Options Trader: Thursday Wrapup

by: Philip Davis

I'm out!

You have to have rules and you have to follow those rules so I'm out of almost all my current month longs.

The Dow broke 11,400 early on and didn't seem to like that one bit, came back in the afternoon, tried again and failed.

The S&P did the same with 1,305, the Nasdaq didn't even get near 2,200 while the NYA touched 8,400 at the end of the day and failed.

I took advantage of the end of day spike to get out of pretty much everything...

Oil once again found a very excited buyer who showed up at 1:30 and just had to have as much oil as possible - driving the price up .75 in 40 minutes! Oil closed for the day up .23 at $70.36 and, as I said this morning, will probably hold $70 over the weekend.

Natural gas, down 60% from its highs, dropped another quarer to $6.05 yet somehow CKH is still in rally mode! Needless to say, I held on to that one...

Gold made another nice move today as the traders are thrilled to have a significant miner taken off the field. Even against a strong dollar, gold finished up $8 at $634 but until it breaks $650 again, we won't be impressed. I was sure enough that this was a pointless move up that I took the ABX Oct $32.50 puts for $1 in comments.


One of the benefits of going to cash is that you have the ability to jump on news. At 3:55 this story crossed the wire.

I'm pretty sure it was a mistake to release it before the close because $8Bn is a market moving order! I jumped on the LMT $85s for .45 and got them right at the bell so wish me luck!

Today's Picks:

There was no buy signal and, as I said, this was more of a day for getting out than in. I did pick up the MRVL's, NOKs and some ABX puts but that was it (and so far I shouldn't have done those either!).

We never got a shot at the HET October $60s as they opened way too high but the Jan $65s are almost in the money at $3.50 (up 95%). Resistance is at $64 and I'm ready to take it off the table there, maybe look at the Jan $70s for $1.80 if it breaks over.

In comments, I picked up the ABX Oct $32.50 puts for $1 as I don't think gold will break $640 and ABX was only at $35 when gold was $750!

The NOK Oct $22.50s went nowhere at .45 but that was better than Motorola did.

I'm still in the CHK Oct $30 puts, still at .80. Taking the $32.50 puts off the table saved me a quarter (not that I would have held them all day) and the $30 puts dropped a nickel to .20.

ECA continues to outperform its cousin with the Oct $50 puts holding $1.45 (up 95%) but strangely down on a day the stock dropped .46.

I got out of SLB $62.50 puts a little early at $2.10 (up 90%), it finished at $2.30 after going all over the place.

It was a good thing we took the other oil puts off the table as many of them had a bad day!

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

TINY March 10s hit $2.80 (up 145%) as the stock gained yet another 4% (yawn).

CAL $22.50s were exited at $3.20 (up 95%).

LUV $17.50s were done at .35 (up 40%).

It will take more than that to get me to sell my STX Mar $22.50s, now 2.65 (up 80%).

After the scary morning open I was glad to say goodbye to ANN $40s at $1.05 (up 30%).

The CAT finally came back! Somebody owes me a dinner on this one... The Oct $70s came roaring back to $1.40 (even!). I defended this stock even as it dropped on Tuesday (see comments).

EBAY reminded me why I didn't want to chase it this morning.

I was trapped by a quick drop in the INTC $20s at .25 (bid is even at .20).

Had to give up on MU at $17.40, up enough to bring the basis of the Jan $20s down .15 to .30 with the call more than a double at .65.

TIF got hit worse than I thought today... We need to look for a new entry here.

WSM, on the other hand, is clawing its way back up and I kept the $30s at .45 (up 80%). WSM got hit way worse than TIF, which was why we entered!

Maybe tomorrow will be a good day, maybe it won't but I will be happy to go into the long weekend mainly in cash - I'm sure I'll find something worth playing in my weekend reading.