Option Writers Newsletter, Saturday, 09/23/2006 12:08:35 PM ET
OW SUPPLEMENTAL OCTOBER PLAYS - 9-22-06
by Steve Gail
HAVING TROUBLE PRINTING?
I want to call all option writer subcribers attention to the EXCELLENT article written by a member of our sister newletter THE OPTION INVESTOR on September 16, 2006. I hope that Option writer subcribers will take a good look at the excepts from the article listed below and keep this information in their memory banks for the next few weeks.
EXCEPTS from SEPTEMBER 16,2006 - OPTION INVESTOR NEWS LETTER
( The "I" in the except is from the OPTION INVESTOR writer of the NEWLETTER, it is not me. Let us always give credit where credit is due. )
I probably need to remind everyone that the markets tried to retest their highs in early September last year only to implode on September-20th for a -78 point S&P drop to the October lows. There is precedent for a late August, early September rally that eventually ends badly. In 2004 the September decline started on the 22nd for a -30 point SPX drop, which was bought in volume but was then followed by a -52 point drop in October. The 2004 drop came after an August rally from a correction that started in late June. This was very similar to our current August rebound. In 2003 the drop began on Sept-19th for a -40 point drop. In 2002 the September high was on the 11th and was followed by a -156 point drop into the October lows. Skipping 2001, the September high in 2000 came on the 1st and there was no relief until the -225 point low in October. In 1999 the indexes were pretty choppy but the September high was on the 8th with the October low -128 points lower on the 18th. 1998, -143 points from September high on 9/23 to Oct low. 1997 saw September close at its highs but the October decline, which began on the 7th knocked off -128 points in only 14 days. 1996 was the closest year on record devoid of a material Sept/Oct decline. One year out of ten with no decline? What does that tell you about our chances in 2006? Averaging the start dates over the last nine years gives us September-17th as the date most likely to see a decline start. Today is September 17th. Is it a coincidence that the markets almost reached their highs on Friday? I also pondered the impact of Fed meetings on the September decline and produced the following table. The last three years the decline began within three days of the meeting. Before that the results were inconclusive other than it did not make any difference if the Fed was hiking, cutting or taking a pass. The decline still appeared.
Now, with that in mind. We are offering a two-leveled SUPPLEMENTAY OCTOBER LIST for your persual as noted below:
SUPPLEMENTAL TRADE IDEAS FOR OCTOBER EXPIRATIONS OPTION WRITER as of 9-22-06
The issues below are additional candidates to supplement your search
for profitable option trades. As with any investment, you must decide
if the selections meet your criteria for potential plays. Only you
can know what strategies and positions are suitable for your experience
level, risk-reward tolerance and individual outlook. There will be no
commentary or analysis offered on these positions, nor will they be
included in the Option writer Portfolio. Additionally, the SUPPLEMENTAL PLAYS are divided into CONSERVATIVE and SLIGHLY MORE AGGRESSIVE PLAYS, depending on your personal risk tolerance.