Options Trader: Wednesday Wrapup

by: Philip Davis

Wow, that was fun!

About damned time too... Dow 11,000 really took me by surprise, a very nice close on good volume with broad participation. If we get follow through tomorrow we may be able to get back to bull mode.

The SOX picked up 2.3% after yesterday's horrifying test of 395 and the oil sector was fairly flat so we may finally be getting a bit of a change of leadership (although you can't read too much into one day's action).

What you can read into is MOT coming in with a huge (10%) beat on record revenues (I so love those guys!) and Ebay is coming in in-line but that's pretty good since that company is an open book with analysts and is usually right on the money.

INTC beat low expectations but once again gave bad guidance to ruin the party.

It will be interesting to see which way the market takes this but Intel is getting slammed in the after hours while Ebay is tracking up and MOT is halted (so something else might be happening). Apple is posting lower than expected revenues but blowing earnings out the door as Macs are indeed starting to sell like Ipods, which are holding their own quite well. Guidance is not so hot for Q4 though but they usually guide low so they can have a big beat. I could kick myself for not pulling the trigger on the $52.50s we talked about on Monday!

Bernanke came through for us today and set the markets on fire with soft talk on inflation and as long as nothing blows up tonight, we should get some follow through tomorrow.

The real estate sector was on fire today with 4% average gains although I think RYLs 8% gain may have been a bit overdone. DHI picked up 4% driving its p/e all the way to 4.15.

Oil was down again today, barely saved by a lot of quick pumping into the close to finish at $72.66 but that has to be weighed against a .8% dollar drop so it's much worse than it looks for crude. Gold went up pretty much in line with the dollar drop but mining stocks went crazy today with 5% gains.


I am very very psyched about the MOT Aug $20s which finished the day up a mere 50% to .65 but should be an ingenious play tomorrow!

UNH didn't take long to reward us with the Aug $50s finishing strong at $2.30 (up 125%).

WIT has a slowish day but is flying in the after hours and looks like we made a nice safe play for a quick 13%.

JPM Aug $42.50s did open at $1 but are already at $1.40 for a 40% gain.

I filled a 3/10 position on YHOO Oct $27.50s at $1.35 average and I picked up another 3/10 of the Aug $25s at $1.30 so we will see how that plays out. I have to hope for big Google numbers to reignite interest in the sector but I had to take a 20% discount on the stock!

The QQQQ Aug $36s finished up just .10 for the day at $1.25 indicating many people have no faith in this rally - we shall see what tomorrow