8:25am (EST) Somebody forgot to tell the bulls that September is historically a bad month for the market. There wasn’t much action heading into Friday’s unemployment report but now that it is out of the way, the bulls seemed determined to take us higher. The Financials put in a good day after a few upgrades in the sector. Citigroup (C, $4.66, down $0.02) upgraded shares of MasterCard (MA, $210.31, up $2.86) while JPMorgan (JPM, $42.86, up $0.32) super-sized Morgan Stanley (MS 28.55, +0.75). This is normally the time of year that companies pre-announce earnings but I don’t think we have to worry about the Financials saying anything negative…I wouldn’t think. Quietly, they have reported back-to-back solid quarters and if 3Q earnings come out better-than-expected, watch out. One stock that I wanted to mention this morning real quick is JDS Uniphase (JDSU, $7.37, up $0.14). A subscriber pointed out that he now had a profitable position but I dropped the trade because I thought it would expire worthless (just like he thought). I profiled the September 7 calls (UQDIJ, $0.45, up $0.10) on June 9th and we left them for dead two weeks later. There was no stop on the trade and I had this to say: From June 22nd (quotes are from that day): “JDS Uniphase (JDSU, $5.48, down $0.39) is a “lottery” play and we entered the September 7 calls (UQDIJ, $0.10, down $0.10) at 35-40 cents. One contract would have cost you $40 or 5 contracts would have cost $200. When I say a trade is a “lottery” trade that means there is no stop for these positions because they are just that..lottery picks. As you can see, we will have to wait this one out.” (END) The reason I am pointing this out is because we currently have a few “lottery trades” in the portfolio. These types of trades are OKAY to try but only if you do limited positions AND you are doing well on your larger trades. Lottery trades are options that trade for under 50 cents. We normally do 10 and 20 lot trades on options that cost $1.50-$2.50. These trades are more detailed and aren’t on lower priced stocks. Back in the day, they didn’t even list options for stocks that trade for under $5. The key to taking on these risky trades is to only buy the same amount of contracts that you do with the other trades. If you buy 10 contracts of a $2.00 option and it goes to $4.00 you have made $2,000. If you then take those profits and roll the dice on a “speculative” trade that you think could do well and you buy 10 contracts for 30 cents, you are risking $300. You still have a profit of over $1,700 which would allow you to play in this area. That is all I have for today. There was no afternoon post yesterday because of Jury Duty. And I have it again today so no afternoon post. Sorry folks, this is about the only thing that makes me miss an update. Subscribers: Please don’t forget to check the MEMBERS AREA for all NEW trades. The trade updates are posted by 9:00am (EST) EVERY morning and I don’t profile mid-day trades. So, if you are a subscriber, check the Members Area daily to see what we have going on. I have profiled two for Thursday morning. Rick@MomentumOptionsTrading.com]]>
