October 2009 | Members

12:55pm (EST) New Trades!!!  Trade #1 RadioShack (RSH, $15.64, up $0.10) Buy to OPEN RSH November 15 calls (RSHKC, $1.20, up $0.02) We like prices at current levels and you can use limit orders up to $1.25 Trade #2 TiVo (TIVO, $11.69, up $0.22) Buy to OPEN TIVO November 12.50 calls (TUKKV, $0.55, up $0.10) I like these options at current prices and use limit orders up to 70-75 cents.  Lots of action today…

 

9:25am (EST) Abercrombie & Fitch (ANF, $36.93, up $0.59) November 34 puts (ANFWL, $0.85, down $0.15) Entry Price: $0.90 (10/20/09) Exit Target: $2.00  Return: -6% Stop:  40 cents Action:  The stock spent much of Thursday testing resistance at $37.50-$37.80 but faded from those levels by the end of the day.  Shares were still up but you have seen the action all this week with the stock struggling to get past $38.  For those of you just joining us, we are looking for Abercrombie to trade back down to $34-$35 over the near-term with a break below $35 leading to a test of $30 which was hit at the beginning of the month.  The stock has rallied 25% since which we believe has provided us a great entry point as the retail teen sector continues to struggle. If the stock does manage to penetrate its resistance level we will close the trade if shares trade $39-$40 which is where our stop of 40 cents is set for the put options.  However, if Abercrombie is at $32 by November 20th then these puts are more than a double from current levels.   Chesapeake Energy (CHK, $27.94, down $0.89)  November 30 calls (HKWKF, $0.60, down $0.30) Entry Price: $1.05 (10/19/09) Exit Target: $2.00  Return: -43% Stop:  50 cents (mental) Action:  Yesterday was a rough one for Chesapeake as an analyst downgrade punished the shares.  At one point, the stock was down to a low of $27.41 after getting dropped from “Buy” to “Neutral” by UBS.  If you are counting, that marks the third analyst this month to chime in with an opinion on the stock.  The first analyst this month initiated coverage of the stock with an “Outperform” rating.  The next analyst who put in their two cents downgraded the stock from “Neutral” to “Underperform”.  So there you have it, three different analysts with three totally different opinions.  We mentioned yesterday that there was going to be some volatility in this trade.  Funny thing… the knucklehead who downgraded the shares yesterday was rewarded with news that Chesapeake’s shale production is at record levels which came out after the closing bell.  The downgrade took a little momentum out of the stock but this was some good news.  The US has enough natural gas reserves to last us a century, yes a 100 years, and the push has only begun.  Yes, natty gas is cheap and inventories will build because of supply but if and when the US makes the switch from oil, Chesapeake and others will do well.  The calls options hit a low of 45 cents yesterday and we went into great detail to say this was a mental stop.  Caution, these calls hit 45 cents again of even trade down to a quarter if the stock does not rebound.  We are going to hold this one open while the market searches for direction.    Blackstone Group (BX, $16.09, up $0.49)  January 20 calls (BXAD, $0.40, unchanged) Entry Price: $0.65 (10/15/09) Exit Target: $1.30   Return: -23% Stop:  25 cents (mental) Action:  Blackstone went out on its high yesterday.  Continue to hold.    Dendreon (DNDN, $28.09, down $0.17) January 35 calls (UQBAT, $1.50, unchanged) Entry Price: $2.15 (10/15/09) Exit Target: $5.00   Return: -30% Stop:  None Action:  Continue to hold.   Imax (IMAX, $11.06 up $0.19)  March 2010 12.50 calls (IMQCV, $0.80, up $0.05) Entry Price: $0.45 (8/10/09) Exit Target: $1.00+ Return: 78% Stop: 50 cents   Action:  Circle your calendars.  This just in.  Imax will announce earnings on Thursday, November 5th, before the bell.  Last time the company reported earnings they posted a profit which came as a surprise to Wall Street after years of losing money. Since there is little analyst coverage, Imax has the chance to report back-to-back profitable quarters which would be huge for a company that is notorious for throwing money into the wind. ]]>