1:05pm (EST)
IBM (IBM, $100.22, down $2.33) has slipped below $100 today and I’ve decided it’s time to move on. The May 110 calls (IBMEB, $0.30, down $0.30) opened at 60 cents this morning and they were profiled at $1.00 on April 16th. After an initial 20% gain, the trade has run into a buzzsaw.
I had given a little more wiggle room for the stock to rebound and it appeared we were headed that way until this morning. IBM failed to rally with the rest of Tech and although that has somewhat faded, IBM is still lagging.
That is a sign in my book and I’d rather exit the trade then ride it into the ground. Remember, we try to target 100% gains and limit losses to 50% while hitting homeruns.
That being said, I am excited on a trade I’m working on for Marvel Entertainment (MVL, $27.88, up $0.13) that will be in this weekend’s Weekly Wrap. I have a good feeeling history could repeat itself with this one just like it did with Dendreon (DNDN, $20.52, up $0.40).
The returns will not match those of Dendreon but I think the Marvel June 30 calls (MVLFF, $1.05, down $0.25) could be good for a 25%-50% return. I like them at the current entry price of $1.05. More details this weekend. Also, keep an eye on Imax (IMAX, $6.28, up $0.33). I don’t like the options but the stock has been getting some attention over the past few weeks.
Rick Rouse
Rick@OptionsMentoring.com