The market has held up well despite what the futures were telling us this morning. Before the opening bell, S&P futures were lower by 17.50 while the Nasdaq futures were down 15.50 which meant a nasty open. This after negative headlines concerning the government and its $25 billion stake in Citigroup (C, $1.65, down $0.81). I won’t get into the details, instead I’ll sum it up in one word. Dilution. Hence, the 30% drop in the stock.

After opening with a triple-digit loss right out of the gate, the Dow is making a furious comeback off its low of 7,033. The Dow is now down only 15 points to 7,104 as we head to lunch.

Just some quick notes, International Business Machines (IBM, $92.16, up $3.19) is on fire this morning and I said last night this is a strong stock in a weak market. The March 95 calls (IBMCS, $2.10, up $1.00) have doubled with today’s big move. These calls were profiled at 70 cents yesterday morning and some of you may have gotten in at higher prices. That’s okay because even if you got in late, they are still rocking. It’s a tough call to leave these open and you will have to see how the market is acting before the closing bell. If it looks like the Dow is headed below 7,000, you may want to get out.

I nibbled on some Freeport-McMoran (FCX, $30.96, up $0.87) options earlier this morning. The March 35 calls (FCXCG, $1.05, up $0.23) were going for 99 cents a contract at the time. The have traded as low as 50 cents. I like Freeport but there is strong resistance at $33. The move above $30 was a bonus and my Watch List alerted me of this. If the stock can hold $30 today AND the market is trading on a strong note as we head towards the closing bell, then keep the trades open.

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Rick Rouse
Rick@OptionsMentoring.com