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Decidedly Undecided Tuesday Wrap-Up

What ever happened to projections?

 It used to be that by the 6pm news, we pretty much knew who won and lost the election.  This year it’s over 80% “too early to call.”  Both sides are claiming victory and everyone is talking about the election but there are no facts…

Oh well, it was a nice relaxing day today, our calls did well and our puts improved – who could ask for anything more?

The Dow fell short of a record as it bounced back off the 12,200 mark but still finished at 12,156, just 11 points shy of a closing high, fully erasing 6 sessions of losses.

The S&P held the 1,380 line while the NYSE tested a new high before closing up just a touch at 8,835.  The Nasdaq broke the 2,375 mark and closed just .88 above it, just 3 points below the May high.

The SOX did their part with a very strong 2% gain after testing the 200 dma at 472.  The transports were a little indecisive but made a nice day of it at 2,618 but tomorrow will be critical.

Oil dropped $1.09 to finish at $58.93 but the untold story was the $1.40 drop on contracts from Jun ’08 on

That drop in oil came against a falling dollar as our indecision is the worlds lack of confidence in our currency.  It’s no emergency yet as gold finished flat at $625 but looks weak to me.


We watched and waited today and nothing happened.

In comments I decided that – if I were trading oil, I would have gone long into the close as I think there are plenty of ways to spin Prop 87 as something that will increase crude prices in the short term no matter which way it ends up.

That did not stop me from adding the SU Dec $75 puts for $1.90and holding them at the close for $2.20 in hopes of a retest of oil’s low for the year.  SU is still $3 above last month’s option expiration and is $13 over last November’s high.  The EPS estimate for Q4 is $1 vs. $1.26 in Q4 ’05 – seems like a short to me…

We took advantage of RNWK‘s big run to sell the $12.50s for .20 against the Dec $12.50s, now .35 (up a nickel).  This lowers our basis to a very comfortable dime.

The QQQQ $42s pulled back too far for comfort and we took them off the table at $1.05 (up 75%).

APC also dropped off on us and we were lucky to get out with a dime on the $50s at .50.

AXP had a great day and raised their targets so we should be having fun tomorrow with the $57.50s at $1.30 (up 53%) and the $60s at .10 (down 70%).

QSFT $15s stopped out at .90 (up 500%) but I held the Apr $15s at $2.15 (up 40%) with a $2 stop.

Good luck to you and whoever you vote for – they’re sure going to need it in the next couple of years!

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  1. CA Prop 87

    Votes % of votes

    No 831,287 59%
    Yes 584,670 41%

    7% of precincts reporting

  2. Now this is interesting.

    FoxNews reporting from the White House: White House spokesman Tony Snow reacted to the change in House control by allowing they’re disappointed, but that it presents some intriguing opportunities, such as passing comprehensive immigration reform which failed in the previous Republican House.

  3. VA SEN [100% IN]
    R- ALLEN 1,140,879 49.42%
    D- WEBB 1,143,144 49.44%

    There will almost surely be a recount.

  4. Phil what about vts

    the 75 strike is getting big volume

    glad i picked one up when you mentioned it back there

    earnings 126

  5. 1) VA Senate: Also something like 130k requested absentee ballots. VA definitely up in the air for a bit longer.

    2) MSFT Nov $30′s (question from yesterday): Total crapshoot. Barring macro-economic events, I like the chances…alas, we can’t really bar macro-economic events in the real world. Release to Manufacturing announcements for both Vista and Exchange Server 2007 are 67+% likely prior to options expiration (assuming MSFT is going to make the Nov 30 availability dates). Zune availability (and attendant media push) is Nov 14. I’ve got some $30′s that I’m willing to let crater. I recently had my girlfriend by the Dec $30′s for $0.20…somewhat more attractive to me if I were going to buy something. Oh yeah, if I believed in Max Pain theory, I’d be afraid of a move back to $27.50 for next Friday.

    Who knew that elections had adopted the “Buy the rumor” mentality? ;-)


  6. Phil – I sure would love to get your feedback on Prop 87.

    It’s been a long day and we still have no decision so I’m off to bed.

    Till the morning! Will be interesting to see how the markets react to the lack of a decision….to be continued

  7. Senate is going to a slim margin….dont like this..

    A weak senate and dem controlled House…hmmm talk about confusion…

  8. VTS I like them but not today but if you are ahead on any November call at this point you should be either rolling into next month or selling.

    Remember, that’s my rule of thumb – within 10 days of expiration, if you don’t like your position enough to roll it into the next month, you should be looking to sell it!


    MSFT – we are in the Dec $30s and I couldn’t believe they didn’t move off .20 yet!


    Prop 87, the oil companies were celebrating last night in AH trading but I don’t think they’re looking forward to another visit to congress now!

    Latest I heard is Prop 87 is written off as a loss – as Bob Corker has proven, negative campaigning still works wonders!

  9. Assuming that Webb holds the election in VA (Webb at least thinks that he’s got a comfortable lead on the absentee ballots…apparently lots were requested in Northern Virginia… Personally I’m not yet convinced because the military is also disproportionately represented here what with the Pentagon and all). Anyway, assuming that Webb holds VA, it comes down to MT.

    And MT now comes down to two counties. One, Meagher county, only has a total population of something like 1900 people and probably is somewhat immaterial (although it’d be a great story if their not-yet-reported results determined the control of the Senate). The other, Gallatin county, is the home of Bozeman and has a population of nearly 68k. So they’ll probably be the deciding votes. Which I find fascinating.

    Anyway, the futures markets are currently down .3% to .5% for the Dow, SPY, and NASDAQ, so it really does look like a case of “Buy the rumor, sell the news” on Congressional Grid Lock. But who knows where the market ends up today. ;-)

    Being a political junkie, I’m sad to admit that I’ve not yet slept, so I’ll mostly not be playing today. But if I stay awake long enough, I may pick up more MSFT Dec $30′s. And if I wake up in time, I’ll look at CSCO for a potential earnings play (although I suspect that the premiums won’t setup for an inexpensive strangle or straddle and I’m not comfortable enough with their numbers to want a naked directional position.


  10. Hevesi, the NY Comptroller despite violating state law flagrantly gets elected….talk about wacky stuff

  11. And with Gallatin county now 100% reported, the Democrat still holds a ~1,500 vote lead in MT. Meagher county shouldn’t be able to make up that difference…but some rural counties in MT did go 85% for the Republican. So it ain’t over until it’s over. And who knows what the MT absentee and provisional ballot situation looks like.


  12. And now with every county except Meagher 100% reported, the Democrat holds a 1,735 vote lead. Meagher county only had 1,435 registered voters in 2000, so they shouldn’t be able to change things (although one wonders why that county has reported no results).

    Off to absentee and provisional ballots we go for Montana (and Virginia).


  13. Webb – I don’t care what the military says to a pollster (because you never know who is listening) but if you and your friends are losing appendages every week you’re going to vote for the guys who might bring you home, not the guys who plan to “stay the course.”


    MSFT – you can’t say they’re not giving you an entry here, down .24 at the open!


    Hey keep us posted on those races – thanks!

  14. Phil,
    Oil Puts ….look like hopeless play short term, agreed with your FA but market move against it.


    Really good site for the election stats if you still care about the Senate.

    Looking for entry on OIH 135 puts on another test of the 139.40-140.0 area. Stop around 140.50.

  16. Thanx Phil i was just thinking that but needed will power…

    i am smelling 77 on vts. ok so

    roll nov 70 and get dec 75

    i want back in erts

    a great earning strangle i got lucky on