Genentech (DNA, $87.47, up $1.13) got off to a slow start on Monday but got it going in late afternoon trading. About the time Roche presented at the JPMorgan Healthcare Conference, Wall Street was bracing for some kind of comments concerning the news that Roche is about to make a bid for Genentech.

Although Roche did say a little something, it wasn’t enough to push the shares of Genentech higher than they were in after-hours trading on Friday when they hit $89. Roche did talk about not destroying the “synergies” that exist and it was actually a good thing the stock got off to a slow start because it enabled us to get into some call options at cheaper prices.

The February 95 calls (DWNBS, $0.95, unchanged) traded as low as 80 cents and as high as $1.15. The March 95 calls (DWNCS, $1.60, down $0.10) traded as low as $1.45. If you got into these positions, place stops 50% below your entry points. These are risky trades especially with Genentech announcing earnings on Thursday. Genentech’s CEO Art Levinson will be speaking today at 5:30 ET so the market will be closed once he takes the podium.

AutoZone (AZO, $128.77, down $4.29) broke down like a rented mule after failing to hold the $130 level. The February 115 puts (AZONC, $3.60, up $0.70) traded to a high of $3.90 which was just shy of $4.00-$4.50 target we have. Stops are set at $3.30 but raise it to $3.75 if the calls get over $4.

How Intuitive Surgical (ISRG, $100.75, down $1.05) managed not to break its 52-week low was a miracle. The stock had a strong opening and hit a high of nearly $106 before a late wave a afternoon selling brought the stock back down to Earth. The February 90 puts (AXQNR, $5.30, unchanged) were profiled at $4.50 on Friday and actually traded as low as $4.40 on Monday. However, the magnet of new lows is right around the corner and hopefully yesterday’s slide will continue into this morning’s trading.

And finally, Family Dollar (FDO, $28.11, up $0.61) bounced back and closed in positive territory. The February 30 calls (FDOBF, $1.05, up $0.15) were profiled at 75 cents and the $1.00-$1.25 target has technically already been hit. You could sell half, place stops
at 50 cents and see what happens from here on out.

Rick Rouse