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Vitesse news wire report was from previous 10-Q

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Just before 03:00 EST, several news wires were reporting that Vitesse Semiconductor (NASDAQ:VTSS) was warning on lower revenues, but just recently, this report was recanted as news sources were reporting a statement from previous 10-Q filings. We had reported the earlier news release and are updating subscribers that the previous report is to be considered public information that was previously reported in the company's financial statements. (The above paragraph was inserted after 03:00 EST).

What's happening at 03:00 EST

Within the past hour, Vitesse Semiconductor (NASDAQ:VTSS) shares fell from the $18.30 level to a session low of $17.50, but have since recovered some of those losses. The SOX.X has picked up a bit of downside momentum after this announcement. In the "hot list" on OptionInvestor.com, I thought that selling the Vitesse September 15 covered call (VQTIC) would be a way for traders holding the underlying stock as bullish to hedge that position until further information is available.

Not to long ago, hear the $20 level, I was bullish the shares of Vitesse Semiconductor (NASDAQ:VTSS) and I would be taking some defensive action with the underlying stock at this point. A trader that bought the stock near $20, is basically willing to part with the stock at the September strike of $15, plus any premium received ($3.70) at time of writing. In essence, the trader/investor selling the call is willing to part with the stock at $18.70, should the stock close above $15 on September expiration.

This news from Vitesse Semiconductor (VTSS) has seen the Semiconductor Index (SOX.X) now trade down 3.34% and has broader technology with a sell-side bias.

The Oil Service (OSX.X) index jumped in the past 90-minutes of trading from the $85 level to $88.39 and now trades up 6.5% on the day. Shares of BJ Services (NYSE:BJS) is up 12% to $26.66, Patterson Energy (NASDAQ:PTEN) is up 9.8%, Halliburton (NYSE:HAL) is up 7.2% and Schlumberger (NYSE:SLB) is posting a gain of 4.8%.

Natural Gas futures are surging to a session high. The September Natural Gas contract (ng01u) is up 9.24% to $3.38. The October Natural Gas Contract (ng01v) is up 8.2% to $3.40. This action is in response to the American Gas Association report showing that U.S. Inventories rose far less than expected.

Jeff Bailey
Senior Market Technician
www.premierinvestor.net

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