Folks, we are planning to launch our new option picks service by September 1st. There will be more details coming soon. We may limit the number of subscribers if the initial launch is oversubscribed. We may do this because we don’t want our option trades to become crowded.
We have given you a blog with free option picks for two months with some fantastic trades to let you get familiar with us. However, once we launch, all of the option trades will be in the Members Area only. We’ll also be rolling out trading videos, some slideshows, doing some webinars, and offering a trading manual.
Bank of America (BAC, $17.79, up $0.04)
January 20 calls (BYOAT, $1.44, down $0.02)
Entry Price: $1.18 (8/12/09)
Exit Target: $1.80
Stop: $1.25, raise to $1.30
Action: BofA’s high was $19.94 and keeps bumping resistance at $18. We are watching this level like a hawk. The call options traded in a range of $1.38-$1.52 so our stop wasn’t hit today.
Citigroup (C, $4.63, down $0.12)
January 7.50 calls (CAQ, $0.20, down $0.05)
Entry Price: $0.14 (8/12/09)
Exit Target: 50 cents (sold half on 8/24/09 at 30 cents) sold other 1/2 today
Action: Our 21 cent stop was hit today as Citigroup traded to a low of $4.58. The overall return was 80%ish. The first half yielded a profit of 114% while the other 1/2 yielded 50% profits from our 14 cent entry price. I still like these options over the long haul but I like to stick to my trading plan. For you new subscribers that means we target 100% profits while keeping losses to 50%.
I have a pretty good feeling that come 2011 this stock will be higher than $4+. The beauty of it is now YOU have these options (or should) on your Watch List. Watch for a break above $5 down the road. But. If Citigroup keeps slipping then we will look for another opportunity down the road. Remember what I said about playing with house money? Well, all of the profits from this trade can be used on these same calls in the future.
Some of you may wonder why I don’t follow the put options for this stock. Well, the lowest a stock can go to is $0 so there is only “4 points” to the downside. With call options we are betting on the upside and in theory, this stock could go to $10, $20 or even $50 or $100. So, there is a lot more upside to play than downside.
Human Genome Sciences (HGSI, $20.50, up $1.29)
September 25 calls (HQIIE, $0.70, down $0.05)
Entry Price: $0.70 (8/26/09)
Exit Target: $1.40
Stop: 35 cents
Action: If we get another pop on Thursday’s open, even if it’s only up to $1.00-$1.25, make sure you walk away with a profit. The 35 cent stop is a “loose” one if you want to stay in the trade and believe a buyout is coming over the next few weeks.
Imax (IMAX, $9.41, up $0.06)
March 2010 12.50 calls (IMQCV, $0.40, down $0.20)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Action: You may wonder why the drop in the option price although the stock went up. That is because with the bid and ask prices there is a 20 cent spread. The bid is 30 cents while the ask is 50 cents. If you were to buy 20 contracts you would put a “limit order’ in for 35 or 40 cents. Don’t put in a market order because you will get filled at 50 cents! I’m not Geico but this tip alone will save you a ton of money.
The big picture here is that I’m looking for Imax to trade to over $15 in the next six months. Remember that when you do this trade. There is a chance these options go down to 20 cents if the stock falls back below $9. I don’t think that will happen but be prepared for it if we do. The big moves should come on the company’s next earning report and the Christmas movie season.
Sirius XM (SIRI, $0.66, down $0.03)
December 1 calls (QXOLA, $0.14, down $0.01)
Entry Price: $0.15 (8/21/09)
Exit Target: $0.30
Action: Same story here with this trade. Look, 10 contracts would have cost $150 from our 15 cent entry price. If Sirius is at $2 then the calls are worth $1 or $100 apiece. That means we now have $1,000 off of our $150 investment.
The company came out with news as predicted and has hooked-up with Apple (AAPL, $167.41, down $1.99). For $120, you can buy the XM SkyDock which turns your Apple iPhone or iPod Touch into a satellite radio receiver. How sweet is that?
It’s a winner-winner chicken dinner kind of deal. Sirius wins because it gets to sell a bunch of hardware for $120 a pop and it also introduced several new radios priced below $99. And they can concentrate on building their subscriber base. Apple wins because it means more downloads of songs that people want to hear over.
The key for us is how fast all of this happens and will it be enough to push the stock to at least $1.15? That is our breakeven point if anything.