NEW TRADE!!! 10:45am (EST) Intel (INTC, $20.02, up $0.14) BUY to OPEN INTC November 20 calls (NQKD, $0.90, up $0.08) We have already profiled the October 20 calls (NQJD, $0.59, up $0.07) at 53 cents but I really like the price action in Intel today. I could be wrong but to me it sure looks like Intel wants to push its 52-week high of $20.65. The fact that the talking heads aren’t mentioning that Intel reports next Tuesday is doing us a favor. If Intel can pull off a quarter like it did the last time they announced earnings then we should see new highs. Of course, there is always the chance of the stock heading lower should they miss Wall Street’s estimates, and if they do, this market could tank. Intel provides the perfect springboard for Dow 10,000 and if the bulls jump in, we win. The November 20 call options will also hold a little more value than the October 20 calls because they have more time premium. I wanted to provide our subscribers with another way to play Intel without as much risk but both trades will suffer if the company disappoints. I like the November 20’s up to $1.00 but make sure you use LIMIT orders to get the best price possible. We will be back Monday morning with the updates. Don’t forget our site may be slow over the weekend because of the upgrade and we are sure you will love our faster email delivery process which may already be working. If so, I owe the Tech boys lunch today!!! Have a great weekend everyone. 8:45am (EST) CURRENT TRADES Intel (INTC, $19.88, up $0.13) October 20 calls (NQJD, $0.52, up $0.05) Entry Price: $0.53 (10/7/09) Exit Target: $1.00 Return: -2% Stop: None Action: Intel traded to a high of $19.98 yesterday as 10,000 contracts of the October 20’s traded hands. Obviously there is a HUGE battle going on here as the bears are trying to keep the lid on at $20 before next Friday’s expiration. Our breakeven point is $20.53 and Intel’s 52-week high is $20.65. Something has to give and a close above $20 today would be very bullish heading into next week. Pepsico (PEP, $60.39, down $0.78) November 62.50 calls (PEPKZ, $0.80, down $0.40) Entry Price: $1.15 (10/5/09) Exit Target: $2.30 Return: -30% Stop: 45 cents Action: Talk about being deflated. Pepsico did everything right and got punished for a great quarter. The company beat earnings by 5 cents and earned over $11 billion for the quarter. But I’ve been warning you of this. Revenues came in LOWER than Wall Street’s expectations and that was one area we really wanted to see improve, not just with Pepsico but with all companies reporting earnings this quarter. Cost-cutting and penny-pinching is helping companies beat earnings but I’m afraid the market wants exactly what we wanted to see – higher revenues. It was nice to see the stock hold $60 but the 1% drop on a strong day for the market was disappointing. Now that the news is out maybe investors will see that Pepsico is still undervalued and start to bid the shares up again. These call options still have six weeks left before they expire but if $60 doesn’t hold, we could be bailing on this one. Citigroup (C, $4.65, up $0.01) January 7.50 calls (CAQ, $0.08, down $0.01) Entry Price: $0.32 (8/28/09) Exit Target: $0.64 Return: -72% Stop: None January (2011) 10 calls (VRNAB, $0.27, down $0.09) Entry Price: $0.60 (8/28/09) Exit Target: $1.20 Return: -40% Stop: None Action: Citigroup seems stuck in the $4.25-$4.75 range which is not doing much for these LEAP options. These call options should not be considered a buy at these levels until Citigroup gets over $5. Because they have lost over half of their value, we are removing them from the “Current Trades” list. They will remain on the 2009 Portfolio as a loss so the results have already been factored into our win/loss record. We are still over a 76% success rate for the year but these two trades put a dent in our overall results or we would be pushing close to an 80% success rate for the year. We have also been fielding a lot of emails on if the call options are a “bargain” and only time will tell. If by chance these call options make a comeback, I will let you know. We just don’t want people getting into this trade when there are better ones to get into. Imax (IMAX, $9.75, up $0.15) March 2010 12.50 calls (IMQCV, $0.45, up $0.05) Entry Price: $0.45 (8/10/09) Exit Target: $1.00+ Return: 0% Stop: None Action: Continue to hold.]]>
