Options Trader: Wednesday Wrap-Up

by: Philip Davis

All the indices we tracked this morning fell below the 50 dma and stayed there yet everyone is spinning this as some kind of good thing. Maybe I'm missing something or maybe it's another one of those times when I'm right and everyone else is wrong.

Had oil not made a spectacular mid-day comeback today would have been way over 100 points down as just about everything was sold off today.

Oil broke $75 per barrel which you would think is a bad thing but oil at that level was a spark for the early May rally we just had (remember when stocks used to go up?).

Gold sold off in the morning but recovered at the day's end to hold the day's high but someone was relentlessly selling miners this morning and buyers were shy about coming back in. It looked like a Euro fund based on the timing so maybe they know something that we don't but I am now very excited (but wary) about some of the gold trades.

Next Monday is earnings and all this news will fade into the background but even the death of Kenneth Lay couldn't change todays nuclear topic and nobody seemed very interested in buying on the dips.


TRMP stayed down all day and the Jan $20 puts finished at $2.50 (up 25%). I would expect 1-2% drops every day that Jersey keeps them shut down but a nice rebound when it ends - if we go into the weekned on strike it could be a disaster for them.

WMT took another 1% dip today and the $47.50 puts are now in the money at .95 (up 170%) while the August $47.50 puts have run up to $1.45 (up 95%).

Good call taking the money early on GM as it rebounded a bit in the afternoon. This could go either way in the short term but I'd be shorting Nissan if they actually take on this mess.

MRVL said "what 5% rule" and crashed right down to an 8% loss.

Oddly, on a day like today, CME finally crashed through $500 again but still shy of it's high. For shame on Google for being beaten to the punch...

My rail stocks are holding up as the economy is simply on fire but I want to see how tomorrow shakes out with all the strange action today.

CWTR continues to fly, holding up nicely today with the $25s hitting $2.15 (up 300%). If you still have this I would hope you did stop out on this morning's dip!

GE held up.

MCD still looks strong.