Fed “Prepared to Respond”…Yeah We Get It…..Some Trades I am Considering

by Dan July 13, 2011 3:23 pm • Commentary

Market rallied this morning on Fed chairman Ben Bernanke’s testimony in front of Congress where he stated,

“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,”

My Sense would be if the fed chairman is thinks the “possibility remains” in such a public fashion than we are on the verge of a dramatic slowdown in our supposed economic recovery.  remember this was the same Fed Chairman that routinely stated throughout 2007/2008 that the sub-prime mortgage situation was contained. 

I want to short this rally and will leg into spreads where I think there are opportunities for big earnings misses in the coming weeks……

TRADES I AM Putting on or Considering:

BRCM $33.50  leg into Put Spreads…..I just Bought the AUG 32 Puts for 1.05..company reports Q2 July 25th….

INTC $22.60 I just bought the AUG 21/20/19 Put Fly for .10….Stock was at $21 three weeks ago before the Rally…..the company raised Q2 guidance when they reported in late April…..recent misses and cautious comments out of TXN, NVLS, MCHP and AMAT make me believe that INTC’s Q2 is not likely to beat and if it misses and they guide down this stock is going right back to where is was in April…..I paid .10 to make .90 if the stock is down 10%….While I don’t place a particularly high probability on that I like the risk reward…..and a gal can hope can’t she???   Company reports Q2 July 20th.

AMZN $213.40 LOOKING AT AUG PUT SPREADS…I am dying to get short this thing…it has run too far too fast…..Looking at AUG 205/195 Put Spread for earnings….it is offered at 3.00 with stock at 213.40….spread not cheap and may look to flys…..I’LL keep you posted on what i think the right structure is.  Company reports July 26th.

WYNN $156.50 I am dying to short this one, I had this one in early June and then the rally came and the stock rallied THIRTY POINTS……you must define your risk in names like this….Company reports July 29th.

SINA $113.80 don’t have much to add on the fundamentals but the stock is the poster child for boom and bust…..chart below shows a massive downtrend channel and looking to make a low premium bearish bet, stay tuned….company reports Aug 4th.

[caption id="attachment_3219" align="aligncenter" width="300" caption="1 Yr SINA chart Provided by Bloomberg LP"][/caption]


QID $49.35 just bought the July 50/51 call spread for .25   QID is the double inverse QQQ short…..low premium bet that Nas melts this week…risk .25 to make .75 in 3 days…..this is not the sort of trade for the faint of heart, using lots of leverage and don’t have a lot of time to be right……risk what you are willing to lose.

Check back for implied moves and more fundamental detail…..