A weaker-than-expected durable goods number has stocks
poised for a lower opening. Once again the S&P 500
Index will face resistance at 1350 but it now has
support at the 1320 level so we could be in store for
another day of quiet and range-bound trading.
But it will be interesting to see if the VIX
still holds above the 25% level, even if trading is as quiet as it was yesterday. This would imply that investors are not yet ready to sound the "all-clear."
This nervous sentiment could be interpreted as moderately bullish as the market might be setting up to climb a wall of worry. But again, I
don't think the S&P 500 will make it much higher than the 1390 level anytime soon.
Oracle (ORCL - commentary - Cramer's Take) should anchor the most active options list ahead of the
companies earning's report scheduled to be released after there close of trading today.
The current configuration of open interest in April is fairly balanced with some 120,000 puts to 95,000 calls. But the strikes of peak open interest are the $19 put with 54,000 contracts and the $21 call with 44,000 contracts.
So given that the stock is trading at $21.20, meaning the calls are slightly in-the-money (on a dollar-weighted basis), the options have a slightly bullish bias. The implied volatility of its options has worked its way up to 42%, which is just shy of 52-week high, and is pricing in abut a 4% or $0.85 price move.
Options of Take-Two Interactive (TTWO - commentary - Cramer's Take) and Electronic Arts (ERTS - commentary - Cramer's Take)should be active. Even though TTWO is still
rejecting a $26 bid form ERTS, it has finally opened the
door to having preliminary discussions or exploring
other alternatives.
Steven Smith Blog Sticking With The Strangle 3/25/2008 9:38 AM EDT I still don't trust this rally -- unless the SPX can move past the 1,350 mark.
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
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