The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Friday, July 13, 2007
Email – #277
Volatility Trader Alert
Sometimes, you just can’t fight the tape… and right now, the tape is showing “up.” I really feel the market is going to take a big hit sometime in the near future. But, as of now, we’re not going to step in front of bulls.
Yesterday’s larger market breakout was very good for our Pulte Homes (NYSE: PHM) call position, which is now trading in the black.
Regarding our Mosaic ( NYSE: MOS) puts trading in the red, I am not concerned yet… but if the market continues higher next week, we may close the position, just to ensure we aren’t holding while the option completely evaporates. I am waiting on further market-confirmation, before taking action. I will keep you posted.
Of note, this week brought even more insider selling in Novatel Wireless (Nasdaq: NVTL), with the Chairman exercising options, and then selling all 100,000 shares in the open market at $24.09.
If the chairman doesn’t want the stock here, why the heck would anyone else? Because of the massive insider selling in this stock, I am going to hold the put position as long as possible. My instincts tell me Wall Street is going to crush this stock. And if actions speak louder than words, then insiders themselves don’t have much faith in the company.
International Coal Group (NYSE: ICO) continues to hold ground… and given scorching temperatures so far this summer, America’s pension for air conditioning could quickly drive the price of coal higher over the next month. Our International Coal Group calls will benefit handsomely.
Digital Realty Group (NYSE: DLR) showed weak relative strength today, which is a good sign, considering our put options expire next week. Please expect an alert Monday about this position, just as a head’s up for what to expect during the week.
If we begin to see the market “confirming” yesterday’s breakout (on Monday and Tuesday), I have a call position waiting on the sidelines. We will implement this long, just to make sure the portfolio is hedged to gain with the market moving up.
More to come on Monday after the open gives me more guidance.
Exit is everything,
Mark Whistler
Current Portfoli
Pulte Homes (NYSE: PHM)
Oct 2007 $22.50 calls PHM-JX
Purchased: 7/06/2007
Current Price: $2.30
Novatel Wireless (Nasdaq: NVTL)
Dec $22.50 puts NVU-XX
Purchased: 6/29/2007
Current Price: $1.05
Mosaic (NYSE: MOS)
Sep 07 $35 puts MOS-UG
Purchased: 6/14/2007
Current Price: $0.80
International Coal Group (NYSE: ICO)
Dec 07 $5 calls ICO-LA
Purchased: 5/21/2007
Current Price: $1.20
Digital Realty Trust (NYSE:DLR)
July 07 $40 puts DLR-SH
Purchased: 3/14/2007
Current Price: $1.05
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisors Ron McCoy, Gunn Allen at 800.720.6576 or Neil Fern, RMB Group at 800.831.3114.
Bi
Mark Whistler is a specialist in high-level trading techniques, and has worked as a licensed trader on various trading floors for over a decade. He is the editor of The Volatility Trader and is an Advisory Panelist for Xcelerated Profits Report through Mt. Vernon Research. Mark has written for The Motley Fool, Active Trader Magazine, BullMarket.com, OptionInvestor.com, and Working-Money online. His first book, Trading Pairs (published by John Wiley & Sons, Inc.), appeared on shelves in 2005. The work is a comprehensive guide to pairs trading and statistical arbitrage. His second book, Trade with Passion and Purpose, has been on shelves since February of 2007. Whistler also writes regularly for Investopedia.com, TraderDaily.com and TraderMonthy Magazine.
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