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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (9432)	2/5/2001 11:26:25 PM
From: hobo	Read Replies (1) \| Respond to of 10876

Any opinions out there? As per my previous post... I went short puts: 1. QQQ 2. added to ORCL (doubled) 3. SUNW (I also tried to close on previously sold calls, but market was away from my price --I believe I may be able to close on these calls in the AM tomorrow) 4. SCH Why am I doing this ? Although the fundamentals seem to be against the market, (i.e.: for the market to go lower, due to : 1. energy costs electricity and natural gas prices, 2. unemployment seems to be rising and possibly new layoffs coming. 3. many of the high tech. companies facing reduced orders in the near future. 4. size of corporate & personal debt.) Yet... The NDX & QQQ seem to be bouncing off of their respective lower bollinger bands. in the face of all these bad news. it may be possible that they could bounce towards their respective averages (14 days on the bb and 50 day exponential M/A). I also drew a trend line connecting the highs of Sept 1/00 and Jan 31st/01 this line and the above 50-day M/A converge around 66.5 for the QQQ and 2,655 for the NDX. (meaning they could bounce back to at least such levels in the next few days). then... I feel we have the Federal Reserve in the side of the bulls that makes me a little more cautious against shorting the market. plus, now we seem to have the politicians all willing to give us a tax cut, which given the size of the potential surplus, it seems to be "ok" by both sides, (Reps & Dems). these two, (the fed and tax cuts) could prove to be powerful allies for the bulls. everyone seems to be expecting another test of the recent lows... (perhaps we already did --frankly i do not know). as discounting mechanism, perhaps this is the time to start nibbling.... therefore, receiving the premium of the sold puts allows me to be a little more courageous, since we have now less than 2 weeks to expiration.... meaning time decay will begin to accelerate... and if we do bounce, it affords me the opportunity to take the risk. worst case, i am forced to buy some shares... and then i can start selling covered calls to motivate the eager beavers to buy my ill-obtained shares -GGGG- (ill obtained because i was wrong in my market assessment). of course if from here we go to the depths of hell.. the premiums off the calls will be tiny. --nobody said there was risk less speculations, did they ? so there.... just my opinion. in the next 2 weeks i will either do ok or.. not.

To: ajtj99 who wrote (9432)	2/6/2001 9:00:00 AM
From: Poet	Read Replies (2) \| Respond to of 10876

Hi there ajtj99, Thanks for your kind comments while I was gone. :) Re. the QQQ's, I see toscano has given you a very nice response and backed it up with TA and fundamentals. The only things I can add are that I think you're quite right that CSCO earnings (and let's not forget today's Israeli election) will move the market. We've been at an inflection point for a bit and, IMO, both the bull and bear cases for the COMPX's near-term movement are of equal weight about now. Flat at this point, as I remain confused about where we're headed, but I'll be watching CSCO very closely tomorrow, as I think their direction will determine the market's direction. I think you're quite right to assume that there will be a good-sized move tomorrow, and you may well want to box the Q's by buying the corresponding calls. A large move in the Q's, in either direction, will inflate the internal volatility of both your puts and calls and you'll likely make a profit regardless of the direction of the move. I'm considering doing this myself this afternoon.