Options Trader: Thursday Wrapup

Includes: ADBE, BTU, SU
by: Philip Davis

Holy cow that was fun! Let's do it again...

Although I am still mortified by the commodity rally, I'm very pleased with this broad based 300 points in 2 days retracement, especially with a strong, high volume finish.

We can thank Uncle Ben for finally figuring out how to make a speech without shocking the markets. It took Greenspan 2 years to realize he should never say anything anyone can understand. Bernanke's style is more of a teacher so he needs to learn to be clear but avoid negative suppositions which get misquoted. Today he did a very good job of it.

So the Dow did just what we wanted: moved quickly up to 10,900, consolidated and broke through and rallied - we just didn't think it would all happen in one day!

The Nasdaq was the star of the day, which made this a real rally with a 3% gain led by the SOX which pulled a 4% gain. The index finished just shy of my 2,150 goal, briefly touching it just before a small pullback near the end.

Tomorrow we keep our eye on the S&P which is resting just shy of its 200 dma of 1,260 and hopefully will gap over it in the morning so we don't have all that annoying drama as to whether or not it can break out.

Oil barely moved and, in fact, retreated from $70 near the close to finish up slightly at $69.50 but the oil sector was greatly encouraged by Bernanke's analysis of an economy which can shrug off $70 oil and will continue to innovate our way out of it as time goes by. He mentioned Canadian oil (NYSE:SU) and Coal (NYSE:BTU) specifically and those stocks got an extra big boost in the afternoon.

Gold had a wimpy day, finishing up just $4 to finish at $570 but the oversold miners flew up over 5% on the average as anything over $500 is still very, very profitable!

We erased a full week's worth of losses today - an incredible recovery - but let's not forget that incredible means "hard to believe" so let's continue to keep our eyes open, especially with options cashing out tomorrow!


Now call me chicken but you should have been out of any of these positions by the day's end (other than the LEAPs) as we did not hit our Nasdaq or S&P safety targets. Even though we missed them by a hair, rules are rules so don't come crying to me if the whole thing reverses tomorrow!

ADBE had my favorite kind of earnings, the kind that sound bad but are actually good. They posted a 35% drop in income but it was due to costs from the Macromedia acquisition so I will be taking advantage of any dip in the morning. These plays work better on morning announcements as you can take advantage of early confusion.

Speaking of confusion, Bill Gates is announcing he is stepping back from Microsoft but 2 years from now but I guess they figured now is the time to tank the stock since it's pretty near bottom already. This is not like Jobs leaving Apple, Microsoft will do just fine without Gates, who rarely shows up anyway.

Speaking of AAPL, we got another chance at those $57.50s for .60 and the stock rocketed in the afternoon to have them finsh way in the money at $2 (up 230%).

UNH was disappointing as usual but the Sept $50s moved up a nickel to $1.30 on our buying.

PEP was a slow starter but finished OK and the Jul $60s also gained a nickel to .75.

BEAV was a great call as it gave us a good entry and rocked 8% for the day. The Jul $20s finished at $2 (up 66%).

AIR made similar gains to it's Boeing buddy but the Jul $20s gained more to $2.05 (up 150%).

I was wrong not to include Boeing Buds TIE and ATI as well as they both had huge days too.

BSC beat my target and gained 6% for the day but drew back to $131.20 in the AH so I feel better about my forecasting!

LEH opened a little high and the $60s ran all the way up to $3.80 (up 120%). The Jul $62.50s were a little easier to get and finished at $3.20 (up 60%).

HD had a mellow day but I'm still liking the Aug $37.50s at $1.65 (up 25%).

TM gave us a good entry and the July 100s are already in the money at $4.60 (up 80%).

GM got off to a shakey start but found some buyers and the $25s barely moved to .75 and should have been dumped.

XOM $57.50s were a great play, moving from .90 to $1.40 then back to .80 before finishing at $1.65.

BTU was the star of the energy sector with an 11% gain and those Jul $50s no longer seem so expensive at $6 (up 85%).

HET had a beautiful day and the Jul $75s finished at $1.55 (up 105%).

GLW made up nicely today with a big 6% gain and the Jul $22.50s are in the money at $1.45 (up 50%).

OK, now I can kick myself for not taking those QQQQ July $38s which ran up to $1.45 (up 55%) already.

I thought I blew it with CEPH but they took off right at the end but the Jan $65s lost .20 to $4.20 for reasons unknown.