Monday, May 05, 2008

Now what?

Bulls certainly know what they are doing, but what about bears?

On Yahoo: turned out to be a big mistake not to take a straddle play last Friday, my primarily concern was a prolonged drag on the negotiation process, did not expect MSFT pulled out so swiftly.

Thought about applying the long straddle to NILE/BEXP/PCS/OSIP/ONXX for their ER plays, but ended with an empty hand either because of high IV readings or low volumes, or both. Among those that I may keep eyes on for the rest of week are: CTSH, RIG, CELG, DWSN, LEAP, NVDA, PCLN and VRSN.

Some nightly observations and thoughts:

1. AAPL: someone just asked for my view. Well, AAPL bulls are pretty determined to take it to the new high, which might occur before the expiration of May options. However, it is overbought on every time frame, so I would not be surprised if it pulls back to 170 or MA10. I have no desire to long it at this level, I also won't play a cute bear before it reaches around 192 at the minimum.

2. The steel sector: something was going on in X as it surged in the closing hour on very heavy volume, AKS and NUE are also poised to break to the new highs tomorrow. There are some topping signs, but might not be wise to hit them head on right now...


Anonymous said...

Thks for your appl comment.

pcaguy said...

EL would have been a good straddle play based on earnings report this morning. Came in at $.46 versus $.45 last qtr versus $.47 expected. The jersey boys ran it up any way to a $48.95 52 week high versus $45.40 yesterday. I bought June $50 strike puts at $2.77 cost which was equivalent to $48.20 or so for EL.
For the last 3 earnings reports EL sold down $2-3 in the days following the initial runup. Will history repeat itself ?
Earnings reports trades for tomorrow: RIG, FWLT, HSP, TS, CSCO, DIS

flyingwabbit said...

EL would've been a OK long straddle play because you only ended up with about 0.65 difference (around 25% gain). As usual, the IV collapsed after ER. On that, I am having another thought on how to straddle play the ER....