Tuesday, January 24, 2006

What We Are Doing

Two days after the last market slide and we're still hovering near Friday's lows. A few inconsequential rally attempts were made but the only thing that really changed was vol giving back a bit of the gains.

That goes for the indices.

Looking at individual issues, things are a bit more interesting with some sectors completely shrugging off the selloff and rallying to new highs. Other sectors floundered with a complete lack of conviction with apparently no one at the helm. Overall, nothing is really selling off and with the volume drying up, it doesn't really seem like the recent wave of fear is still present.

Lacking any stronger indication our stance remains the same - we're leaning long delta on the indices from a purely directional standpoint. More specifically, here is a recap of what we're doing in this environment:
  1. We're continuing to sell oil premium via put sales.
  2. We're starting to lean short oil stock.
  3. We're long metals and miners.
  4. We're selling *some* semiconductor premium.
  5. We're staying long OEX calls.
Finally, we're looking for long gamma in issues that continue to rally (GOOG was a perfect candidate on Friday night, albeit it is much less so today.)

In summary, it's another day and it's business as usual. Stay tuned - more excitment is forthcoming!

Cheers,
/Dmitry

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