1:30pm (right coast time)
Celgene (CELG, $37.94, down $6.46) dipped below $37 which pushed the April 40 calls (LGHDH, $1.05, down $4.35) to a low of 75 cents. They were at $1.20 when I mentioned them this morning and I said they could go as low as 80 cents. If you waited for better entry prices, you followed the plan and now it becomes a matter of a one or two day trade.
This is still a high risk trade but a bounce back to $1.20 is possible if the stock can get back over $38 and hold $37 today. Right now, if you got in at 80 cents then you are up 20% so take the trade for what it’s worth. If you hold today they could be lower on Thursday. I’ll give an update on the chart later tonight.
The May 40 calls (LQHEH, $2.35, down $4.45) were at $2.55 about three hours ago and I listed a low of $2.25 as an entry price. As the stock continued to drift lower you could have adjusted the limit to $2.00 as a “trailing stop entry price”. The calls traded to a low of $1.92. They call options have bounced off the lows but they could fall back a little if the stock tests its low of $36.90 again today.
The April 40 calls are for “playing”, the May 40 calls I like over the next six weeks. Set stops at $1.00-$1.25 for the May 40’s. Remember, we only did half positions today.