The market is taking no prisoners and continues to spread like “a blob” through all sectors. Gold, Energy, Financial, Housing and Tech stocks continue to get sucked up into the market’s downward pressure and the only question now is how low can we go?
Dell (DELL, $15.98, down $2.01) once again warned about “”further softening” in technology spending and its stock promptly fell over 10% on Tuesday. It seems like another “cry wolf” cliche but we already knew that Dell was suffering. For investment relations, Dell has to tell it like it is and it’s a shame I didn’t recommend buying puts after the company reported a lousy quarter three weeks ago.
At the time, the company reported a 17% drop in earnings after lowering prices and taking some restructuring charges. Lowering prices made sense to a degree but not when you have to mortgage the ranch. Dell lowered prices in an attempt to gain market share but the weak global economy is keeping customers on hold.
Dell is also in a costly battle with other big names in the industry for shelf space at retailers. Although this is new territory for the company, Dell has done well in this area but what made them so good was their ability to ship PC’s direct which helped transform the industry. Now it looks as though Dell is playing catch-up to the Hewlett-Packard’s (HPQ, $48.41, up $3.08) of the world.
Dell hit a new 52-week low of $15.68 before closing slightly higher. The September 17 puts (DLYUR, $1.21, up $1.09) were the lottery play of the day on Monday before the market closed. They were up a staggering 900% as Dell opened at $16 to start the trading session. Better days are ahead for the market (and Dell…I think) but not right now.
Rick Rouse
Rick@OptionsMentoring.com











Checking In
Friday, August 28th, 2009
2:00pm (EST)
The Dow is struggling after starting off the morning in the green. Intel (INTC, $20.25, up $0.78) got the ball rolling after the company raised its sales forecast for the current quarter from $8.9 billion to $9.2 billion and Dell (DELL, $16.08, up $0.43) came in with better-than-expected earnings. However, all the major indexes are now lower as the Dow has fallen 65 points and is currently trading at 9,515. The Nasdaq has slipped 6 points to 2,021 while the S&P 500 is down 5 to 1,025.
We added the Citigroup (C, $5.20, up $0.15) call options this morning and there are a few other names I like and don’t like.
As far as specific stocks, make sure you close the AIG (AIG, $49.81, up $1.97) call options today. The stock hit a high of $55.90 this morning which represented the perfect opportunity to sell the September 35 calls (IKGII, $15.80, up $1.70) which printed $21.00 today. Incredible. I’ve got another strangle option trade in the works for Sunday night and AIG has proven the kind returns that can made with strangles
DryShips (DRYS, $6.05, down $0.19) couldn’t carry the momentum from yesterday so there was no day trade.
I’ll be back Sunday night with the updates.
Rick@MomentumOptionsTrading.com
Tags: AIG, c, Citigroup, Dell, drys, IKG, INTC, Intel, options trading strategies
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