Options Trader: Weekly Wrapup

by: Philip Davis

Soft landing!?!

Holy cow they do love to label things don't they? The indices ended the week up 3-4% across the board, a huge move! I especially liked the way they did it in stealth mode so the rally sort of caught most people by surprise.

I'm still waiting for the other shoe to drop next week but let's just sit back and enjoy the week that was while we can.

The Dow punched through 11,200 with authority today but has a lot to prove at 11,260 (July top). If you check the chart you will see that we have now had 3 month end rallies in a row and the other two did not end very well.

The S&P finally broke out of my range today and took a light rejection off 1,280 but that's nothing to get picky about on a 1.2% up day. NYSE ran right past its July high of 8,241 and will be a good indicator next week of how real this rally can get. With the Nasdaq, I'm going to follow the rule that if you can't say something nice, don't say anything at all...

Oil finished the week flat but down over $5 from last week's highs but that didn't stop oil companies from making mega bucks.

Gold continues to track the dollar pretty much tick for tick but once again got slammed back from $640 today. Looks to me like it's consolidating for a breakout, especially if the international market starts thinking the Fed is going to stop tightening.

On the whole it was a great week to play the markets but let's keep our eyes open next week and not give too much back if we can avoid it. I called for a cash out today so all of these trades (other than, of course, leaps, spreads and income producers) are closed as of Monday and we're going to make a fresh start.

======================================

Now there was a lot more money to be made on some of these if you had followed the rules and stopped out but, except for extreme cases, I'm just going to go with today's closing prices.

Congrats to Prof wherever he went for exiting the housing market at the exact right second!

AMGN should have been taken off the table at a triple but the $67.50s are still $2.40 (up 100%).

AXP made a very nice play with the $50s running up to $2.65 (up 120%) and the $52.50s winding up at .90 (up 275% from pick one, up 40% from repick). On Wednesday morning I said "I think it's consolidating for a run at the 200 dma of $52."

BHS hasn't been gangbusters but we'll take $1.50 for the $25s (up 130%).

BNI made an amazing comeback today (5%) and I still like the Oct $75s, now back to scratch at $2.05. Wednesday we stuck to our guns and picked up the BNI $70s which did quite a bit better at $1.70 (up 250%).

CAT $72.50s are up just a dime to $1.35.

CBH really gathered speed this week and the $32.50s hit $2.45 (up 40%) which is not bad for a bank stock in 5 days.

COH had a rough ride with the retail sector but pulled up 2% today and the $27.50s hit $1.80 (up 80%).

I need to stop betting against oil (or at least start following the Valero rule) as the CVX Sept $60 puts cost me 50% at .50.

EBAY has gone nowhere so far but that does seem to be the bottom and the Sept $27.50s dropped a nickel to .45.

GE may be like watching paint dry but the $32.50s made it to .85 (up 40%) and I feel very safe with the Jan $35s at .75 (up a dime).

GLW was a total disaster and if you held those $22.50s to the bitter end they are down to .20 (down 85%). I hate to say it but I love the $20s for .40 now...

I could have waited a day for HD but the $35s clawed back to .75 (down 25%).

HPQ was a great play off LXK and the $32.50s are already $1.25 (up 80%) but what a scare they gave us on Wednesday morning!

JPM is like a little energizer bunny and the $42.50s are $3.20 (up 480%).

LVS was a classic example of taking it off the table with the stock bouncing back 5% today and the Jan $60 puts dropping a dollar to $8.10 (up 75%). Add the $1 we made selling the shorter puts and we are back at 90%!

Slowly but surely people are getting the LXK model and the $55s moved up to .85 (up 20%).
MAT $15s haven't moved much since we got out at $2.75 (up 85%).

We stopped out of MCD $32.50s with a 400% profit last Thursday but now those little .45 calls are at $3 (this is why you should never look back!). The $35s are up just a nickle to .90 if you rolled your profits.

MOT (gosh I love these guys!) $20s finished the week at $2.60 (up 500%).

MRB has been a real grind getting to $3.12 (up 7%) but we were supposed to wait for gold at $650 for this one so serves you right if you jumped the gun!

MRK had a great week with the Oct $40s finally getting some respect at $2.40 (up 300%).

MT was an obvious choice on Tuesday and the $32.50s are already $1.80 (up 50%).

OXPS Sept $25s are way in the money at $2.40 (up 200%). People just cannot read earnings reports!

PEIX is going well with the stock down .34 and the $20 calls we sold down .45 for a .10 gain!

PETS did not go very far but the $12.50s shot up to .30 (up 50%).

PTEN did a power dive yesterday and gave up a buck but the $25s are still $2.40 (up 110%).

I was a little early with my bottom call on the 19th but the QQQQ $36s are finally in gear at $1.55 (up 40%).

RICK slid down the pole a little but recovered nicely to $7.72 (up 35%).

SHLD is working with the Jan '08 $135s down .50 to $31.50 nicely offset by the $145s we sold dropping $3 to $2.70 but you should have bought them out for $1.50 yesterday! Our goal on these is to gain 10% in a month.

SIRI looks good so far with the stock up 10% and the Jan '08 $5s up a dime to .95.

SMVD went nowhere this week, down .08 to $1.37.

T was a lovely little play with the $27.50s finishing the week at $2.70 (up 500%).

TEVA had another strong day today, now at $32.84 (up 15%).

TIF went nowhere and the Nov $35s dropped to .85 but don't worry, my wife is heading to the mall this weekend!

TIVO was well timed and ran up to $6.82 already (7%) and the Feb '07 $7.50s are already $1 (up 60%) as sentiment has changed.

TGT is having a tough time recovering and the $45s are just $2.10 (up 25%).

I think we must do TM once a month when it sells off. This time the $105s hit $3 (up 130%).

TRMP (8/1) is a tough one as the $20s we sold dropped $1.10 to .25 (again buy it out!!!!) but the stock is down .89 to $18.14. I still bless the stock but for .25 I might want to buy those $20s now...

TXN rocked and rolled and the $30s held .60 (up 70%) while the $27.50s finished at $2.20 (up 115%).

UNH took a big sector hit and I will rebuy the $50s for .90.

VOD never gave us a lick of trouble as the $20s ended the week at $2.35 (up 150%).

VZ was soooo nice with the $32.50s going straight up to $1.55 (up 250%).

WIT is starting to make me nervous as it went up faster than I thought. The stock is at $12.34 (up .64) and the $12.50s we sold at .50 are almost in the money. I didn't want to get called away on this one but it might happen.

WMT was a good call but I guess I wasn't the only person who thought dumping Germany was good for the company, this one got away too fast to buy.

XING had a nice low open at $10 and ran up to $10.37 which is just fine for a first day. No worries at all if you sold the Jan $12.50s against it for $1.60 (now $1.80) as the worst that will happen if it runs up on us is you'll get called away with a 45% profit!

XLNX is a great example of how you make a lot more money selling on the initial run-up. The Sept $20s are back to $1.35

YHOO is another one on the March and this is one of the few trades I held with the Oct $27.50s now at $1.95 (up 50%) and the Aug $25s at $2.65 (up 105%). The Oct $30s were a roll play now at .95 (up 20%).

The YRCW $45 calls came in at .30 but I'm not sure they were worth it... The conference call went well but no one is buying transports today so I gave up on the $40s just 2 hours after I bought them.

Hope you all made some money!

Have a good weekend,

Phil