The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Tuesday, January 16, 2007
Email – #243
Volatility Trader Update
Dear Subscriber,
We’re four days out from expiration (including today)…
I’m keeping a close eye on Payless Shoesource (NYSE: PSS), Mattel (NYSE: MAT), Vornado Realty Trust (NYSE: VNO) and Southern Copper Company (NYSE: PCU) – all of which will expire on Friday.
I am very encouraged with today’s trading action in Southern Copper Company, which was down over $1 at last glance.
The stock is falling today in sympathy of Freeport-McMoRan (NYSE: FCX), which reported decreased production from its “core Indonesian operations.”
Regardless, the recent drop in the price of copper has savvy investors a bit worried, and I expect further follow-through on the downside for this entire sector.
While we already booked 117% on one half of our Vornado Realty Trust puts, the stock has since rallied. However, it is beginning to run into resistance, and could quickly fall before expiration. Hang onto the second half of your position.
Payless Shoesource and Mattel have both rallied since the inception of the positions; however, with profit warnings from Symantec (Nasdaq: SYMC) and Centex (NYSE: CTX) this morning, the major markets could still correct this week, as frail bulls take profits. We will use any weakness to exit these positions.
Please expect more alerts from me than usual this week, as I’ll keep a close eye on our positions with expiration right around the corner.
Exit is everything,
Mark Whistler
Current Portfoli
Southern Copper Company (NYSE: PCU)
Bear spread opened: 1/08/2007
Bought Jan 07 $55 puts PCU-MK
Current Price: $1.35
Sold Jan 07 $50 puts PCU-MJ
Current Price: $0.15
Tyson Foods (NYSE:TSN)
Apr $17.50 puts TSN-PW
Purchased: 12/18/2006
Current Price: $1.40
Payless Shoesource (NYSE: PSS)
Jan 07 $30 puts PSS-MF
Purchased: 12/6/2006
Current Price: $0.15
Mattel (NYSE: MAT)
Jan 07 $25 puts MAT-ME
Purchased 11/22/2006
Current Price $1.65
S&P 500 (AMEX: SPY)
Mar 07 $146 calls SFB-CP
Purchased: 11/16/2006
Current Price: $1.35
Vornado Reality Trust
January $125 Puts VNO-ME
Purchased: 12/6/2006
Current Price: $2.20
(Sold 1/2 of position at $7.40)
