September 2009 | Members

MomentumOptionsTrading NewsFlash for 9/23/09:  Fed Holds Rates   2:30pm (EST) The Fed left rates unchanged and they expect them to stay low for quite some time.  The vote was unanimous and the market has rallied off of the news.  The Dow is currently up 50 points to 9,880 while the S&P 500 is up 4 to 1,076.  The Nasdaq is up 10 points to 2,156. As far as our trades, Research In Motion (RIMM, $87.47, up $2.61) is up 3% and the October 100 calls (RULJT, $1.40, up $0.40) traded as high as $1.75 which represented a 75% gain from entry levels.  You should have closed half of the trade.  Our next exit target is $2 or higher. ChangeYou (CYOU, $40.80, up $2.87) is up nearly 8% and the rebound has meant a double for the October 42 calls (CQUJP, $1.50, up $0.80) which have easily doubled from yesterday’s closing price.  Our entry price was 85 cents so we are close to a double.  Once we get there, we can close all or half depending on strength. The way things are looking, I wouldn’t be surprised to see Dow 10,000 this week.



9:20am (EST)

ChangeYou (CYOU, $37.93, down $0.36)  October 42 calls (CQUJP, $0.70, down $0.15) Entry Price: $0.85 (9/21/09)  Exit Target: $1.30 Return: -18% Stop: $0.35 Action:  Well, we held $37 but shares of ChangeYou ended lower after starting off in positive territory.  When I did the trade update yesterday I was wondering if Shanda Interactive Entertainment (SNDA, $53.53, down $0.67) would have been the better play and judging by yesterday’s results, it was.  The Shanda October 60 calls (QKUJL, $1.25, up $0.35) were up nearly 40% from Monday’s close of 90 cents but opened at $1.15.  I still think we should be good but I was disappointed on how this one started. Citigroup (C, $4.65, up $0.22) January 7.50 calls (CAQ, $0.15, up $0.03) Entry Price: $0.32 (8/28/09) Exit Target: $0.64 Return: -53% Stop:  None  January (2011) 10 calls (VRNAB, $0.44, up $0.02) Entry Price: $0.60 (8/28/09)  Exit Target: $1.20 Return: -27% Stop: None Action:  Citigroup got a nice 5% pop yesterday.  Continue to hold. Dendreon (DNDN, $28.87, down $0.59) November 45 calls (UQBKO, $0.80, down $0.10) Entry Price: $0.30 (8/31/09)  Exit Target: $0.60 (closed half at 50 cents on 9/15) Return: 117% Stop: 30 cents  Action:  For those of you who have just signed on recently, the current trade is mostly covered from any losses.  I profiled the options in late August and we closed half when the call options hit 50 cents.  It wasn’t exactly a double but should Dendreon disappoint Wall Street on Thursday then these calls could lose a lot of their value.  I just wanted to point this out because I am not in the position to tell you if these calls are a buy right now.  By that I mean is that the risk has changed from when I first profiled the trade so if someone were to jump on these today or Thursday and Dendreon’s stock takes a plunge then you will have a nasty loss.  I expect good things to come from the conference which should take the stock higher.  But there is also the buy the rumor, sell the news type event, or something negative could come out that Wall Street doesn’t like. Also, these are way out-of-the-money options which make them doubly dangerous.  The implied volatility is also jacked so if this makes you uneasy you can close the trade for a cool double and have no worries either way. Imax (IMAX, $9.06, up $0.10) March 2010 12.50 calls (IMQCV, $0.35, flat) Entry Price: $0.45 (8/10/09) Exit Target: $1.00+ Return: -22% Stop: None  Action: Continue to hold.  International Business Machines (IBM, $121.61, up $0.04) October 130 calls (IBMJF, $0.47, down $0.03) Entry Price: $0.60 (9/17/09) Exit Target: $1.20 Return: -22% top: 30 cents Action:  Continue to hold. Research In Motion (RIMM, $84.86, up $0.70) October 100 calls (RULJT, $1.05, down $0.02) Entry Price: $1.00 (9/17/09) Exit Target: $1.50-$2.00 Return: 5% Stop: 50 cents Action:  The call options hit a high of $1.20 yesterday but there was a battle at the $85 level.  The stock opened at $84.99 and the bulls got a run to $85.14 before the bears stepped-up.  They took the shares slightly lower but all signs are pointing towards more strength.  It would be ideal if we could get a run to $86-$87 before the company’s earnings announcement. Sirius XM (SIRI, $0.66, up $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:  There is a “bid” again of 5 cents and the “ask” is 10 cents.  Open Interest stands at nearly 60,000 contracts.  We may be stuck in this trading range for quite some time until we see what kind of sales and signups start coming through Sirius’ doors.