What’s Driving The Market Today

The market is set to open lower this morning. The driving stories are: Weaker
than expected same-store sales out of Wal-Mart
Quote |
Chart |
News |
, Federated Department
Stores (FD) and Citigroup (C) taking a fourth-quarter charge of $1.5B to settle
the equity research charges and related lawsuits, and McDonalds (MCD) with a
possible debt rating downgrade.

Currently, DJI futures are 56.0 lower, S&P futures are 4.70 lower, and Nasdaq
100 futures are 1.50 lower. In Europe, the FTSE 100 is up 21.90 points or .56%,
the DAX is 32.72 points or 1.08% lower, and the CAC 40 is down 7.71 points or
.25%. In Asia, the Nikkei gained 19.31 points or .23%, and the Hang Seng lost
57.76 points or .60% lower. The dollar is off versus the yen, Swiss franc and
euro, but up against the pound. Interest rate futures are lower along the short
end of the curve, unchanged on the long end, and February crude futures are up
$.52, and February gold is up $2.50.

Personal income and spending came in this morning pretty much as expected, and
had no effect on the market. However, at 08:50 CST December University of
Michigan Sentiment will be released, expected at 86.7. With all the nervousness
about the consumer, this number could be a market-mover.

If you are sitting down to try to make money today, you are nuts! You should be
simply caring for open positions, waiting for the fish to swim into nets you’ve
already deployed, or observing market action for clues. Don’t try to force money
out of this thing, you’ll just lose.

Update: (12/20/02)


New Recommendations

PG — Cancel the recommendation to buy the PG
April 75 /85 put spread at $2.00

Working Orders (Old Recommendations)

KSS — Sell half of our January 50/60 put spreads at $5.00 (to close).

QQQ — Subscribers short the January 23/26 call spread at $1.50 (25%), leave an
order in the market to purchase the spread at $1.50 to close the trade.

Recap of open trades


Reverse Collars




Proxy buy-writes

DYN — Long the January 15 calls at $3.20 — left over from proxy buy-write
(50%). Left for dead.

Complex Strategies

BGEN — Long the January 40 /45 box (25%).

Directional Positions



Call Positions

HD — Long the January 25 calls at $1.75 (50%).

Call Spread Positions

QQQ — Short the January 23/26 call spread at $1.50 (25%).

Put Positions


Put Spread Positions

BAC — Long the January 60/70 put spread at $2.90 (25%).

KSS — Long the January 50/60 put spread at $2.475 (50%).

PG — Long the April 75/85 put spread at $2.50 (25%).


KSS — Two consecutive closes
over $74.00.

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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
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  • Supporting documentation for claims,
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  • 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
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