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stock share, stock option
[Weekend Summary]
Dear Member:
I was able to take a good profit on Telefonos de Mexico (TMX) before the markets fell by selling my Jan '08 $20 LEAPS calls for a 15% gain before commissions in just 9 days.
When I saw the apparent market reversal after the Fed announcement, I took action in several areas. I bought Dec 40 puts on QQQQ and they have jumped 13.7% in value in a day. I opened a bearish call spread on Ryland (RYL) for a $1.25 a share credit which will yield a 33% return on risk if the stock stays below 60 at June expiration and I make no adjustment.
In addition, and as a result of the downward move, I created spreads by selling calls against my long option positions in the Biotech Hldrs (BBH) and Sirius Satellite Radio (SIRI). I got $1.60 a share by selling the June 180 calls on BBH and brought in a quarter by selling the Dec 6 calls on SIRI. Each of these moves brought in income and reduced risk in the long term options I already owned. The positions are covered since I do have the long term options.
The Jul 60 puts on Morgan Stanley (MS) are moving up as the stock moves down. The Conoco Phillips (COP) is just doing what straddles do.
I did adjust the condor on Unit (UNT) by closing the short call leg, but the stock dropped after I had made that move so I'll be looking to see if I can readjust and bring in some more cash.
The spreads on Micron (MU), SPY, and XLK are doing what I expect. The short legs on SPY and XLK (I had sold the Dec '07 140 calls on SPY and the Jan '07 22 calls on XLK) are both in the profitable area. Micron hasn't moved down enough to make the short 17.50 leg profitable yet, but the long 10 leg is currently profitable. I expect be in and out of these positions trying to gain additional profits as the stocks move up and down or down and up.
Last week I thought the markets were really turning bullish, but it seems that the Fed may have seriously stalled the upward march. I can't yet be sure whether the drop toward the end of the week is a simple retracement on profit taking or whether it is the first signal of a return to a bear market. The indices stopped near relative levels of support Friday so we may see a bounce next week or, since the volume has been strong on the fast descent, we may see a much larger retreat. I'm looking to play either way if I can get some clarity.
Have a great weekend.
Bill
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