The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, September 20, 2006
Email – #189
Dear Volatility Alert Subscriber
Here’s an update for each of our positions -
Chaparral Steel (NYSE: CHAP)
The company reported earnings last night, which were great (as expected). However, the company failed to say anything incredibly exciting during the conference call… and Wall Street is worried about declining steel prices. And to further help our position, the firm Ferris Baker Watts downgraded the stock from buy to neutral, just minutes before the earnings call began.
The stock was solidly in the red during today’s session, and could easily begin to lose ground over the next few days.
Hang on to your positions!
Diamonds (AMEX: DIA)
The Dow showed strong buying strength today after the FOMC announced that the overnight rate would stay at 5.25%. Despite this news though, the Fed is maintaining it’s tightening bias, and continues to see some caution in the economy. Though the Dow Jones Industrial Average climbed in afternoon trading, we will HOLD the October 116 puts (Symbol: DAW-VL) until the index actually CLOSES above 11,700.
While the index could make a new high in the next few days, a pull back is looming, which we want to be on board for.
TXU Corp (NYSE: TXU)
The big winner of the day was TXU, which began to tumble after rumors began circulating that the company was sustained some huge natural gas trading losses. Though the rumors were upended by the company, the damage is already done, and the stock could continue to drop over the next few days. Both the stock and the Jan 2007 $55 puts (TXF-MK) are in the money… something that’s always great to see. Hold onto your positions!
If any news develops, as always, I will alert you immediately,
Exit is everything,
Mark Whistler
Current Portfolio:
Stock or Option: Diamonds Oct 2006 $116 puts (DAW-VL)
Current Price: $1.50
Comments: Buy puts. Sell if Dow Jones closes above 11,700.
Stock or Option: Chaparral Steel (Nasdaq: CHAP)
Current Price: $37.77
Comments: Sell SHORT and place buy stop at $39.50
Stock or Option: Chaparral Oct 2006 $27.50 puts (ZHQ-VY)
Current Price: $0.10
Comments: Buy puts and use a 50% trailing stop.
Stock or Option: Chaparral Jan 2006 $27.50 puts (ZHQ-MY)
Current Price: $0.70
Comments: Buy puts and use a 35% trailing stop.
Stock or Option: TXU Corp (NYSE:TXU)
Current Price: $62.38
Comments: Sell SHORT. Buy stop is above $67.50
Stock or Option: TXU Corp Jan 2007 $55 puts (TXF-MK)
Current Price: $1.05
Comments: Buy puts. Sell puts if TXU closes above $67.50.
