Russell’s Weekend Review

Barron’s –

This week’s cover story is about the growth in the currency markets. Most people think of currency trading being focused on the spot and futures markets, but there are also opportunities to trade currencies using exchange traded funds. Barron’s has a list of the ETF’s that focus performance on current movements. All but a couple of the funds on the list also have option contracts listed on them.

The Striking Price column highlights a recommendation by Oppenheimer on Exxon (XOM). The trade involves buying an October 85 Call and selling an October 95 Call. The trade makes sense based on a price target of 96 for shares. He refers to this trade as a gas-pump-hedge, we commonly refer to this trade as a Bull Call Spread at the Options Institute.

For the second week in a row, $110 oil was mentioned as a level that stock traders need to keep an eye on.


Options Action –

Started out talking about the earthquake in Japan and the potential market impact.

The traders discussed Goldman Sachs (GS) and gave a bearish recommendation via a vertical spread. Specifically the recommendation was an April 150-160 Bear Put spread. The second discussion was on Royal Caribbean (RCL) stock and a neutral short strangle spread was recommended.