7:30am (EST) Futures are sharply lower this morning so many of these positions will have to be watched closely. There is a lot of good things being said about Ford (F, $5.89, down $0.02) and the stock held up well last week as it traded to a high of $6.25. There was some good news Sunday night as a report said Ford sales were up nearly 15% in China. That could help the stock but futures are pointing towards a nasty open. Here is where we are at with Ford: December 6 calls (FLI, $1.14, up $0.04) Entry Price: $1.25 (5/18/09) December 7 calls (FLJ, $0.77, up $0.03) Entry Price: $1.00 (5/18/09) I really don’t want to set stops on these positions but if we are headed for a sell-off they will get cheaper. For the 6’s, you could set stops at 65 cents and for the 7’s, you could set stops at 50 cents. That is 50% lower than the entry prices. There is a chance Ford bucks the trend and I still think we hit double-digits by December. However, if the stock fails to hold $5.40, we could see a drop below $5. Bank of America (BAC, $12.64, down $0.41) November 15 calls (BYOKO, $1.07, down $0.13) Entry Price: $1.50 (6/12/09) These call options traded to a high of $1.35 last week but retreated with the rest of the market. Same situation here. The financials are sure to move over the coming weeks and BofA will be announcing earnings on July 17. For the risk takers, this is an all-or-nothing trade that will either double from here of lose a majority of its value by the time the company announces earnings. If they are bad, there is a good chance these call options will be “dead money” for quite some time. They will have plenty of time to rebound but this will put a huge dent in any second-half recovery we have for Bank of America if earnings fail to impress. Cisco Systems (CSCO, $18.50, down $0.30) has been trying to get back above $20 and the October 20 calls (CYQJD, $0.77, down $0.75) have had trouble getting back above $1.00. You could set stops at 50 cents but this is a $25 stock, folks. If we can get there by October, these calls will be worth $5. The last trade I want to talk about is Imax (IMAX, $8.11, down $0.10). It seems that Barron’s listed the stock as a short or a “dangerous” stock that needs more research in its weekend edition. I’ve never been a big fan of the publication because more often than not they seem to get things wrong than they do right. (See General Motors). However, I have outlined the risks of Imax and have told you the company has yet to turn a profit. I suggested closing the July 7.50 calls (IMQGU, $0.80, unchanged) last Thursday because they only have two weeks before they expire and they had more than doubled from an entry price of 35 cents. The September 7.50 calls (IMQIU, $1.15, down $0.05) were profiled at 85 cents and are still up 35% but these calls traded to a high of $1.40 last week. Set stops at $1.00. For the December 7.50 calls (IMQLU, $1.65, unchanged), stops could be set at $1.25 which was our original entry price or a little higher ($1.30) to offset commissions and maybe squeeze a small profit out of the trade. A break below $8 could trigger these stops. As far as the market, if you were watching Thursday’s action or read last night’s Weekly Wrap, then you probably had a feeling that today’s open was going to be rough. If you are looking to play the downside, you can watch the PowerShares QQQ’s July 36 puts (QQQSJ, 90 cents) which is a direct play on the market’s weakness. I wouldn’t buy these at the open but there could be an opportunity for a quick trade if the market opens lower and snowballs. Rick@MomentumOptionsTrading.com]]>