September 2009 | Members

NEW TRADE!!!

11:00pm (EST)

United States Steel (X, $46.00, down $0.63) has come down from its recent high of $51.65 and has not participated in today’s rally.  There are conflicting reports on just how strong demand is for steel but August showed steel output actually increased.

Over 100 million metric tons were produced which was up 2.5% from the previous month, but still down 5.5% from August 2008.  Yes, when compared to YOY (year-over-year) numbers steel production is off 20% from a year ago. However, U.S. Steel has been performing well and demand could strengthen as the manufacturing sector worldwide begins to ramp up production. 

There are a few analysts on Wall Street who share the same sentiment.  Bank of America-Merrill Lynch recently upgraded the company from “Underperform” to “Neutral” and raised its price target from $30 to $55.  Let’s use today’s weakness to go long.

Buy to open the United States Steel Jan 55 Calls (XAK, $2.50, down $0.36) at current levels.  The current “Bid” is $2.50, the “Ask” is $2.60.  Use a limit order of $2.55 but do not pay more than $2.75 if we rebound from here.

If we can get a run back to $50, these calls should trade $3.75-$4.00.  Set stops at $1.30.

Rick@MomentumOptionsTrading.com

 

New Trades

There are no trades this morning.  There are a couple I’m looking at and if we add them you will get an email.  

Note:  I wanted to give an update on the trade positions because we have a lot of new faces that have recently joined us.  First, the Welcome Guide is a good overview on our style of trading here at MomentumOptionsTrading.com. 

One of the first questions we are always asked is are the results real?  I want to be the first to say that there aren’t many option sites that will actually show their track record for their trades.  I won’t say we are the only one because I’m sure there are a few others but our belief is that you keep your subscribers based on your results and accountability.  Yes, they are real.

Not every trade will be a winner as you will see below but we are approaching nearly 200 trades for the year with only 45 losers (77% success rate).  Four of those losers are in the Current Trades.  If you’ll notice the date that the trades were profiled then you will see they have been open for weeks.  At the time of the trades, the market was trending higher but as I’ve mentioned in the Blog, we haven’t had the “explosive” moves to the upside like we did on the way down.

Also, any old trades can be researched by using the Search box and going by the day they were opened by using the Track Record.  They are good learning examples and they are also time dated to show our integrity. 

There are too many options site that give you a “Closing Price” from the night before and say that is when you “could” have gotten in.  Then the next day when you try to get in you find that the spread or entry price is totally different because of a big move.  All stock and options have a quote that is current as I write the blog and do trade updates.  There are no smoke-and-mirrors.  If we are wrong, I will say I blew a trade.  It’s that simple. 

I don’t want to go out on a limb and say these Current Trades are “buys” (C, IMAX, SIRI) because I wouldn’t “double up” if you are already in the position.  I just don’t trade that way.  These positions are longer-term options and we went further out to protect ourselves from the volatility and in case the market headed lower.

RIMM was closed Friday and MCO was opened this past Thursday in the 1pm update. 

The point is I’m going to profile a lot of good trades and it’s up to you to maximize your profits.  For example, the MCO put options are already up 20% and were up 33% at one point.  If you had bought 20 contracts at 75 cents and sold at $1.00 then that is a $500 profit.  That is a good day folks.  The initial exit was $1.00-$1.25 and they are currently at 90 cents.  For those of you who missed the trade then if the put options are at 90 cents and they are near the exit target then obviously these options are not still a “Buy”.

Our stops are normally at 50% below our entry prices but for some positions, we don’t carry stops but I will let you know that when we a trade is profiled.  It is possible for an option position to lose 80% of its value only to rebound to end up 50%-100% higher.  That is a fact.  So, some of these positions are down and their stories are a little different so it depends on where YOU think the stock or option will be. 

I just wanted to be clear on a few things because we have a lot of new people on board.  Each trade has an Entry Price with date, Exit Target, the current Return and a Stop.  The Action summaries are my current thoughts on the trade.

The 2009 Portfolio is update regularly so you can see our results as well.  We also send emails before we post on the website and they are usually sent around 9am and 1pm.  New Trades will be labeled this from now on along with Market Commentary and Current Trades.  We want to thank you for your suggestions because they are improving our service every day.  We have plenty of support and we always try to respond to your emails within 24 hours.

Sorry to be long winded but I wanted to get this out before we get into the trade updates.  Also, the newest trades will be listed first instead of alphabetically.   

Current Trades

Moody’s (MCO, $18.85, down $0.73)

October 17.50 puts (MCOVW, $0.90, up $0.25)

Entry Price: $0.75 (9/24/09) 

Exit Target: $1.00-$1.25

Return: 20%
Stop: 30 cents 

 

Action:  The put options hit a high of $1.00 on Friday after the 1pm Mid-Day update but we are pushing for $1.25. 

Research In Motion (RIMM, $68.91, down $14.15)

October 100 calls (RULJT, $0.05, down $0.73)

Entry Price: $1.00 (9/17/09)
Exit Target: CLOSED (closed half at $1.75 on 9/24, half at $0.05 9/25)
Return: -10%

Stop: 50 cents

Action:  The writing was on the wall Thursday before the earnings were released and this was the risk of leaving the other half open.  Most of you took my warning sign and cashed out early but part of me wanted to believe that RIMM was going to smash earnings.  They missed and it only confirms that Apple (AAPL, $182.37, down $1.45) is the 800-lb. gorilla in the space.  

Citigroup (C, $4.38, down $0.05)

January 7.50 calls (CAQ, $0.10, down $0.01)

Entry Price: $0.32 (8/28/09)

Exit Target: $0.64

Return: -69%
Stop:  None  

January (2011) 10 calls (VRNAB, $0.39, flat)

Entry Price: $0.60 (8/28/09) 

Exit Target: $1.20

Return: -35%
Stop: None 

Action:  Continue to hold.  

Imax (IMAX, $8.67, down $0.05)

March 2010 12.50 calls (IMQCV, $0.25, flat)

Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: -44%
Stop: None 

Action:  Continue to hold.

Sirius XM (SIRI, $0.62, down $0.02)

December 1 calls (QXOLA, $0.05, flat)

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

Action:  Continue to hold.

Rick@MomentumOptionsTrading.com