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| Author: Mike Celeste | Editor: Tony Ponzo | July Circulation: 13012 |
STAT SHEET WEEK ENDING July 9 / 05
**************** Percent / Points
Dow Weekly Change + 1.4 % +46
S&P Weekly Change + 1.5 % +18
Nas Weekly Change + 2.7 % +56
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Note---Let’s start right out with a Target Sell notice on the written puts for The S+P 500 August 1075’s and the 1100’s. There has been a very nice
profit in them in a short period of time. Since they are the August puts,
not the July puts, we feel that the length of time until expiration is not worth waiting for, if we can get our price. Also, the market had a great week, and closed that way, so I don’t know how much more upside move there is in the immediate short term. So---for the Aug. 1070 puts, written at $1.85,
we are entering a target buy price at 70 cents, to close the position. The
last bid/ask was .50/.95, so that is a good target. The buy price for the Aug. 1100 puts, written at $2.70 is $1.10, which it hit on Friday. That is to close the position.
General Comments:
The tragedy that hit London on Thursday happened before the US markets opened.
The pre-market prices were down dramatically, At one point the Dow futures were
down 200 points. That was after being down 101 points the previous day.
However, by the end of the day the Dow had more than fully recovered, being up 32 points at the close. I learned not to panic, in a very expensive lesson years ago. I was sitting on a very large profit when the news came out, before the market opened, that there was a financial panic in Brazil. I thought, since when does something happening in Brazil affect the US markets. Well, the US pre-market plummeted and I fell for it. I sold at
the open and lost over 80% of that large profit I had. By the end of the day, the market had recovered to the point it had closed at the day before---meaning my profit would
have recovered, too. I still feel the pain of than lesson. After that, I didn’t fall for that pre-market action. It has paid off a number of times, too.
Go figure----We saw that the major markets had a very good week. One of the sparks from the economic news was the jobs report. Unemployment went down and new jobs went up. There was a time when the emotions of the market would have had a negative effect on the markets. The thinking would have centered around the thought that such news would increase inflation. Now, it is taken as good news and the markets
rocketed upwards. Don’t get me wrong—I liked Friday’s results.
You can go to www.SplitMaster.com and check our results for the early part of
July, too. Our Basic System is running a little over 6% at this point in the
month. We did have a small 2% loss in one Big Dipper, with one active Dipper
showing a profit (before sell date). The Options are rolling right along. The calls are up 34% at this point, while the puts (100% max possible) are showing a gain of 84%. Those S+P 500 options continue to amaze me. They have never, ever lost since we have been studying them.
Remember,
tho, you option players---these are NOT futures options—that is a whole different ballgame. The symbols for the puts mentioned at the beginning are
spqto for the Aug. 1075 puts, and spqtt for the Aug. 1100 puts.
A sidelight note on those S+P 500 puts. On Thursday, the day of the London bombings, they had a huge gap between bid/ask at one point during the day. That bid/ask on the 1075 was 1.10/2.30 and for the 1100 it was 1.40/3.10. That is incredible to me. It means that if you bought it at the ask side, the bid would have had to more than double before you were at break even. It narrowed out later and by
Friday it was at more normal levels.
Another mention about the option action. Since the time 3 weeks before the July expiration on the options, there was a discount on the bid side for many options---with 3 whole weeks to go, it meant that if you sold at the ask side you were getting less than
the current stock price plus the option value. So, here again, we would have to short the stock, to make sure of our closing price on the play. Then we would exercise the option and submit the stock to cover the short. I don’t care—they want to “steal” the money by
discounting the bid side, the saved money is better in my pocket than in the market maker’s pocket. Now that is for the calls. Puts usually go down to
acceptable levels so that we can close the positions by buying the puts.
There is a cyclical slowdown in the number of split announcements during July, so we will be concentrating more on the Big Dipper. There are new ones coming and by tightening our standards we hope to continue to have more hits. .
Tidbit---
This news caught my eye. The number of cell phone users in the US surpassed the number of conventional land-based phone lines in the 2nd half of 2004, the government said Friday. What a phenomenon cell phones have been---and they are planning on so many more uses of them, especially music. This growth is fun to watch.
Today’s Inspiration Thought---
Birthdays are good for you. The more you have the longer you live.
Mike www.SplitMaster.com
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