Options Trader: Weekly Wrapup

by: Philip Davis

Not bad for August!

The markets were strong all day as oil dipped and other economic indicators support my bumpy landing theory.

The Dow breezed through 11,400 but the Nasdaq did a double tap at 2,200 with no success:

The S&P shot right past 1,310 and then promptly used it as support, a really good sign:

The NYSE also tested support, but at our breakout level of 8,400 and promptly ran up to test 8,450:

Oil fell to $69.19 and perhaps the early close of the NYMEX caught our pumper off guard as oil plunged a dollar into the close:

Having fallen from last Friday's close of $72.50 one could say that stoping at $69 today was simply the 5% rule kicking in for the week - not bullish at all!

Gold pulled back to $632 which was a good finish after being down as much as $7 on the day.

Wow, we actually hit a missle with another missile today! That's a big thing if they can work out the bugs that have plagued it in the past. This may be more money for Boeing (NYSE:BA) than the shuttle is for Lockheed (NYSE:LMT)!

I don't regret getting out yesterday; although there were many stocks up today there was nothing very spectacular as most gained just a little ground while waiting for the big boys to come back and trade next week. Think of it as primping up for the big dance...

Today's Picks:
Our week went very well and we had a lot of winners and are left with no September calls or oil puts left (other than Chesapeake (NYSE:CHK) and EnCana (NYSE:ECA)) with 9 more days until expiration:

• Barrick Gold (NYSE:ABX) Oct $32.50 puts held $1.10 (up 10%) in day 2 and will be a big gamble into the weekend.

• Adeza Biomedical (ADZA) picked up another 1% today but I'm bored with it at $17.16 (up 8%).

• We got out just in time on AnnTaylor Stores (NYSE:ANN) $40s at $1.05 (up 30%) yesterday!

• AXA (AXA) $35s were exited at $2.50 (up 85%).

• The BHP Billiton (NYSE:BHP) Oct $45s never stopped out and I forgot them at .85 (up 20%). I really meant to be out of these!

• BJ Services (BJS) $32.50 puts Valero'd out at $1.30 (up 40%), not too shabby for 3 hours...

• Burlington Northern Santa Fe Corp. (BNI) Oct $70s are still $1.65!

• We took the BP (NYSE:BP) $70 puts in comments at $2.15 (more on that over the weekend).

• Peabody Energy Corp. (BTU) was a nice insurance play with the $45s almost in the money at $1.30 (up 25%).

• Continental Airlines Corp. (NYSE:CAL) $22.50s were exited Thursday at $3.20 (up 105%).

• Sticking by Caterpillar Inc. (NYSE:CAT) this week was indeed it's own reward with the Oct $70s running up to $1.70 (up 25%):

• Chesapeake Energy Corp. (CHK) Oct $30 puts dropped to .65 (down a nickel from our dca .70), and the $30 puts dropped 33% to .10, but at least they were a freebie on profits from the $32.50s...

• After suffering for a week our CKE Restaurants Inc. (CKR) $15s went into the money at $1 (up 120%):

• Costco Wholesale Corp. (NASDAQ:COST) Oct $50s finished at .80, up a nickel.

• CSX Corp. (NYSE:CSX) Jan $32.50s are inching up to $1.55 (up 15%) but I think this sector is ready to go.

• E.I. DuPont de Nemours's (NYSE:DD) stock is making good progress but the Oct $42.50s are just .35 (up a nickel):

• Dune Energy Inc. (DNE) went nowhere at $1.43 (down .06).

• EnCana Corp. (ECA) Oct $50 puts came down to $1.30 (up 80%). We had detailed discussions in comments today, and I decided to hold the Nat gas puts (but I'm worried!). The $55 puts finished the week at $2.25 (up 45%), but the Valero Rule took us out Wednesday (thank goodness) at $4 (up 190%).

• Our protective play on Dawson Geophysical Co. (NASDAQ:DWSN) finished the week at $27.50 (up 4%).

• Freeport-McMoRan Copper & Gold Inc.(NYSE:FCX) $55s finished the week at $4.80 (up 120%)

• General Electric Co. (NYSE:GE) Oct $35s are still .35 (up 40%)! I said this last week about HP and look what happened...

• The Home Depot Inc. (NYSE:HD) $35s were a real struggle getting to .40 (up 33%):

• Harrah's Entertainment Inc. (HET) Jan $65s finished a very good week at $3.80 (up 110%). I did take these off the table and used most of the $2 profit to buy the Jan $70s for $1.80, but with tight stops!

• Hewlett-Packard Co. (NYSE:HPQ) gave us no trouble all week and the $35s finally moved to $1.70 (up 70%):

• Intel Corp. (NASDAQ:INTC) $20s came back to .30 (up a dime), nice save after yesterday's drop! The Jan $17.50s hit $3.10 (up 95%), and should rolled into the Jan $22.50s for .45, taking a 75% profit off the table. The Oct $20s are already .80 (up 80%).

