September 2009 | Members

 
IBM (NEW TRADE)
International Business Machines (IBM, $121.82, up $2.47) broke $120 yesterday in strong fashion and it has been a level I have been talking about since July/ August.  I’m trying to show you a perfect trade setup that would have tripled your money yesterday so be patient with me… 
 
The September 120 calls (IBMID, $2.20, up $1.65) were up 300% for the day.  They opened at 55 cents and traded to a low of 45 cents.  The high was $2.30.
 
That August 12th update was pretty much my last comments on the stock.  IBM briefly tested $120 a few times after that update but not with authority.
 
The chart for IBM is showing a run to $125-$126 is likely which is where the stock will run into a little resistance (just like Freeport McMoRan has at $72-$73).  If we can clear that then $130 will be monumental, folks.  If the stock clears $130 then we are looking at a multi-year and possibly all-time highs.  Incredible.
 
Here is what 30 days of extra premium will cost you compared to the September 120’s.  The October 120 calls (IBMJD, $4.60, up $1.50) were up 50% while the October 125 calls (IBMJE, $2.10, up $0.95) nearly doubled. 
 
The October 130 calls (IBMJF, $0.78, up $0.45) these calls opened at 40 cents yesterday and traded as high as 80 cents.  Over 6,000 contracts traded hands which was slightly more than the Open Interest.  Depending on how we open this morning, these could get cheaper of continue higher. 
 
If IBM is weak and breaks below $120 then we will forget the trade.  If we can hold or just open a little lower than try to get in for under 85 cents.  Use a limit order of 95 cents or $1.00 and look for a possible run to $1.50-$2.00.  Confirm market direction…
 
 
Current Trades
 
 
 
Apple (AAPL, $181.87, up $6.71). 
 
October 200 calls (APVJT, $1.40, up $1.00)
 
Entry Price: $0.85 (9/16/09)
Exit Target: $1.70 (sold half at $1.70)
Return: 65%
Stop:  $1.00 
 
Action:  I apologize to those of you who may have missed the 11am NewsFlash yesterday.  For the record, I usually post before 9am and again by 1:00-1:30pm every day.  Wednesday morning I was late posting and didn’t do so until 9:40am.  As I started working on the 1pm Blog I was watching Apple.
 
When I was looking at this trade for my own account I was thinking…”I can’t wait until 1pm to post because Apple is smoking right now”…
 
The call options were at 85 cents when I published the Blog and at 75 cents when I started typing.  That was how fast they were moving.
 
I try to follow the aforementioned schedule (9am and 1pm) because I know many of you don’t or can’t follow the market all day long because of your jobs.  However, it brought to light what we CAN start doing as far as keeping everyone in the loop.
 
We are working on doing an email each time I do a Blog update just in case I see a good trade again between the 1pm update and after the 9am morning blog.  Again, I try to have trades ready BEFORE the market opens so that you can get into your accounts and do some research in case you like the trade.  We are also looking into doing an auto-trader with one of the brokerage firms as well.
 
In any event, Apple looks strong and these calls hit a high of $1.80 shortly after yesterday’s update.  I suggested closing half of the trade to lock in profits and we now have the luxury of riding the other half higher.  Stops are set at $1.00 on the other half. 
 
Citigroup (C, $4.20, up $0.08)
 
January 7.50 calls (CAQ, $0.12, up $0.01)
 
Entry Price: $0.32 (8/28/09)
Exit Target: $0.64
Return: -63%
Stop:  None  
 
January (2011) 10 calls (VRNAB, $0.40, up $0.03)
 
Entry Price: $0.60 (8/28/08) 
Exit Target: $1.20
Return: -33%
Stop: None
 
Action:  Hold
 
Dendreon (DNDN, $26.81, down $0.40)
 
November 45 calls (UQBKO, $0.55, up $0.04)
 
Entry Price: $0.30 (8/31/09) 
Exit Target: $0.60 (closed half at 50 cents on 9/15)
Return: 83%
Stop: None
 
Action:  I like yesterday’s rebound. 
 
Freeport McMoRan (FCX, $72.15, up $0.83)
 
October 80 calls (FHZJP, $1.45, up $0.18)
 
Entry Price: $1.00 (9/14/09) 
Exit Target: $1.50-$2.00
Return: 45%
Stop: $0.90, raise to $1.05
 
Action:  Freeport hit our zone of $72-$73 and stuck right there.  I had mentioned this was the first area of resistance and we have found it.  The calls traded as high as $1.65 yesterday and some of you may have taken some profits.  I still think the stock is going to do something special between now and October and I hope we don’t get stuck in the Bermuda Triangle here at these levels.
 
Imax (IMAX, $9.85, up $0.03)
 
March 2010 12.50 calls (IMQCV, $0.60, up $0.15)
 
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: 33%
Stop: None
 
Action:  The stock hit a high of $10.14 and the options are asking 60 cents.  Volume was pretty heavy Wednesday as nearly 900 contracts traded hands.  Open Interest stands at 400 contracts so look for this to keep building.  That’s a good sign…
 
Sirius XM (SIRI, $0.69 up $0.02)
 
December 1 calls (QXOLA, $0.10, flat) 
 
Entry Price: $0.15 (8/21/09)
Exit Target: $0.30
Return: -33%
Stop: None
 
Action:  Hold.