Option Investor
Market Updates

Duke Energy Chart - Daily Interval

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Bearish traders will often search out stocks where a secondary offering begins to discount and look to short ahead of potential institutional dumping. For an options trader, such a supply/demand trade become lower "risk" as any type of upside squeeze can be limited with the price of the option.

Today's trade at $17.50 is the sign of weakness that bears wanted to see since my first bearish profile of 09/20/02 at $18.73. Today's heavy volume and downward move hints that there's some stock hitting the bid and perhaps some institutional bulls that took some of the recent secondary offering are trying to get out. I recently profiled the DUK Jan $20 puts as I think the stock has some downside potential to the $10-$6 range longer-term. Today's trade at $17.50 triggers a triple-bottom sell signal on the point and figure chart and establishes a bearish vertical count of $14.50, which could grow lower if the current column of O builds.

Jeff Bailey

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