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[Weekend Summary]
Dear Member:
I enjoyed a pleasant trade on CHINA LEAPS this week. I bought the 5 calls on Monday and sold them on Thursday for what turned out to be a 13.9% return before commissions (12.7% after commissions in my personal situation)!
Micron (MU) has moved into the $15 range which is good for my Jan '07 10/15 bullish call spread.
The straddles on Burlington Resources (BR) (Aug 90), Cardinal Health (CAH)(Jun 70), and Morgan Stanley (MS)(July 60) are doing what straddles do. As I have said before, straddles can take some time, and I am looking for a fairly sharp move in either direction in the stock and/or a jump in implied volatility. CAH helped a bit with a fairly sharp move down this week. MS has been moving up fairly steadily and BR just broke a short term support.
SPY has retreated to a support level and that gives me the opportunity to buy to close the Feb 129 calls that I sold against my Dec 120 long position. At today's close, my gain on the short leg of this diagonalized calendar spread showed a 55 cent profit at the bid. What I do will depend on the SP-500 movement during the early part of next week.
BBH, the biotech ETF, punched through a resistance on Wednesday. I am waiting to see what it will do before I decide whether to create a spread, bring in some income and reduce risk or just continue the directional play.
Tenet Healthcare (THC) stock has drifted down less than 30 cents since I bought the Jan '07 $5 calls, but it has not yet hit my exit. It appears to be continuing a base at the moment.
EBAY has broken down through a support so I am glad I had sold the Jan '07 50 calls against my long position in the Jan '07 40 calls. I can already make a couple of bucks if I buy back the 50's and could take in even more if I then sold a lower strike to create another spread, either calendar or vertical.
The markets retraced this week. It looks to me as though the Dow 30 should be of the most concern for the bulls. It has broken down through the exponential 50 day moving average and a break below 10661 could easily result in a drop to the 10200 range as a first level of support. It closed Friday at 10793. The Nasdaq gapped down today but came to rest at the exponential 50 day moving average. The SP-500 also came to rest at that same moving average. Retracements are expected so, except for the Dow, the news so far is ho-hum. February is often a down month so these indexes definitely bear watching. A break down could provide some good bearish plays and a bounce some good bullish plays. The jury is definitely out right now.
Have a great weekend.
Bill
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