What the hell was that?
We had some very impressive gains on light volume and I felt like I was asleep at the wheel as the market was passing us by as we sat on a lot of covered positions and made little progress. At least the June calls we are going to be moving our covers to went up nicely as well so we'll be even more protected than we thought we would be next week (see how we can find a bright side!). I've looked and I really can't see any particular reason for the bounce other than, thankfully, the S&P chose not to fall below the March trend line, as noted by Trader Mike:
Well we weren't caught completely off guard as our first quick play of the day was the QID $40 puts at .70, which finished the day at $1.45 so the day wasn't a total loss. We also got my long predicted test of Google $570 and we took our callers out at the dead bottom (but re-covered lower at the top) and our VLO calls finally came back, putting our spreads in the money and allowing us to get out of the ones that were still naked with a small profit.
Our worst play of the day wound us up in the RIMM June $135 puts at $7.65 (we started with the $125 puts and got blown out and rolled up) as I just couldn't buy into the excitement of the new Blackberry, which is pretty much the old Blackberry with a few improvements and is exciting to Blackberry users but certainly isn't going to be an IPhone killer.
The announcement from RIMM did have a huge positive impact on AAPL, who jumped $5 on the day as those investors also saw that the new "Bold" was certainly no IPhone killer. RIMM is even putting up their own money to start a "Blackberry Partners Fund" to make sure no one thinks for a moment that every idea they have isn't stolen from Steve Jobs. Amazingly, this one-trick pony gained 7% on the day and added $6Bn in market cap, putting them at $79.9Bn, close to half of Apple's market cap where the IPhone (RIMM's one trick) is less than 1/5 of total revenues. We'll keep our money in Apple thank you!
FDX was indeed a great buy at the bottom this morning as we are less worried about their outlook than they are and oil was indeed kind enough to give us a little pullback on the day. We took SLB June $90 puts and XOM $90 puts but were not very enthusiastic as we know they only ordered 23Mb of oil for May at the NYMEX so, unless demand is really off a cliff, we certainly have at least one inventory draw-down coming before the end of the month.
Financials came back strong today as well with a 1.7% gain, even as C fell back to $23.50, giving us cheap rolls down and nice, fresh entries. So there were lots of things that LOOKED good today, including HPQ spending $13Bn to buy EDS but I still can't reconcile a rally against $120+ oil ahead of what is probably going to be some very inflationary data this week so we remain cautious at the moment, despite evidence to the contrary…
