September 2009 | Members

12:05pm (EST)

The RIMM October 100 calls (RULJT, $1.00, up $0.05) were at 95 cents on Friday and I suggested opening half for those of you who thought the stock would continue its uptrend today.  Go ahead and complete the other half.  For those of you just joining us, use a limit order of up to $1.10.

Shares of RIMM opened at $83.23 and hit a low of $82.64, down 98 cents from Friday’s close of $83.62.  That suggests there is strength heading into earnings but we will probably exit the trade BEFORE earnings. 

We also stuck our toes in the water on Changeyou.com (CYOU, $38.08, down $0.67).  The October 42 calls (CQUJP, $0.85, down $0.30) are right at our limit price and have traded as low as 75 cents.  Set stops at 30 cents and target an exit of $1.25-$1.30 initially.

We are still in a choppy market but the bulls still want to run.  Until the bears start to put up a fight, which could be around the corner with earnings season coming up, the bulls are in control. 

 

8:45am (EST)

Shanda Games (GAME) recently filed with the SEC for an IPO of its common stock.  The company is offering shares at an expected price between $10.50-$12.50 per share.  This should net them $800 million, depending on the price. 

Shanda Games is China’s leading online game company and China has a thirst for online gaming.  It is the future of gaming so this one could be interesting.  The company had $500 million in sales last year and currently has 30 games in play with another 20 in development.

If this IPO is successful then one way we could play the sector is with Changeyou.com (CYOU, $38.75, down $0.79).  Back in June there was an opportunity to make a double as we went long the July 50 calls at 75 cents.  Three days later we were out at $1.50.

I’m not sure when Shanda Games debuts but Changeyou.com has solid support at the $37ish level and the October 42 calls (CQUJP, $1.15, down $0.60) are the call options we are targeting.

As much as I bark about analyst upgrades/ downgrades, Changeyou.com did get a recent upgrade to “Overweight” on September 10th when the stock was at $41.  Let’s set a limit price of 85-90 cents which could be triggered if the stock comes down to the $37 support area.

 

 Current Trades

Apple (AAPL, $185.02, up $0.47). 

October 200 calls (APVJT, $2.05, up $0.05)

Entry Price: $0.85 (9/16/09)

Exit Target: $1.70, raise to $3.00 (closed half at $1.70 on 9/16)

Return: 120%
Stop:  $1.70

Action:  Apple was strong out of the gate on Friday as the stock hit a high of $186.55.  The call options traded to a high of $2.50 but only ended the day slightly higher.  RIMM will announce earnings this week and if that stock can continue its upward trend then Apple should be right there with it.

Citigroup (C, $4.26, down $0.16)

January 7.50 calls (CAQ, $0.11, down $0.03)

Entry Price: $0.32 (8/28/09)

Exit Target: $0.64

Return: -66%
Stop:  None  

January (2011) 10 calls (VRNAB, $0.42, down $0.02)

Entry Price: $0.60 (8/28/08) 

Exit Target: $1.20

Return: -30%
Stop: None

Action:  Continue to hold.  

Dendreon (DNDN, $29.20, up $0.30)

November 45 calls (UQBKO, $0.95, flat)

Entry Price: $0.30 (8/31/09) 

Exit Target: $0.60 (closed half at 50 cents on 9/15)
Return: 142%
Stop: 30 cents 

Action:  Dendreon opened the week at $23.58 and caught fire mid-morning last Monday.  The fuse was lit and Dendreon exploded by the end of the week.  September 24th is when the company will update Wall Street so we could have another leg up.  Then again, investors could sell into the news so we will have to watch these developments closely.

Imax (IMAX, $8.95, down $0.55)

March 2010 12.50 calls (IMQCV, $0.35, down $0.15)

Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: -22%
Stop: Non 

Action:  We all know analysts “upgrades” and “downgrades” can move a stock and it has been well documented in this blog on some of the dumb calls Wall Street has made.  Well, some brokerage firm (Merriman) took the wind out of our sails on Friday after the firm downgraded the stock from “Buy” to “Neutral”.

I have outlined some of the risks with the stock but Imax just reported a solid quarter and I’m eager to see what they do when they report again in a few weeks.  That will be the key for us.  There isn’t a lot of coverage on this stock which is why it has stayed under the radar. Imax has a strong global presence and remians an interesting buyout candidate.

International Business Machines (IBM, $122.11, up $0.23)

October 130 calls (IBMJF, $0.70, down $0.05)

Entry Price: $0.60 (9/17/09)
Exit Target: $1.20
Return: 17%
Stop: 30 cents

Action:  Continue to hold.

Sirius XM (SIRI, $0.68, flat)

December 1 calls (QXOLA, $0.05, flat) 

Entry Price: $0.15 (8/21/09)
Exit Target: $0.30
Return: -67%
Stop: None

Action:  Sirius got hit with a “minimum bid notice” on Friday which was not a good sign.  The Nasdaq’s listing requirements call for a stock to trade for over $ 1 or else it could get delisted.  The rules are if a stock breaks below $1 for 30 business days, it gets an alert from the exchange, along with 6 months to get the shares back over the $1 level.

There is the possibility of the company doing a reverse stock split but things will hinge on how quickly the company’s new products and its deal with Apple takes shape.