Waiting For Greenspan
PPI was a non-event,
coming in a bit weaker than expected in both: -.7% vs. -.2% and -.2% vs. +.1% in
the core. This gives the Fed further ammo if
they need it.
The big event today will be Greenspan speaking (12:45 CST)
on the economy. I would imagine
that trade would be confined to a fairly narrow range
until then. I suggest going to the gym or taking the dog for a long
walk this morning, come back after lunch and strap in.
Enron Fallout
The more I see about the Enron situation, the more
convinced I am that it will have
an impact on the stock market — eventually. A crackdown on financial
reporting and the accounting mumbo-jumbo that has been going on
in the name of stock price management may be coming to an end. If some
of these companies actually have to tell the truth about their business,
who knows where we could go?
Updates:
(
GENZ |
Quote |
Chart |
News |
PowerRating) — We sold some GENZ at 54.08, the upper
volatility (sigma) band.
A couple of future possibilities:
(
QCOM |
Quote |
Chart |
News |
PowerRating) — Looks like it might be searching for a
toehold somewhere down here. It
has rallied all day after being downgraded. We like to buy QCOM near
40.00 and sell it near 60.00, so we are being patient and waiting for
a dip down to establish a bullish position.
(
IMCL |
Quote |
Chart |
News |
PowerRating) — Still looking for activity to indicate a
strategy.
Gamma Scalping
GENZ — Today’s sigma’s: 52.41 – 55.82.
(
BBBY |
Quote |
Chart |
News |
PowerRating) — Today’s sigma’s: 32.54 – 34.34.
Current Recommendations:
GENZ — Continue Gamma scalping the GENZ straddle.
BBBY — Continue Gamma scalping the BBBY straddle.
Rolls/Adjustments
None.
Recap of open trades:
Long-term
Airline calendar spreads
(
AMR |
Quote |
Chart |
News |
PowerRating) — Sold 50% of the Jan. 25 calls for $1.50,
leaving us long the balance for
free.
(
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. Note: We have covered the Jan. 12.5 puts
at $.05. This effectively leaves us long the Jan. 15 calls at $.10,
eliminating the need for a stop.
(
TLAB |
Quote |
Chart |
News |
PowerRating) — March 17.5/15 reverse collar (long the
March 17.5 calls, short the
March 15 puts) at $1.50 credit average (50%).
(
AMD |
Quote |
Chart |
News |
PowerRating) — April 25/15 reverse collar (long the April 25
calls, short the April 15 puts)
at $.40 (50%).
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/May 45 call calendar @ $4.75 — hold.
BA Jan. ’03 40/May 45 call calendar @ $2.75 — hold.
Complex Strategies
JDSU — Long 1 unit of the Jan. 10 calls at $.90 credit.
(Due to “roll.”)
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
$.80 credit average (50%). 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.
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: Stop @ 13.95 close only.
TLAB: Stop @ 11.95 close only.
|
Click |
*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