Alcoa (AA, $11.86, down $0.25) opened lower and struggled all day to stay in positive territory. The company will report earnings next Monday, January 12. The Alcoa January 10 calls (AAAB, $2.23, down $0.09) had a stop of $2 which was hit today. These calls could have been entered on 12/9/08 at $1.20 for a return of over 100% as they did hit a high of $2.50 for the day. Of course, this was after our stop was hit but the trade still should have netted most of you 60% or better.

Caterpillar (CAT, $46.08, down $0.83) had a lousy day as well and spent most of the day in the red as the dollar rallied. A stronger dollar usually sends Caterpillar down and today was one of those days. The Caterpillar January 40 calls (CXJAN, $6.25, down $0.75) came close to hitting our stop of $6.05 but didn’t. This position could have also been entered on 12/9/08 at $4.80 and the position is still up 30%. If the stop is hit on Tuesday, the calls will return 25%.

Schlumberger (SLB, $46.82, up $1.20) continues to work well for us as the stock made a run to $49 today. I mentioned Sunday night the stock was at its 50-day moving average and if that was taken out then we could get a run to $50. Bingo. The Schlumberger February 45 calls (SLBBI, $6.05, up $1.50) were profiled for $2.00 on 12/30/08 and now have a 200% gain. The calls closed right at our target of $6 and traded as high as $6.20. If you didn’t sell the calls today, set stops at $5.75 but they should have been sold when they traded at $6.

Toll Brothers (TOL, $22.18, up $0.59) was profiled last night and we were looking to enter the February 20 calls (TEPBD, $3.40, up $0.30) for $3.00 or better. The stock opened lower from Friday’s close and the calls opened at $2.95. Toll Brothers bucked the market and traded mostly higher after the lower open and managed to trade as high as $22.58. The calls traded as high as $3.70 before giving back a little bit. I’m still not a big fan of the trade but it’s working. Set stops as $3.25.

Apple (AAPL, $94.58, up $3.83) stayed strong after the open and hit a high of $96.18 for the day. The news of Steve Jobs staying on as CEO while getting treatment was a springboard for the stock. The January 95 calls (QAAAS, $3.95, up $1.75) were profiled at $3.10 and we were targeting a run to the $4 or $5 area. The calls traded as high as $4.50 where they could have been closed for a 45% profit. Set stops at $3.50 which gives you over a 10% gain if you didn’t make this a one day trade.

There are several other stocks that are on fire right now and they include DryShips (DRYS, $13.85, up $1.36), First Solar (FSLR, $157.80, up $6.30) and Potash (POT, $82.62, up $5.27). These stocks are no stranger to the blog and they remain some of my favorite stocks to trade options on.

If the Caterpillar trade hits our stop then we may add a couple of Potash February 90 calls (PYPBR, $6.20, up $2.10) to the portfolio if we can get them at $5. Potash could make a run at $90 but there is strong resistance at $94 so we are due for some profit taking.

Rick Rouse
Rick@OptionsMentoring.com

]]>