[Weekend Summary]
Dear Member,
A decent week. I was able to close out the last leg of the EBAY spread and add $0.20 to my profits on the original spread. The return on risk was 1% per day or 13% in 13 days. For 8 of those 13 days, I had no risk whatsoever in the position.
I opened two credit spreads this week as well. On Imclone (IMCL), I sold the Nov 50 Puts (QCIWJ) and simultaneously bought the Nov 45 Puts (QCIWI)for a net credit before commissions of $1.60 a share. If IMCL stays above $50 a share until expiration, that will be a 47% return on risk. It's doing well so far.
The other bull put spread was opened on Avon Products (AVP). In that one I sold the Oct 42.50 Puts (AVPVV) and bought the Oct 40 Puts (AVPAH) for a net credit of $0.30 a share before commissions. If I don't have to adjust and the stock remains above $42.50 at expiration, I'll have a 13.6% return on risk for a 15 day trade.
Today, I bought LEAPS calls on both Intel (INTC) and Broadcom (BRCM). In each case I bought out of the money calls as the stocks bounced off some support. I bought the Jan '06 25's (WNLAE) on INTC for $1.50 and the Jan '06 40's on BRCM for $2.80. Remember, they don't have to go in the money for me to make money. As the stock goes up in price, the calls will go up in price as well.
HDI did a little juke this week and got me excited. It dropped in price fairly quickly which could signal an increase in volatility, but then recovered to near the 60 level. The Feb 60 straddle is just plodding along at the moment.
Things look a little more optimistic for the bulls now. The Nasdaq has gone through a bit of resistance at 1921 on above average volume and the SP-500 had its' first close above 1130 since June. The SP-500 accomplished the move on above average volume. Even the DOW showed a little promise nudging above the 50 day moving average.
Have a wonderful weekend and great week ahead.
Sincerely,
Bill
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