Window Dressing
The market is looking better
across the board. Initial Jobless Claims came
in at 392,000, better than expected; Durable Orders at -4.8 %, also
better than expected.
We have a set of very important numbers coming at 9:00 AM
CST, Consumer Confidence (expected 83
vs. 82.2), Chicago PMI (expected 45 vs. 41.1), Existing
Home Sales (expected unchanged at 5.17mm), and New Home Sales (expected
875k vs. 880k). Any of these reports could move the market greatly
in the current low-volume environment.
“Window dressing” will continue as fund managers
make their portfolios appear as though they have all the high-performing stocks
of the recent past:
(
NVDA |
Quote |
Chart |
News |
PowerRating),
(
IBM |
Quote |
Chart |
News |
PowerRating), etc., and unload the dogs.
Don’t get caught long on any of this stuff when the music
stops.
Updates:
(
AMZN |
Quote |
Chart |
News |
PowerRating) — We sold 100% of the AMZN Jan. ’03 10
buy-write at $6.70 yesterday.
This reduces us to a simple 100% position. (A 200% position means
you have allocated two trades worth of risk capital to the same trade.
We only do this when we feel the trade is really “stacked” in our
favor.)
(
GENZ |
Quote |
Chart |
News |
PowerRating) — We purchased the Jan. 60 straddle at $5.40
yesterday (remaining 50%). This
takes us up to a 100% position, long the GENZ Jan.
60 straddle at an average cost of $5.95.
Current Recommendations:
GENZ — Continue Gamma scalping the GENZ straddle.
(
TLAB |
Quote |
Chart |
News |
PowerRating) — Place an order to buy the TLAB March 15
put/March 22.5 call collar for
$1.00 (25%).
Rolls/Adjustments:
See above.
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.
(
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.
(
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.
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 |
Quote |
Chart |
News |
PowerRating) — Long 1 unit of the Jan. 10 calls and short
2 units of the Jan. 7.5 puts @
$1.00 credit.
(
GENZ |
Quote |
Chart |
News |
PowerRating) — Long the Jan. 60 straddle at $5.95 average
cost, (100%) — hold.
Short-term
Call Positions
(
WCOM |
Quote |
Chart |
News |
PowerRating) Jan. 12.5 calls @ 2.40 — hold. Stop below.
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
(
AWE |
Quote |
Chart |
News |
PowerRating): Stop @ 12.25 close only.
(
WCOM |
Quote |
Chart |
News |
PowerRating): Stop @ 13.95 close only.
(
TLAB |
Quote |
Chart |
News |
PowerRating): Stop @ 11.95 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