China Woes And Dollar Hurt Stocks and Options In Focus: Exit Strategies

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City of Industry, CA --(www.USEquityNews.com)-- 01/27/2010 - Financial News industry alert provided by U.S. Equity News. The NYSE composite cut a 2.3% shortfall to 1.5%. But that was still its biggest drop in a month. The Nasdaq trimmed a 2.2% deficit to 1.3%. The Dow and S&P 500 fell 1.1% each.


AsiaInfo Holdings (ASIA) dropped 6% on nearly twice its average trade. The stock sliced its 50-day moving average.

Home Inns & Hotels (HMIN) lost 6% in heavy volume. The stock cleared a 38.10 buy point from a square box Jan. 4, but triggered the 8% sell rule seven sessions later.

Community Health Systems (CYH) shed 6% on three times normal trade. The Republican win in Massachusetts makes health reform seem less likely. This is bad for hospital operators that would miss out on new admissions.

Group mate Universal Health Services (UHS) lost nearly 6% on twice its average volume. The stock closed just above its 50-day moving average.

On the upside, Cree (CREE) gapped up and bolted nearly 18% to its best level since November 2000. [Read the full article]

"Tricks of the trade" can save option traders money over the long run. And around expiration, the smarter adjustment might even deliver a nice upside surprise. For illustration purposes, let's say a trader purchased an ATM July XYZ 70 call for $2.10, as the stock cleared a 71.50 buy point.

A couple of weeks later with expiration fast approaching, the trader realizes he or she would like to book the existing profits with shares at $76 and while the getting is still good. Intrinsically, with the stock at $76, those calls have gained nearly 200% at $6 per contract. However, when the trader goes to close out the position by offering the call at $6.00, the market is quoted as 5.90 bid / 6.00 ask.

The trader might see the above quote and think "good enough for government work", hit the bid of $5.90 and call it a day with $3.80 in profits. In certain instances the trader might be right for executing that quickly. [Read the full article]

BHP reported record production of iron ore, alumina, copper and nickel during the fourth quarter.

In addition, the company said it saw strong price recovery across its categories "driven by demand in China and restocking in the developed world."

The company said most key indicators among developed economies improved during the quarter and that stimulus spending hoisted global trade from extreme lows to more normal levels.

But BHP's report remained cautious about 2010, saying "the speed of recovery in the developed economies remains uncertain." Two critical factors: the eventual withdrawal of government stimulus across multiple economies, and China's effort to head off inflation by reining in lending by banks.

In contrast, Brazil-based Vale (VALE) on Tuesday forecast increasing demand for iron across the year. An official of the world's largest iron ore producer told Reuters that 2009 production jumped 40% through Q3, with nearly all of the increase going to China. [Read the full article]

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