11:35pm (EST)

Bank of America (BAC, $16.42, down $0.28)

November 15 calls (BYOKO, $2.60, down $0.27)

Entry Price: $1.50 (6/12/09)
Exit Price: $3.00
Return: 100%
Stop: CLOSED

Action: These calls hit $3.20 on Friday and I had raised our exit target Thursday night to $3.00. BofA traded to a high of $17.14 and we were stopped out on the way back down. Our next step is to see how BofA acts this week.

Now, here is where I want to talk about “rolling” out your positions. Let’s say you had bought 10 contracts for $1,500 back on June 12th which is when the trade was initiated. That gives you the luxury of taking a chance on some cheaper out-of-the-money calls.

The November 17.50 calls (BYOKZ, $1.40, down $0.16) and the November 20 calls (BYOKT, $0.66, down $0.12) could be used as a replacement for the 15’s. Target $1.25 as an entry price for the 17.50’s but they could be considered a buy up to $1.50if BofA runs again this week. For the 20’s set a limit price of 55 cents and don’t pay no more than 75 cents.

If your profits were $1,500 on 10 contracts for the original trade then you made a 100% return. You would be risking half of that if you bought 10 contracts of the 20’s. It would cost you $750 (75 cents x 10 contracts) and would give you the assurance that no matter what happens you still would be up 50% from your original investment. That means you could ride these things into the ground and they could expire worthless and you still netted 50%.

For you new subscribers, if you take this trade, then there is a chance BofA retreats and never touches $20. Then you would risk losing ALL of you capital if you don’t have stops in place. Having said that, set stops at half of your entry price. The stock has had a huge run over the last 10 trading days so you could also do just “half” positions. That means if you normally buy 10 contracts, buy 5. If you normally do 20 contracts, go with 10.

Cisco Systems (CSCO, $22.12, down $0.12)

October 20 calls (CYQJD, $2.64, down $0.13)

Entry Price: $1.50 (6/2/09)
Exit Price: $3.00 (8/4/09 1/2 the trade was closed)
Return: 100%
Stop: $2.50

Action: The call options traded to a high of $3.05 when Cisco hit $22.74 but faded as the day wore on. The break above $22.50 was good on a technical basis and that clears the way for a test of $24. I know I have been calling for $25 but the charts are saying if we clear this area, $24 would be the next hurdle.

You also could have closed the other half of this trade once the calls hit $3.00 on Friday but the stop protects our profits while waiting to see what Cisco does from here.

Visa (V, $69.17, up $0.52)

August 70 calls (VEHHN, $1.20, up $0.10)

Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -25%
Stop: 80 cents

Action: Visa is another stock that is running right against resistance and $70 is the key this week. Otherwise, these calls will start to lose some serious “time premium” and they are still technically out-of-the-money.

Imax (IMAX, $9.35, down $0.05)

September 7.50 calls (IMQIU, $1.90, down $0.10)

Entry Price: $1.90 (8/4/09)
Exit Price: $3.00
Return: 0%
Stop: $1.50

Action: These call options are right at entry level prices and it will be interesting to see if Imax can keep it rolling. The company reported its first profit in 3 years and the shares made it above $10 after they announced earnings. It would be nice to see a few Wall Street boys come out with “upgrades” but Imax has the pieces in place to make a ton of cash.

Another trade I would like to add to the mix is the March 2010 12.50 calls (IMQCV, $0.50). These options do not expire until March 19th 2010. Folks, that is 8 months away. I’m going to run some quick figures by you and you will see why buying 10 contracts at 50 cents ($500) could pay off big time when March rolls around. If Imax is at $15, these call options are worth $2.50 each or $2,500 minimum. Since Imax’s slogan is “Think Big”, then if the stock is at $20, these calls are worth $7.50 or $7,500. $500 to $7,500 is a “15-bagger” as the great Peter Lynch would say…

PowerShares QQQ’s (QQQQ, $39.88, up $0.50).

August 40 calls (QQQHN, $0.63, up $0.12)

Entry Price: $0.65 (8/7/09)
Exit Price: $1.30
Return: -2%
Stop: 30 cents

Action: This was a trade that was added on Friday and the futures are mixed at 11:20pm. Dow futures are up 11, S&P 500 futures are up 1 while the Nasdaq futures are down 1. I will be back in the morning with the earnings outlook and what to watch for this week.

Rick Rouse
Rick@MomentumOptionsTrading.com