Week Recap

Friday, March 23, 2007

Week Recap
The Fed sparked a rally on Wednesday that pushed the S & P 500 and NASDAQ back into positive territory for the year. Meanwhile the Dow posted its largest one-day gain since last July. This came when the FOMC decided to leave rates unchanged at 5.25 percent for the sixth straight meeting.
The afternoon rally was fueled by the Fed’s statement that shifted the committee’s stance to a more neutral bias, leaving the possibility open that rates could also go down in the future. The Fed removed language from previous statements that hinted their next move could be an interest-rate hike. Traders took this hint and ran with it as all the indexes raced higher.
This week’s nice move played right into our hands. We saw big moves in most of our stocks that helped give us larger cushions in our spreads. Moves like today help us sleep better at night and worst-case scenario, they allow us to weather the big drops like we saw a few weeks ago. We have a lot of time left in this options cycle, but we couldn’t ask to be sitting any better at this point in time.
some spreads we are holding :
AAPL 85 - 80 Bull Put Spread (20 contracts 3/15/07)
Potential Profit $1,500
Apple has been strong over the last few weeks and climbed $5 this week. The Apple TV hit store shelves this week and it has received solid reviews so far. With a nearly $9 cushion and strong momentum, we are sitting in good shape with this spread.

OIH 130 – 125 Bull Put Spread (20 contracts 3/15/07)
Potential Profit $1,200

We decided to stay in OIH this month based on a number of reasons including seasonality. It also had a nice bump up of $9.00 this week. Our 130 strike price is sitting below strong support and with OIH now $18 above it, we feel pretty good with this one.
GS 190 - 185 April Bull Put Spread (20 contracts 03/19/07)
Potential Profit $1,200.00

Goldman Sachs was over sold on the markets recent sell-off and has since bounced back nicely. It is coming off a blow-out earnings report and caught on fire this week. Financial stocks usually are affected the most by Fed announcements and wednesday was no different. It rose nearly $7 and has given us a 20-point cushion.