The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Tuesday, July 6, 2004
Email – #177
** Dialing in New Directions on Motorola
Today was a bad day for tech stocks. Our Motorola LEAPS suffered a large decline, putting them within spitting distance of our sell stop at $1.85. This means that if the highest closing bid on our option (WMA-AD) is $1.85, then we are stopped out with a loss… ordinarily.
The action in the market today was negative, however, for Motorola (NYSE: MOT) it may have been overdone. I am removing our sell stop on Motorola for the following reasons:
1) There was nothing specific to Motorola that caused its shares to fall.
2) As far as I can tell from the research and news to date, the company is doing well.
3) Most importantly, the company will be announcing numbers and guidance on July 20, just a couple of weeks from today. That announcement, if positive, could send the shares rocketing upward. If negative, the shares could react badly.
With LEAPS we have the luxury of time. Our options still have more than 1 1/2 YEARS left on them. I believe it is worth the risk to hold them for at least two more weeks knowing that the possibility of a strong quarter is more than 50/50.
Regards,
Karim Rahemtulla
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Current Portfolio:
Company / Symbol: Ciena (Nasdaq: CIEN)
Option / Symbol: Jan 07 $5 call (VCB-AA)
Date Purchased: 6/22/04
Current Price: $1.20
Comment: Hold.
Company / Symbol: Lucent (NYSE: LU)
Option / Symbol: Jan 06 $5 call (YXL-AA)
Date Purchased: 5/25/04
Current Price: $0.55
Comment: Hold.
Company / Symbol: Dynegy (NYSE: DYN)
Option / Symbol: Jan 06 $5 call (YNY-AA)
Date Purchased: 5/25/04
Current Price: $0.90
Comment: Hold.
Company / Symbol: Motorola (NYSE: MOT)
Option / Symbol: Jan 06 $20 call (WMA-AD)
Date Purchased: 5/5/04
Current Price: $2.15
Comment: Hold. Remove trailing stop per above instructions.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Sell Jan 06 $25 call (YDI-AE)
Date Purchased: 4/1/04
Current Price: $1.30
Comment: Hold. Sold call against Jan 06 $20 position.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Jan 06 $20 call (YDI-AD)
Date Purchased: 1/23/04
Current Price: $2.10
Comment: Hold. No TS.
Company / Symbol: Hewlett Packard (NYSE: HPQ)
Option / Symbol: Sell Jan. 06 $30 call (WPW-AF)
Date Purchased: 2/3/04
Current Price: $0.50
Comment: Hold. Sold call against Jan 06 $25 position.
Company / Symbol: Hewlett Packard (NYSE: HPQ)
Option / Symbol: Jan 06 $25 call (WPW-AE)
Date Purchased: 12/10/03
Current Price: $1.15
Comment: Hold. No TS.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Sell Jan 06 $30 call (WIK-AF)
Date Purchased: 2/9/04
Current Price: $0.20
Comment: Hold. Sold call against Jan 06 $30 position.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Jan. 06 $22.50 call (WIK-AX)
Date Purchased: 8/29/03
Current Price: $0.55
Comment: Hold. No TS.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Sold Jan 06 $15 call (WZY-AC)
Date Purchased: 11/6/03
Current Price: $3.20
Comment: Hold. Sold call against Jan 06 $12.50 position.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan 06 $12.50 call (WZY-AV)
Date Purchased: 7/28/03
Current Price: $4.30
Comment: Hold. No TS.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $10.22
Comment: Buy under $10. No TS.
All LEAPS Option Trader recommendations will be posted on The Oxford Club’s web site. Simply go to http://www.oxfordclub.com and click on “The LEAPS Option Trader.”
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