9:15am (EST)
The Dow futures are lower by 13, and Nasdaq futures are down 8 points as we head towards the opening bell. S&P 500 futures were down 1 point. In economic news, consumer prices (CPI) showed no changed in July, in-line with Wall Street’s expectations and far below the 0.7% jump in June. Futures made a reversal after the news but have started to drift lower again.
Thursday’s retail sales report was terrible and Abercrombie & Fitch (ANF, $32.96) is showing why this morning. The company reported a loss of $26.7 million, or $0.30 a share, versus a profit of $77.8 million, or $0.87 cents a share, last year. However, the stock is up $1.71 to $34.67 in pre-market trading. Watch the September 32.50 puts (ANFTZ, $1.15) which should fall to under a $1 once the stock opens. I would buy these put options today on the stock’s strength at the opening bell. It wasn’t too long ago I profiled an ANF trade that turned us a quick profit but that was when the stock was around $25. Ambercrombie is a mess…
A quick rundown on the trades (quotes are from Thursday’s close):
Bank of America (BAC, $17.00, up $1.07)
January 20 calls (BYOAT, $1.29, up $0.39)
Entry Price: $1.18 (8/12/09)
Exit Target: $2.20
Return: 9%
Stop: 55 cents
Action: BofA is up 2 cents in early trading. The November 17.50 calls (BYOKZ, $1.66) had a nice jump and we were in and out at $1.25 for no gain. For those of you still in it has been a nice $400 payday on 10 contracts…
Citigroup (C, $4.06, up $0.08)
January 7.50 calls (CAQ, $0.13, flat)
Entry Price: $0.14 (8/12/09)
Exit Target: 50 cents
Return: -7%
Stop: None
January (2011) 10 calls (VRNAB, $0.39, up $0.01)
Entry Price: $0.40 (8/12/09)
Exit Target: 80 cents
Return: -3%
Stop: None
Action: Citigroup is up nearly 3% in pre-market trading to $4.17. These options should get a slight pop but the bigger moves won’t come until the stock breaks $5
Imax (IMAX, $9.10, down $0.15)
September 7.50 calls (IMQIU, $1.70, flat)
Entry Price: $1.90 (8/4/09)
Exit Target: $3.00
Return: -11%
Stop: $1.00
March 2010 12.50 calls (IMQCV, $0.50, flat)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: 11%
Stop: None
Action: Go catch a movie at an Imax near you this weekend!
Wells Fargo (WFC, $27.88, up $0.71)
September 26 puts (FHUUZ, $0.90, down $0.35).
Entry Price: $1.30 (8/11/09)
Exit Target: $2.60
Return: -31%
Stop: $0.65
Action: Wells is down a penny and these options took a little hit yesterday on the Financial rally. The stock is down a penny in early going and this is a September play. Our stop is at half our entry price and a move above $28 could trigger it.
Rick Rouse
