Thursday, January 26, 2006

What We Are Doing

So, we gave up on the OEX. Vol crush is absolutely mind numbing and being right and NOT making money is not our business. Hasta la vista OEX calls.

Interesting action with the market trying higher. We're looking at a few things here:
  1. Oil stocks reached healthy levels where they will find a resting point. Thus we're selling more put premium but no longer long any of the underlying.
  2. Semiconductors look great and we're getting long stock (again) into the after-market action (TXN, KLAC). We are also looking into selling SOX premium via put verticals in the morning.
  3. Pharma/Biotech is selective but there are a few gems. We're continuously adding some longs here with heavy bias towards ABT.
  4. I finally broke down and sold condors on GOOG. The vol is just crazy leading into earnings and the net result will likely to be a non-event. At any rate, 20% ROI with 2:3 win/loss ratio and about 82% win probability, this is a good play.
  5. Aside from a few random credit spreads, everything else stays the same.

Directionally, we're still long and seeing this action we're planning to get longer. Natural inclination would be to buy dips, but we may not see enough of them to build positions. Not calling for a huge rally here (Even though it may not seem to be so, but I don't like making predictions), just anticipating grinding action leading higher. My only hope is that it is maddeningly frustrating as that will constitute enough evidence for the move being true.

QQQQ is trading at 41.80 after the close - 0.25 higher. A good sign.

Cheers,

/Dmitry

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