The market over the last week has been nothing but highly volatile. The Dow moved in a triple digit range for the most days in a week since August.
This volatility is going to make it difficult to trade. The violence in Libya is increasing as the rebels move towards Tripoli and Gaddafi uses more airpower and artillery against the rebels.
In Yemen the situation is deteriorating and the U.S. has warned U.S. citizens to leave the country. Oman and Bahrain are also worsening. Saudi is facing the planned Day of Rage protest on Friday.
In the U.S. the economic calendar is light but there is a growing fear of a change in the Fed statement when they meet on the 15th. I believe this anticipation is the primary reason for the volatility in the market and not specifically unrest in the Arab nations.
Next week is also the two-year anniversary of the bear market lows. This type of an event normally brings up questions of sustainability and especially after such a strong run.
This means we could have continued volatility next week. I am going to add a couple plays with the obvious qualification the market needs to be positive before taking the entries. If we see the market turn directional again I will add some more.
Current Position Changes
APKT - Acme Packet $76.42 (Short Put)
Acme has been consolidating above $70 for a month now but it appears to be edging closer to a breakout. APKT has shown amazing relative strength over the last two weeks of market weakness. In times of volatility we want relative strength in a long position.
Acme is currently at $76.42 and I am recommending the $67.50 put option. However, if APKT breaks out at the open on Monday I want to raise the strike price to the $70 level.
O not enter this position unless the S&P and APKT are both positive.
Sell short April $67.50 put, currently $2.20, stop $74.15
IF APKT opens over $78 change that to the April $70 strike.
Chart of APKT
NOV - National Oilwell Varco $80.80 (Short Put)
NOV has been moving in a range from $76 to $82 for the last month and trending to the high end of the range as the week ended. Crude futures are up on Sunday night and the bullishness in NOV should continue.
I am recommending the April $75 put.
Do not enter this position unless the S&P and NOV are positive.
Sell short NOV April $75 put, currently $1.75, stop $78.50
Chart of NOV
WYNN - Wynn Resorts $130.80 (Short Put)
Wynn still has the highest premiums for any non-tech stock. The spike last week inflated those premiums again and we can get $1.73 for the $115 strike and be more than $15 OTM. Even on Wynn that should insure relative safety. The news of a massive increase in gambling revenues from Macau is powering the stock higher.
Do not enter this position unless the S&P and WYNN are both positive.
Sell short WYNN April $115 Put, currently $1.75, stop $123.75
Chart of WYNN
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