Verdict Please!

  • November 21, 2000
  • Tony Saliba

With the fate of the identity of the next president now
in the hands of those seven Florida justices, options players saw another major
selloff expand volatilities further. Is the possibility of a calm Thanksgiving
holiday all but erased?  Will we see the year-end rally materialize? There is still time, we are now back to
where the lows last week were lows for the year in a lot of cases. Moreover,
key analyst downgrades continued, with entertainment industry giants
(
NWS |
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and
(
DIS |
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looking to unload long premium may want to begin today. I think that a lot of
the negative reaction to the election problems is in the market today. Opening
fresh short premium positions should still wait. 

For our vertical spreaders, we are open on one-half of
the cover… meaning we are long at (and now out of) the money bull spreads,
with only half of the higher struck verticals sold against them. So I’m looking at adding to the long side (December and January expiries) at these levels. 

Pre-open volume was very light
today, with call sellers again outnumbering buyers 2:1, while put sellers led
buyers, 3:1.
(
ORCL |
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activity was in
(
CSCO |
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(
DELL |
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PowerRating), mostly put buyers.

After
the first hour of trading, volume
was the lightest we have seen in weeks. There was no discerning pattern in the
data.

Were this a normal year, we would expect volatility to
decrease in the face of the upcoming holiday with traders declining any large
commitments until they’ve slept off their food comas.Unless we see a
verdict before we break tomorrow, this market truism no longer holds.

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