Stock Option Trading Strategy – Long calls in energy stocks and bull put spreads.

Today the market is off to a relatively quiet start. There were a couple of takeover deals, with Chrysler being the largest. Tomorrow we will get a look at consumer price inflation and that could have a market impact - either way. If the market can generate a small rally, it could gain momentum as expiration related program trading takes hold. The earnings calendar is light and there are a few economic numbers that are due out later this week. My gut feeling is that the market will continue higher in choppy trading. There is not enough negative news to dampen the spirits of buyers. The global scene is also very bullish with many foreign markets making new highs. With every passing week, I am turning more bullish. I have been in the "neutral camp" since the February decline. Now that the market has been able to hold the breakout (SPY 146) for a few weeks, I have seen enough to justify a bullish bias. As long as that level holds, I'll stay bullish. I consider myself "late to the party" so I'm not going to jump in and buy calls at this stage. I will continue to sell bull put spreads since they give me more breathing room. If the market pulls back I will carefully be watching the support levels. I if they hold I will be a call buyer. I have been long calls in energy stocks and those positions have fared well. I am not adding to those positions, I am waiting for those stocks to lose momentum and then I will look to take profits. This is shaping up to be a quiet day. I expect the daily trading range to be established by noon Eastern Time.

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