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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…

IBM (IBM, $119.45, up $1.66) is getting a pop as well but is still having trouble with $120.  For me, this is the clue I’m watching to see just how strong Tech is.  IBM is the 800-pound gorilla of Tech stocks and $120 is the key to a sustained rally in the shares.

Here is how our trades look in the Members Area and the closing remarks on August 6th were this.  Pay close attention to the last sentence:

“IBM (IBM, $118.47, down $1.13)

August 105 calls (IBMHA, $13.60, down $1.10)

Entry Price: $3.40 (7/14/09) Exit Price: $12.00 (7/24/09 1/2 the trade was closed, 8/5 other half closed)

Return: 330% Stop: $14.00

Action:  These call options opened at $13.65 and I said to close the other half of the position yesterday.  Once again, IBM was turned away at $120 so remember to watch for the break and have a list of call options that you are actively watching.” (END)

The key is that last paragraph.  It’s hard to “teach” new option traders how to see these things but trust me, I am trying.  That is why I quote myself and offer past comments.  Look, the same information that is available to Wall Street is available to us.

The aforementioned IBM trade returned 330% in 10 days when the stock was trying to clear $110 and we rolled the trade over and made another 245%.  Now, if you would have had your list of call options ready here are the potential profits you could have banged out yesterday.

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.

Yesterday, IBM reminded Wall Street it is still the “Tech Sheriff” and not the “New Sheriff” in town.  Subscribers, go to the Members Area for more commentary and a trade that could take advantage of IBM’s possible breakout.  I know this is an early post but I may have Jury Duty again today.  I have served quite a few times this month which is why I did a few 8am blogs. I have been rushing to get to the courthouse on time so today I didn’t want to rush myself.  I only have a handful of days left for the month and then I’ve done my duty for our city’s justice system.