September 2009 | Members

 

1:00pm (EST)

Moody’s (MCO, $19.50, down $1.04) has dipped below $20 today and here were by thoughts on August 11th:

“One stock that I have been watching is Moody’s (MCO, $24.65, down $0.57) which I have mentioned several times in this space.  The September 25 puts (MCOUE, $1.90, up $0.25) are getting a little action and I think Moody’s could trade $20 by September.”

Well, we decided not to do this trade because the options expired on the 15th and we were waiting for better entry points.  The stock fell $2 yesterday and the breakdown could lead to a test of its 52-week low of $15.41.  I’m not sure if we test the lows again but I do think Moody’s could fall to $18 where there is slight support.

The Moody’s October 17.50 puts (MCOVW, $0.75, up $0.30) opened at 25 cents this morning and could run to $1.00-$1.25 if the stock trades $18.  I like positions at current levels and I would use a stop of 30 cents if you get in at current prices. 

 

8:30am (EST)

ChangeYou (CYOU, $39.84, up $1.91)  

October 42 calls (CQUJP, $1.15, up $0.45)

Entry Price: $0.85 (9/21/09) 

Exit Target: $1.30 (closed half @ $1.30 on 9/23)

Return: 44%
Stop: $0.35, raise to $0.70

 

Action:  The call options traded to a high of $1.65 Wednesday and I was pushing for a double.  Our exit target was $1.30 and at the time of yesterday’s email the calls were at $1.50. 

The market took a dive shortly after yesterday’s NewsFlash at 2:30pm and it caught everyone by surprise and I said we would close half or all depending on strength. 

Although we have been in a bull market since March and the trend is still up, I have been suggesting taking quicker profits.  The trend has been up but we are not seeing the explosive moves that we were seeing at the beginning of this rally.  I’m not saying the trend has changed, we are just getting “choppy” as the bulls sniff Dow 10,000.

For those of you just joining us, you will also get the Mid-Day and NewsFlash updates via email so you won’t miss any updates.

As far as the other half of the position, the stop was raised to 70 cents to lock in profits.  The stock hit a high of $41 yesterday and we were only looking for a run to $40.  We got that and then some.  If it weren’t for the sharp sell-off in the overall market, ChangeYou probably would have held $40.  Hopefully we get another run today.  The 70 cents stop is in place but don’t hesitate to close the other half if it looks like the stock falls back to support at $37.

Citigroup (C, $4.52, down $0.13)

January 7.50 calls (CAQ, $0.11, down $0.04)

Entry Price: $0.32 (8/28/09)

Exit Target: $0.64

Return: -66%
Stop:  None  

January (2011) 10 calls (VRNAB, $0.41, down $0.02)

Entry Price: $0.60 (8/28/09) 

Exit Target: $1.20

Return: -32%
Stop: None

Action:  Yikes.  The financials led the downturn in the last hour of yesterday’s trading but remember we don’t need to get caught up in the day to day moves.  These LEAP options do not expire for 4 and 16 months.

Dendreon (DNDN, $28.27, down $0.60)

November 45 calls (UQBKO, $0.63, down $0.14)

Entry Price: $0.30 (8/31/09) 

Exit Target: $0.60 (closed half at 50 cents on 9/15)
Return: 100%
Stop: 30 cents 

Action:  Keep your fingers crossed. 

Imax (IMAX, $9.00, down $0.06)

March 2010 12.50 calls (IMQCV, $0.30, down $0.05)

Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: -33%
Stop: None 

Action: Continue to hold. 

International Business Machines (IBM, $120.82, down $0.79)

October 130 calls (IBMJF, $0.30, down $0.17)

Entry Price: $0.60 (9/17/09)
Exit Target: CLOSED
Return: -50%
Stop: 30 cents

Action:  I had a feeling on Monday that we weren’t looking good on this one and said that $122-$123 would be a brick wall.  It has been.  Wednesday’s rejection was clear and IBM tanked when the market went south.  As such, the 50% stop was hit and will go on the track record as an “L”. 

If and when we get a blow-off and the bulls have a 500-point day, IBM should break $125.  Of course, like skeletons in a closet, the bears are still hanging around and are waiting for the right opportunity.  It may be short-lived but you always have to respect both sides of the trade.

Research In Motion (RIMM, $85.77, up $0.91)

October 100 calls (RULJT, $1.02, down $0.03)

Entry Price: $1.00 (9/17/09)
Exit Target: $1.50-$2.00 (closed half at 50 cents on 9/15)
Return: 5%

Stop: 50 cents

Action:  “It would be ideal if we could get a run to $86-$87 before the company’s earnings announcement” which is exactly what I said and we got yesterday.  In fact, shares hit a high of $88.08 and the calls traded to a high of $1.75.

Some of you may have closed the entire trade yesterday and booked 50%-75% profits which is what we had talked about.  I wanted to leave half the position open because of the thrill of it and because we have an extra trading day before earnings come out.  This is where your trading results will vary.

The stock was up 82 cents in after-hours last night so hopefully buyers come in today and push us to $90-$95.  I don’t think the stock has enough gas to get to $100 and any disappointment in the earnings could cause a drop below $80.

Sirius XM (SIRI, $0.67, down $0.01)

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.