RFMD |
Quote |
Chart |
News |
PowerRating),
(
JNPR |
Quote |
Chart |
News |
PowerRating),
(
Q |
Quote |
Chart |
News |
PowerRating) — nothing yet.
Rolls/Adjustments:
NONE
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 the Jan.
25 calls. In with a chance!
(
UAL |
Quote |
Chart |
News |
PowerRating) Jan./Oct. 25 call calendar @ .70 — Oct.’s went
out worthless, holding Jan. 25
calls, looking like rip-ups.
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. Note: We have covered the Jan.
12.5 puts at $.05. This effectively leaves us long the Jan. 15
calls at $.10.
(
TLAB |
Quote |
Chart |
News |
PowerRating) March 17.5/15 reverse collar (long the March
17.5 calls, short the March 15
puts) @ 1.50 credit average. Now a 75% position as a result
of today’s rolls.
Buy-writes
*
(
AMZN |
Quote |
Chart |
News |
PowerRating) Jan. ’03 10 buy-write @ 5.15 (100%) — 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/Jan. ’02 40 call calendar @ 5.00 —
hold.
BA Jan. ’03 40/Nov. ’01 40 call calendar @ 3.00 — hold.
Complex Strategies
JDSU — Long 1 unit of the Jan. 10 calls and short 2 units
of the Jan. 7.5 puts @ $1.00
credit.
GENZ — Long the Jan. 60 straddle at $5.95 average cost,
(100%) — hold.
BBBY — Long the Jan. 35 straddle at $2.85 (100%) — hold.
Short-term
Call Positions
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
Call Spread Positions
(
DYN |
Quote |
Chart |
News |
PowerRating) — Long the March 30/40 1:2 call ratio spread @
$1.50 (100%) — hold.
(
TLAB |
Quote |
Chart |
News |
PowerRating) — Long the March 17.5/22.5 call spread at
$.60 credit (25%). Note: This spread is a result of a reverse collar
roll.
Put Positions
(
TGT |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 35 puts @ 1.15 (100%) — hold.
(
WMT |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 55 puts @ 2.35 (50%) — hold.
(
IBM |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 120 puts @ 2.60 (50%) — hold.
Stop below.
Put Spread Positions
(
AZO |
Quote |
Chart |
News |
PowerRating) — Long the March 55/65 put spread @ 2.125
(100%) — hold.
(
BBY |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 60/70 put spread @ 3.00 (50%)
— hold.
STOPS
(
WCOM |
Quote |
Chart |
News |
PowerRating): Stop @ 13.95 close only.
(
TLAB |
Quote |
Chart |
News |
PowerRating): Stop @ 11.95 close only.
(
IBM |
Quote |
Chart |
News |
PowerRating): Stop @ 125.00 close only
|
|
*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
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