Option Investor

Excitement Just Ahead

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Oil prices flip-flopped once again and we are right back to the lows from late March. Unfortunately the oil stocks themselves have failed to give us the same retracement. With regular equities duller than a $2 knife it seems everyone wants to hold their oil stocks for the next bounce.

We were triggered on the Unocal play when it dropped on the announcement it was being bought by Chevron. Since any Unocal leap will end up being a Chevron leap I am going to activate that play as well and it will be the one we follow.

Falling oil prices sent the airlines higher and we were also triggered on the Jet Blue put. Now we are in caught in a dilemma. We want oil prices to continue to fall to get entries in oil positions but we also want oil prices to rise to tank the airlines. Personally I would gladly stop out of the airline puts to see oil take a serious tumble. We will be well rewarded in the future by good oil entries.

The drop in oil prices did not help the FedEx play and Friday's -3% drop in the transports sent it to a new low. We are down less than $1 thanks to the insurance put but it expires next Friday. I am going to close it today but I would suggest holding the put as long as FDX continues lower. One more day could break us even on the play.

I am also adding a new put play, TOO Inc. The setup was TOO good to pass up as we head into the summer doldrums.

DGX dipped back to tag our profit stop at $104 before continuing higher to $106 but we can't complain about an $8 profit.

RIMM was all over the map last week as earnings surprised in both directions. A new 4-week low was hit at $71 but that produced an instant rebound to $77.50. The option prices are so inflated now I would hesitate an entry even if we got back to that $65 I was targeting. Post earnings that target looks more like $70 but I think we are better off looking elsewhere.

Remember ADSK? The company just completed two straight weeks of strong gains that began the day after I dropped it. Now at three month high. Sheesh!

I mentioned EBAY last week as finding support at $36 but not wanting to make an entry with the summer doldrums ahead. EBAY rebounded to near $39 intra week but slid back to $35 on Friday. I am very tempted to jump in again but the sudden weakness just confirms my suspicions from last week that there is trouble ahead.

This should be a pivotal week in the markets with Friday, April 15th, my target for a turning point.

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