• I don't make a lot of index calls but the iShares Russell 2000 Index ETF (NYSEARCA:IWM) Oct $72s are doing well at $2.15 (up 60%).

• It is so hard to follow my rule of selling into the intitial excitement, but I picked up .65 for the Lockheed Martin Corp. (LMT) $85s at the open (up 80%), and even though they finished at .75, I still think that's plenty of money for a position I held for a total of 4 trading minutes!

• Southwest Airlines Co. (NYSE:LUV) $17.50s were done Thursday at .35 (up 40%).

• Las Vegas Sands Corp. (NYSE:LVS) $70 puts gave us a $2 entry in comments and finished at $2.75 (up 35%).

• As expected, Medco Health Solutions Inc. (NYSE:MHS) got clobbered, but the Oct $60 puts finished at just $1.10 (up a dime) as the stock recovered half its loss.

• I'm pretty sure we got Marvell Technology Group (NASDAQ:MRVL) just in time, but only time will tell on the Jan $21.25s for $1.15 (up a nickel).

• Microsoft Corp. (NASDAQ:MSFT) Oct $27.50s are still just .15, but the $25s finished at $1.30 (up 20%).

• Micron Technology Inc. (NASDAQ:MU) Jan $20s held .65 (up 115%).

• Nokia Corp. (NYSE:NOK) Oct $22.50s dropped a dime to .35, and the stock is now 15% behind Mororola since 7/15:

• We got out of that Phelps Dodge Corp. (PD) $85 put just in time today at $1.40 (up 40%).

• POSCO (NYSE:PKX) Nov $65s had a strong finish to get back to $3.20 (up 30%).

• QUALCOMM Inc. (NASDAQ:QCOM) Oct $40s ended at $1.25 (up 20%).

• NASDAQ 100 Trust Shares ETF (QQQQ) $40s finished at .40 (up 33%). This is a big gamble on Tuesday's action, but all the signs are very positive (famous last words!). For the year, the Nasdaq is still 7% behind the Russell and the Dow and 5% behind the S&P.

• Royal Caribbean Cruises Ltd. (NYSE:RCL) Oct $40s are already .55 (up 80%). I have to think about this one...

• Royal Dutch Shell (NYSE:RDS.A) $70 puts pulled back to $1.30 (up 225%).

• Restoration Hardware Inc. (RSTO) held up well at $7.04 (up 15%).

• Schlumberger Ltd. (NYSE:SLB) $62.50 puts were exited Thursday at $2.10 (up 90%).

• sanofi-aventis (NYSE:SNY) Dec $50s finished at $1 (up 25%).

• Sunrise Senior Living Inc. (SRZ) Jan $30s suddenly got peppy and zoomed up to $3.20 (up 45%).

• Seagate Technology (NASDAQ:STX) Mar $22.50s are a tough call at $2.80 (up 90%), as the Jan '08 $25s are $3.50! That indicates we could do much better... but it's a big double to leave on the table!

• Suncor Energy Inc. (NYSE:SU) $80 puts finished the week at $2.80 (up 45%).

• Sunoco Inc. (NYSE:SUN) $75 puts finished the week at $3.20 (up 160%).

• Sun Microsystems Inc. (NASDAQ:SUNW) $5s are all the way up to .15 (up 50%), but that doesn't do you any good unless we get another nickel, hopefully on an Apple merger rumor...

• Tidewater Inc. (NYSE:TDW) $50 puts gave us an proper exit on Wednesday at $3 (up 95%). Best day trade of the week!

• We made a lucky escape on the Tiffany & Co. (NYSE:TIF) Jan $35s at $1.70 (up 70%) ahead of disappointing earnings:

• Harris & Harris Group Inc. (NASDAQ:TINY) March 10s ended at $2.75 (up 140%), and we maintain a stop at $11.50.

• Texas Instruments Inc. (NYSE:TXN) Oct $32.50s got killed today, dropping back to $1.25 (up 25%):

• Williams-Sonoma Inc. (NYSE:WSM) is the only September call I have left with the $30s at .50 (up 100%). Hopefully I'm not being greedy.

• Taking it off the table lesson of the day! Weyerhaeuser Company (NYSE:WY) $60s finished the week strong at $2.75 (up 200%), but we were right last Friday when we got out at $2.60, as the premiums eroded to wipe out the additional $2 gains.

• ExxonMobil Corp. (NYSE:XOM) $70 puts finished the week at $2.20 (up 200%) but we exited early. The $67.50s are .75 (up 50%), but were much higher:

I hope you have an excellent holdiday weekend.
- Phil