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Abercrombie & Fitch (ANF, $31.47, down $0.07)

 

September 32 puts (ANFUJ, $2.20, flat) 

 

Entry Price: $1.25 (8/14/09) Exit Target: $2.50 Return: 76% Stop: $1.75, raise to $1.85

 

Action:  Abercrombie was weak in a strong market today which was a good sign.  The stock traded to a low of $31.25 and a break below $31 clears the way to our exit target of $30 for the stock and $2.50 for the puts.  It would be great to see a break below $30.  For those who just signed on to the blog…WATCH the September 30 puts (ANFUD, $1.30, down $0.10) and if ANF makes a move to $30 or below, these will do well.  For those of you already in the 32.50’s, you don’t need to add these particular options because your options will move nearly dollar for dollar if the stock continues lower.   

 

Bank of America (BAC, $16.90, up $0.34)

 

January 20 calls (BYOAT, $1.28, up $0.03) 

 

Entry Price: $1.18 (8/12/09) Exit Target: $2.20 Return: 8% Stop: $1.10-$1.15

 

Action:  BofA traded $17 again and still looks strong.  Our stops were raised to reflect a small loss in case of a market reversal.  If that is the case then we will ride the storm out if the stock fades back to $15…although that is hard to imagine with the momentum the shares have shown.

 

Citigroup (C, $4.14, up $0.14)

 

January 7.50 calls (CAQ, $0.16, up $0.02)

 

Entry Price: $0.14 (8/12/09) Exit Target: 50 cents Return: 14% Stop: None

 

January (2011) 10 calls (VRNAB, $0.43, up $0.06)

 

Entry Price: $0.40 (8/12/09) Exit Target: 80 cents Return: 8% Stop: None

 

Action:  Continue to hold

 

Home Depot (HD, $26.93, up $0.82)

 

August 26 puts (JGLTM, $0.11, down $0.53)

 

Entry Price: $0.54 (8/17/09) Exit Target: $1.00

Return: -80% Stop: None

 

August 25 puts (HDTE, $0.05, down $0.27) 

    

Entry Price: $0.26 (8/17/09) Exit Target: 50 cents Return: -81% Stop: None

 

Action:  I thought Home Depot would miss earnings and you have to put this trade in perspective.  When we do option expiration week trades you don’t bet the house on them.  I tried to explain this in July but for our new subscribers, here goes…when you buy options that expire in four days or less they are trades that can make you a lot of money by risking a little bit of money.  You’ll notice that none of the other current trades have an August expiration option.  So, if you would have bought just 5 contracts of the August 25 puts you would have spent $130 (5 contracts x 26 cents per contract).  Yesterday, this position was UP 23% but the commissions would have ate away at the profits.  If these put options expire worthless we are only out $130.  We have made more than that on the other trades I have profiled.  Way more.  If you did a 10 contract trade on Abercrombie then you are sitting on profits of nearly $1,000.  So if you take $130 away from the Home Depot “gamble” then you are still up over $800.  Now, if Home Depot would have traded to $24 (and it still can by Friday) then the August 25 puts will be worth $1, or $500, since you still own 5 contracts.  The 26’s will be worth $2.  Of course, that is if the stock trades lower from here by Friday.  Just remember this when playing cheap out-of-the-money options during expiration week.  If you manage your portfolio to where you can take calculated risks then these types of trades won’t hurt you.

 

Imax (IMAX, $9.16, up $0.05)

 

September 7.50 calls (IMQIU, $1.70, unchanged)

 

Entry Price: $1.90 (8/4/09) Exit Target: $3.00 Return: -11% Stop: $1.00

 

March 2010 12.50 calls (IMQCV, $0.45, down $0.02)

 

Entry Price: $0.45 (8/10/09) Exit Target: $1.00+ Return: 0% Stop: None

 

Action:  Continue to hold.

 

Wells Fargo (WFC, $26.34, up $0.04)

 

September 26 puts (FHUUZ, $1.35, down $0.10)

 

Entry Price: $1.30 (8/11/09) Exit Target: $2.60

Return: 4% Stop: $1

 

Action:  Continue to hold.

 

Note:  Dow futures are down 15, the Nasdaq futures are down 4 while the S&P 500 futures are lower by 2.  Earnings for Wednesday:  BJ’s Wholesale Club (BJ, $31.32, up $0.80), Cyberonics (CYBX, $17.84, down $0.29), Deere (DE, $45.09, up $2.62), Eaton Vance (EV, $30.12, up $1.07), Gymboree (GYMB, $39.82, down $0.57), Hot Topic (HOTT, $7.23, down $0.07), NetApp (NTAP, $22.85, up $0.31), PetSmart (PETM, $21.62, up $0.28) and Synopsys (SNPS, $19.97, up $0.27).