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Call Updates

None
 

Put Updates

Volatility Index - VIX - cls: 55.13 chg: + 0.14 stop: n/a

It was another volatile day in the stock market and a volatile session for the VIX. It looks like the low for the day was around 54.87 on the VIX but some quote services say the low was 46.35. The high was almost 60. That's a huge range. At the end of the day volatility continued to slide lower. We're not suggesting new positions at this time.

Note: The VIX options, which are European style options, have a unique expiration date. October VIX options expire on October 22nd, 2008. November VIX options expire on November 19th, 2008. The last day of trading for these options is the Tuesday before expiration. For more information check this link

Our September 16th put position (suggested entry at 30.30) has a 25.50 target. In all honesty this position may be dead. We still have plenty of time with these next two. The September 29th position (suggested entry at 46.72) has two targets at 36.00 and 31.00. Our October 8th position (entry 57.53) has two targets at 40.00 and 35.00.

Picked on September 16 at = 30.30 first position
Change since picked: +24.83
Picked again Sept. 29 at = 46.72 second position
Changed since picked: + 8.41
Picked again Octo. 08 at = 57.53 third position
Changed since picked: - 2.40
Earnings Date 00/00/00
Average Daily Volume = --- million
 

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)

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CBOE Volatility Index - VIX - cls: 55.13 chg: + 0.14 stop: n/a

As noted above the VIX continues to move in big swings but the afternoon trend was lower. We're not suggesting new positions but the strategy remains the same if you want to design your own spread based on a collapse in volatility. Please see the CBOE website or our Sunday play description for details on margin requires for selling VIX options.

Note: VIX options are European style options that settle for cash at expiration. Furthermore VIX options have unique expiration dates. October options expire on Wednesday, October 22, 2008 and will stop trading on Tuesday, Oct. 21. November options expire on Wednesday, November 19, 2008 and will stop trading on Tuesday, November 18th.

We have listed two different plays. The strategy was to sell an deep in-the-money call to collect the premium while buying a much higher call as a partial hedge should the VIX remain extremely elevated.

VIX spread #1 with October options:

We wanted to SELL the October 40 calls (the opening price Monday morning was $13.00) and BUY the October 60 (open was $2.90) as a hedge against the VIX remaining elevated.

Here is the strategy in another format:
SELL CALL OCT 40.00 VIX-JH.
Monday 10/13/08 open 13.00, high 15.16, closed 11.00

-and-
BUY CALL OCT 60.00 VIX-JN.
Monday 10/13/08 open 2.90, high 3.70, closed 1.80

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VIX spread #2 with November options:

We wanted to SELL the November 30 calls (opening price was $ 8.60) and BUY the November 50 (opening price was $1.61) as a hedge against the VIX remaining elevated.

In a different format the play is:

SELL CALL NOV 30.00 VIX-KF.
Monday 10/13/08 open 8.60, high 9.80, closed 8.40

-and-
BUY CALL NOV 50.00 VIX-KJ.
Monday 10/13/08 open 1.61, high 2.10, closed 1.50

Picked on October 12 at $ 69.95
Change since picked: -14.82
Earnings Date 00/00/00
Average Daily Volume = ---
 

Dropped Calls

Mosaic - MOS - close: 39.25 change: -4.96 stop: 39.75

The bounce is already rolling over for MOS. The stock hit $47.08 this morning and then reversed sharply following the market lower. MOS hit our stop loss at $39.75 closing the play. Technically today's move has painted a bearish engulfing candlestick (bearish reversal) pattern.

Picked on October 13 at $ 42.15 *stopped out 39.75
Change since picked: - 2.90
Earnings Date 01/06/08 (unconfirmed)
Average Daily Volume = 10.5 million
 

Dropped Puts

None
 

Dropped Strangles

None
 

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