Celgene (CELG, $42.05, down $2.68) was the only thing that looked good this morning for a trade when the market looked poised to open lower. I listed a bunch of call options in case we got a rebound this morning but you could tell in last night’s Weekly Wrap the bias was to the downside. That is why I kept mentioning check market and stock direction. This morning I followed that up by saying do not buy any call options.
The Dow is currently down 235 points to 6,825 and I had mentioned in last night’s newsletter that the market theme felt lower. The levels for the Dow I was looking for was 6,800-7,000 and we are at the bottom end of that range. That was the last thing I said…
The Celgene March 40 puts (LQHOH, $1.35, up $0.55) opened this morning at 95 cents and I said they had a good shot of making at least 50% if Celgene fails to hold $40. The sell-off has picked up steam but I wouldn’t initiate new positions if you were late to the party. If you got in this morning for under a $1, target $2 as an exit and use $1.25 for a stop. If the put options get to $1.50, that would represent a 50% return so keep that in mind as well.