Not much has been happening with AutoZone (AZO, $141.08, down $2.80) since I profiled the stock on Tuesday. The March 160 calls (AZOCL, $1.50, down $1.50) were at $2.30 and the March 130 puts (AZOOF, $3.80, down $0.80) were at $3.90.

My initial hopes were that the stock would have fallen to below $140 this week which would have made the puts options worth $6-$6.50. That would have allowed us to sell the puts for enough of a profit that it would have left us with a free call option on the stock going into earnings.

AutoZone hit a low of $140.72 today, so we will see…

Bank Of America (BAC, $5.32, up $0.16) has had a heck of a week as banks have been rallying. The March 6 calls (BYOCF, $0.50, up $0.14) and the March 7 calls (BYOCG, $0.30, up $0.05) were profiled on 2/12 at 90 and 60 cents.

The March 6 calls traded to a high of 80 cents and the March 7 call options traded to a high of 45 cents. This represented a loss of 10% and 33%.

It looks like I was a week early on the recommendations and maybe they should have been sold today for a small loss. Remember what I have been telling you. If you can limit your losses to 25%-50% on options trades while making 100% then you will do fine. I don’t mind taking a small loss on the trades and will probably close them on Friday. There are better opportunities out there for us to make some money.

I mentioned the International Business Machines (IBM, $88.97, up $3.07) March 95 calls (IBMCS, $1.10, up $0.60) this morning at 70 cents. As I was doing the blog, IBM came out with “breaking news” and the stock started to rally after the company said it was on track with its 2009 numbers.

The call options immediately started to trade higher and ran to a high of $1.40. Obviously, that was good for a 100% return. I realize many of you can’t follow the market minute by minute and I’m looking at an alert service to inform you of the blog postings. If you are interested, send me an email and any thoughts you might have.

The call options are still up 50% and IBM looks pretty strong in a weak market.

We closed the Safeway (SWY, $18.37, down $2.75) trade this morning. The March 20 puts (SWYOD, $1.95, up $1.25) were profiled at 70 cents on Wednesday and you could have bought them before the market closed at 65 cents. I said to sell them this morning at $1.80 and yes, they finished higher but after hitting a high of $1.90, the puts traded back to $1.40. That was the difference between 150% and a 100% trade.

The put options still closed higher than where we sold them at but our trade parameters were already meet. New options traders will hold onto these positions instead of taking what the market gives them. That is the main reason between having winning and losing option trades. Safeway could continue lower but when our goals are meet, ring the register and move on to the next trade.

Rick Rouse
Rick@OptionsMentoring.com