Pfizer didn’t have a very strong finish but the rest of the market did.
The Dow went from another bounce at 10,825 at 11 am all the way up to 10,950 just after 3 pm. The bounce off a higher point than before is very significant:
http://finance.yahoo.com/q/bc?s=%5EDJI&t=5d&l=on&z=m&q=l&c=
The other indexes followed suit only not as dramatically so I wouldn’t read too much into this because it was a small bounce on the whole and we are looking very oversold. This does fall within what you would expect to see with rotation but a rotation into the Dow will be very interesting!
Oil broke our $61.90 target at the end of the day but Valero shooed us out of our positions when it turned sharply up at 2pm, which worked out to be about the low for the day. It looks like the oil stocks are just in weekend denial. Lack of a supply interruption over the weekend will probably send us below $60 next week but we need to wait and see.
There is simply nowhere left to put oil and gas in this country. We are bursting at the seems with the stuff and there are 500 tankers on the way here with more, whether we want it or not!
SLB wins the recovery of the day award, going from $114 to $120, this is why I don’t short them other than intraday! http://finance.yahoo.com/q/bc?t=1d&l=on&z=m&q=l&p=&a=&c=&s=slb
Gold stopped at $550, down $20 for the week but the gold stocks are trading lower than when gold was at $500 so something has to give next week.
It looks to me like the markets are ready to rally providing no one blows anyone else up at the Olympics this weekend! The oil traders think all will be well or they wouldn’t have let the price drop this afternoon so enjoy your weekend, Monday could be very exciting!
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There’s not much to review since we cashed everything out but here’s a study list for the weekend in case Monday really is a time to buy.
I’m not going to bore you with going over the many many 100-400% returns we made on oil puts this week. Just want to say that this is the reason I say keep cash available – you never know when an opportunity like this will come up. It’s only a shame that builders picked the same week to drop but we certainly picked the weaker group to focus on.
New readers please read this post: http://philstocks.blogspot.com/2006/02/oil-worlds-stage.html which set us up for this very profitable week.
If you took the Apple spread I certainly hope you bought out your caller for less than $1 yesterday or this morning, pocketing the certain $2.20 and lowering your basis to $13.80. If so, good play and now you should sell the $72.50s when they hit $3 to really lock in a profit. Everyone will talk about the WiPod this weekend. PLAY will also benefit.
ABX Apr $27.50s are very attractive at $2.50 (a $1.50 premium).
When I said the ACI puts may go in the money today, I didn’t think they would open there! BTU was in the same boat, neither trade was worth making.
We picked AMAT Mar $20s for .60 back on the 2nd, they are at .85 now and still looking good.
There was a point mid-day where BA single handedly held up the Dow.
BUD Jan $40s for $3.70 look better to me than ever.
CCE had a very mile pullback today and the Mar $20s are just .50.
CHK was a comment intra-day trade on Thursday that was a huge winner, the $32.50 puts more than doubled today (of course I took the money off the table!).
CSCO still can’t break $20, no buying until it does.
DOW Mar $40s $2.75, still a good buy if oil continues down.
FRK was called as a buy 2/2 at $53, now at $56, still looks good.
IBM Mar $80s for $2.55 are still looking good, up 10% since Wednesday’s pick.
MET had a great first day! We got the Mar $50s at $1.30 and they look like they are a very safe $1.60 already (+25%). Not bad for a day…
Take MOT off the table for next week. Apple may announce a phone that will have people putting Razors in the recycle bin. This will make MOT a buy as it will have little real effect in the long run.
NCS went the wrong way on us, the Feb $50 puts are down to $1 (-20%) if you haven’t stopped out Monday may be better as long rates shot up yesterday.
I was way too right on NFI, there was no point making that trade as it opened down 11%.
PCU gave us a reasonable entry and the Sep $85 puts finished at $14 (up $2.50). I adjusted due to the rapid drop and sold the $80 puts for $3.90 instead or the $85s. On Tues morning I said: “PD was shocking in the scope of its drop, sheddig 7.6% in one day. In a real copper pullback, PCU is still much pricier (plus that Chavez is blowing off steam again). ” PCU is down 10% since then already.
Notice that the PFE Mar $25s for $1.15 held up well, still up 40% from our entry if you didn’t stop out. I will be buying more at this price if the stock opens strong Monday.
Our old favorite PLAY is back in play announcing they are doing the guts of the new WiPod, I know I’m buying 2 or 3 asap so I like the May $25s for $4.50 to give us plenty of time and maybe sell the March $27.50s for $1.55 if we get nervous (but I doubt it).
SBUX was a great call on Tues. The Mar $35s are now $1.45, up over 60% from our pick.
SHFL did not pull back, it zoomed up 4.4% today, missed our chance there.
SIRI was flat today, it will all come down to earnings!
SYMC is now officially a buy with MFE running up 18% on Friday on strong earnings and outlook. Owning the stock and selling the Mar $17.50s for $1.80 (10%) is the way to go. You can also increase the return (and the risk) by owning the Jan ’08 $15s for $5.20 and selling the same for a 40% return (if it stays flat to mildly up).
TM has been the victim of the Nikkei meltdown this week but could skyrocketed if the exchange recovers. The Jul $100s are still nice at $9.60 and you can always sell the Mar $105s for $2.80 (but I’m confident enough to wait to sell the $110s for the same or more).
http://finance.yahoo.com/q/bc?t=5d&s=TM&l=on&z=m&q=l&c=%5En225
TXN is pausing for a power move up, Nasdaq willing. Must own next week!
UNH finished very strong today and is way too beaten down. This morning’s Jan $55s are already still just $9.40 and now you can sell the March $60s for $1.35.
X kicked up and stopped me out with a nice profit. Had I sold 100% calls against it I would have stayed but I bought the guy out in the morning.
If Google heads up buy Yahoo, not Google. Mar $32.50s are ok at $1.35 but not until GOOG breaks up. If Google dies, it will take Yahoo with it… The Jan $30s are a great deal at $6, especially if you turn around and sell the March calls for 20%.
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Here’s a nice link I found (ironically on a Google ad!) to the CBOE. Lots of nice option information here and, on the front page, Fidelity advertises .75 per contract pricing, that’s less than I pay and I shop around!
http://www.cboe.com/Strategies/WeeklyStrategy.aspx
Front page: http://www.cboe.com/?GCID=S15299x002&KEYWORD=Stock+Quotes
Here’s the Fidelity link in case it goes away. I am NOT endorsing them as I have never tried it but I also know some of you may be paying way too much to trade options so it’s a nice starting point.
http://personal.fidelity.com/misc/buffers/ats_landing.shtml?
banner=12382966&immid=00052&crtype=banner&bplace
=336×280&boffer=explore_your_options
