I didn’t like the afternoon action today as the market came off its highs. The futures are slightly lower as I head to press and we will have to watch the action closely this week. With earnings season winding to a close, economic reports will take on more meaning…
Bank of America (BAC, $17.35, down $0.11)
January 20 calls (BYOAT, $1.35, flat)
Entry Price: $1.18 (8/12/09)
Exit Target: $2.20
Stop: $1.15, raise to $1.20
Action: BofA made a run to over $18 and the call options traded as high as $1.63. The financials stocks sold off just after mid-day and it was a disappointment they couldn’t close out on a more positive note. Hopefully this isn’t a reversal but we raised the stop just in case.
Citigroup (C, $4.82, up $0.12)
January 7.50 calls (CAQ, $0.27, up $0.02)
Entry Price: $0.14 (8/12/09)
Exit Target: 50 cents (sold half on 8/24/09 at 30 cents)
Stop: 21 cents
January (2011) 10 calls (VRNAB, $0.57, up $0.08)
Entry Price: $0.40 (8/12/09)
Exit Target: 80 cents
Stop: 50 cents
Action: I did mention today to close half of the trade if you hit a 100% return because the rest would be house money we played with. As far as the 2011 10 call options there was a chance at a 50% profit but let’s just keep the stop of 50 cents in place. That represents a return of 25% and we will honor the stop on the 7.50’s as well. At 27 cents, these calls are still a double so make sure you close the trade if Citigroup hits our stops.
Imax (IMAX, $9.71, up $0.16)
September 7.50 calls (IMQIU, $2.20, up $0.15)
Entry Price: $1.90 (8/4/09)
Exit Target: $3.00, lower to $2.60
Stop: $1.50, raise to $1.90
March 2010 12.50 calls (IMQCV, $0.60, up $0.15)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Action: I lowered the exit target on the September calls because Imax is not a fast mover. Yes, we did challenge $10 today but if the stock continues to struggle with that area we will manage the position for a profit. Ideally, we would like to see a strong breakout abover $10 and hold.
Potash (POT, $96.27, up $0.23)
September 110 calls (PYPIB, $0.80, down $0.30)
Entry Price: $1.35 (8/20/09)
Exit Target: $2.10+
Stop: 65 cents, lower to 60 cents
Action: Nasty. After hitting a high of $1.45 the bottom fell out after shares hit $99. The premiums lost a lot of juice on the way back down although Potash ended the day with a small gain. I lowered the stop to give us a little wiggle room but this one is pretty close to hitting it anyway.
Sirius XM (SIRI, $0.73, up $0.03)
December 1 calls (QXOLA, $0.15, flat)
Entry Price: $0.15 (8/21/09)
Exit Target: $0.30
Action: Take this trade for what it’s worth. To buy a 1000 shares at current prices would cost you about $730. To control a 1,000 shares which would be the case if you bought 10 option contracts will only cost you about $150. This is still a risky play either way you slice it and Sirius is bleeding money. Their balance sheet is a disaster but we are only risking a small amount of capital on this trade. If the stock can make it to $2 which could be a cold day in hell, then these options would be worth at least a $1 apiece or $1,000 if you had 10 contracts. See the leverage?