We got the curve ball on Monday, today we got the wildcard. The market is headed for a lower open after the horrendous unemployment report we got this morning. The U.S. unemployment rate jumped to 8.5% in March – the highest in 25 years.
The good news is we should golden on some of the trades that we are following. Celgene (CELG, $40.77, up $2.30) held $40 and broke $41 in late trading last night. The April 40 calls (LGHDH, $2.00, up $0.85) were entered at prices ranging from 80 cents to $1.00 so we doubled. The stop is $1.25 – raise it to $1.75. Sell 1/2 of your positions by the close today. The May 40 calls (LQHEH, $3.45, up $1.00) were entered at around $2 and are up 75%. Keep stops at $3.00. The current bid is $41.31 for the stock so the options should be a little higher when we open.
Amazon.com (AMZN, $76.34, up $2.50) did well to hold its gains yesterday given the downgrade and closed at $77 in after-hours trading. The April 80 calls (ZQNDP, $1.87, up $0.74) ended the day up 65%. We set a stop of $1.35 which can be raised to $1.50. Also, you could sell half today to lock in gains while keeping the higher stop in place. It’s tough to hold over the weekend so I think you have to at least take some off the table.
I’ll be back in an hour or so with an update on Research In Motion (RIMM, $45.62, up $2.51). The stock is up $12 as we head towards the ringing of the bell and it is looking like shares are going to open at $61-$62.
I’m not ready to back the truck up on the Casino stocks but there has been some heavy action in the option pits this week. Two of note: The Las Vegas Sands (LVS, $4.40, up $0.66) April 5 calls (LJJDA, $0.25, up $0.15) traded nearly 24,000 contracts. I watched then inch up all day long yesterday and did nothing about it. The May 5 calls (LJJEA, $0.65, up $0.15) could also be worth a gamble but they could get cheaper. You set a limit to buy these calls at 55-60 cents and see what happens. They could be a bargain if LVS is headed back above $5.
Wynn Resorts (WYNN, $26.85, up $5.30) had a big day on Thursday, gaining 25% but the real story was the April 25 call options (UWVDE, $2.95, up $2.45) which zoomed 490%. They opened at $1.00. Should’ve, would’ve, could’ve…I wouldn’t chase here due to yesterday’s run-up but we will watch them next week before seeing what’s up with the sector.
Rick Rouse
Rick@OptionsMentoring.com
