Option Writers Newsletter, Friday, 05/20/2005 01:44:15 PM ET
HAVING TROUBLE PRINTING?
Another Month Gone By...
The major equity averages traded lower Friday as a lack of any notable economic or earnings data left investors with little incentive to buy stocks. The broad consolidation in equity values was somewhat expected considering the Market's recent four-day rally. Early in the afternoon session, the Dow was down 29 points at 10,463 while the S&P 500 index was 3 points lower at 1,188. The NASDAQ composite was nearly unchanged at 2,041.
The OW Portfolio experienced little downside activity during the morning session and all but one of the recommended plays are expected to expire successfully at the end of the day. Positions in Priceline.com (NASDAQ:PCLN), Transkaryotic Therapies (NASDAQ:TKTX), Nautilus Group (NYSE:NLS), Archipelago Holdings (NYSE:AX) and Gamestop (NYSE:GME) should achieve the target gain for the May options-expiration period.
Of course, our conservative style of position management prompted "early-exit" trades in NLS and TKTX, thus the (maximum) profits from those positions will not be published in the portfolio summary. In addition, the Connetics (NASDAQ:CNCT) play endured an unexpected drawdown when the company's share value plunged after its quarterly earnings report. Since we favor the long-term outlook for the stock, a "roll-out" strategy was suggested to recover the (short-term) loss. However, we could not officially recommend this strategy due to the increased margin/collateral amount necessary to complete the adjustment. With that fact in mind, the position has previously been closed and the debit recorded in the summary is larger than the actual loss at expiration.
Looking forward, the Ameritrade (NASDAQ:AMTD) position is performing well and our search for additional June positions is underway. We expect to publish some new candidates in the week-end edition of the Option Writers Newsletter.