October 2009 | Members



12:35pm (EST) NEW TRADE!!! Garmin (GRMN, $31.24, down $0.35) Buy to OPEN GRMN December 25 puts (GQRXE, $0.70, flat) Use limit orders of 75 cents.  Do not pay more than 80-85 cents for these options.  We will be back with the full update in the morning.   ******************* 11:45am (EST) Apollo Group (APOL, $60.30, up $0.24) November 55 puts (OAQWK, $1.00, down $0.20)  Entry Price:  $1.00 (10/28/09) Exit Target: $2.00 Return: 0% Stop: 80 cents, lower back to 50 cents Action:  Apollo is positive at the moment and we told you we might get a little pop.  The stop is a touchy one today but we want to stay in the position.  We made some great returns on the trades below as you will see so we can afford to be a little “aggressive” with this trade.  If the stock can close below $60 today then we will be headed in the right direction with this trade.  However, please realize the volatility could stop us out at 50 cents.  That would represent a 50% loss and if we are stopped out we may have to move out to the December or January options.  The bottom line is we feel this stock is headed to double nickels or lower… First Solar (FSLR, $125.71, down $25.87) November 115 puts (QHBWC, $2.75, up $1.25) Entry Price:  $1.00 (10/27/09) Exit Target: $2.00 Return: 175% Stop: $2.00  Action:  Well, we actually got a bigger open than the $1.75 prediction we made this morning.  These puts OPENED at $3.20.  We always mention to sell into strength and the puts have traded as high as $3.99 today.  WOW! We hope you sold half at the highs and left the rest open.  However, we didn’t tell you to do this so we will roll with the $2.00 we set from this morning.  That still locks in a 100% return for the portfolio but many of you have written and said you got out over $3 or sold half positions.  GREAT job everyone! Abercrombie & Fitch (ANF, $34.36, up $1.42) November 34 puts (ANFWL, $1.55, down $0.70) Entry Price: $0.90 (10/20/09) Exit Target: CLOSED at $1.90 Return: 110% Stop:  $1.90 Action:  We must have jinxed this one talking about the 450% return we might get if the stock fell to $30.  As you can see, these puts were stopped out this morning. They opened at $1.95 so we knew there was a good chance the stop would be hit if the stock continued higher this morning. Oh well.  Hopefully shares run back up to $36-$37 which is where we would love to short it again.  We love triple-digit returns and we can play this record until it scratches.   ********************************   Apollo Group (APOL, $60.06, down $12.91) November 55 puts (OAQWK, $1.20, up $1.00)  Entry Price:  $1.00 (10/28/09) Exit Target: $2.00 Return: 20% Stop: 50 cents, raise to 80 cents Action:  Wow.  Folks, I WISH I could have gotten us this position on Monday and the trade was right there on my computer Sunday night.  As you can see, the return would have worked out to a 500% gain.  Still, we have a 20% gain out of the gate.  From the chart it looks like $60 could be short-term support.  It could take a couple of days but we are looking for a move to the $57-$58 level then $55.  If $55 breaks then we could have a real good shot at $50. I also mentioned if these puts traded to $1.50 then you could close the trade for a quick one day profit of 50%.  You can tell we are in the zone when an option comes within a PENNY of hitting our exit target as the puts traded to a high of $1.49.  Since the trade is “technically” still open we have to watch for the choppiness we might get at the $60 level. The shares touched a low of $58.84 on Wednesday so it is hard for to imagine this level not being tested again.  We had a stop of 50 cents in place but we have raised it in case we get “whipsawed” out of this trade.  Apollo could break down big time from here but then again we could see some buying come in at these levels from the bulls who still love the stock. The firm has always had shady accounting practices like the ones I mentioned yesterday but nothing has been done about it.  Sad thing is, the goverment has known about the “cooked” books for 10 years now. First Solar (FSLR, $151.58, up $1.36) November 115 puts (QHBWC, $1.50, up $0.20) Entry Price:  $1.00 (10/27/09) Exit Target: $2.00 Return: 50% Stop: None Action:  Okay, here’s the deal.  If you will notice, we have really inflated option premiums here.  The puts are $35 out-of-the-money, the stock went UP yesterday as well as the puts.  Normally, that is not the case but the options were rich in price when we purchased them.  The good news is that the stock dropped like a rock in after-hours trading and was down $24, to $127.50, at 8pm (EST).  This morning in pre-market trading, shares are at… Now, these put options may not get the explosive move that many might be expecting and here is why.  The options were expensive to start AND they are still 3 strike prices (or $15) away from being “in-the-money”.  Basically that means if the stock stays flat from here on out and closes above $115 by November 20th then these options will be worth $0.  We don’t believe that will be the case but we have to watch how these options open this morning.  By my calculations, we could open at $1.75 but they could go higher.  Then again, we will have to wait for the adjustments and volatility to kick in to get a feel on when to close the trade. We still have an exit target of $2 for the position but if we can get $1.75 at the open then set stops at $1.50.  That locks in a 50% return in case the stock rebounds and if the stock continues lower then these puts should move up in price.  If we go higher than our target of $2, set stops there and roll with it. Abercrombie & Fitch (ANF, $32.94, down $1.79) November 34 puts (ANFWL, $2.25, up $0.85) Entry Price: $0.90 (10/20/09) Exit Target: $2.00, raise to $3.00  Return: 150% Stop:  95 cents, raise to $1.90 Action:  “We are looking for a drop to $32-$33 over the near-term”… That was our quote from yesterday and ANF fell right into our “zone” with yesterday’s 5% plunge.  The stock hit a low of $32.67 and the put options traded as high as $2.45.  We could have a tiger by the tail… Our exit target was $2.00 and we easily blew by this.  When this happens it makes our job so much easier.  What already have a great return, but this is how you capture incredible returns.  Since the options blew by our target and the stock showed weakness all day long there was no need to close the trade.  You could have closed half but we have been saying that if we get to $32-$33 then we have a good shot at $30.  Since the puts are past our target, we RAISED the exit price and raised our stop.  The new stop is now $1.90 which represents a 110% gain from the entry price.  Now, if ANF should happen to crash down to $30 then these put options will be worth $5.00.  We are not there yet but at the end of that $30 rainbow is our big pot of gold.  That would represent a return of over 450%.  If you have one trade that returns 200% then you can have 4 losing trades of 50% if everything is equal and still be even.  With a 450% gain you could have 9 trades with a 50% loss and you would be even.  Or better yet, you could have 4 trades that lose 100% and still be up 50%.  It’s important that I show you this… If you make a 10 lot trade and an option is at 90 cents it will cost you $900.  If those options run to $5 you now have $5,000 and you have made a 450% return on your money.  Now, let’s say you made 4 more trades after that monster winner and each trade was for $900.  And they all lost you 100%.  We like to limit losses to 50% but let’s go to the extreme because this is a good example. If you take the losses from those 4 trades it would come out to $900 a trade or $3,600.  Right?  Well, if you started with $900 and grew your bankroll to $5,000 then subtracted $3,600 you would still have $1,400.  The return from $900 to $1,400 is 55%. Now, having said that, we prepare you for the rest of the trades which all took another hit yesterday.  These positions have been down past our normal 50% stops and again, it’s not often we do this with our trades but the market was looking for direction which is why we got “caught” in some of these trade.  However, we prepared you for this and we also went out until January 2010 because we knew this. The Dow, Nasdaq and S&P 500 all hit our target levels that we have been talking about for months and for the past week or so we have said the market is looking for direction.  But yesterday we said we have to keep trading and we explained the current market environment.  Once we got the break below Dow 9,900 and the S&P 500 failed at 1,100 then we knew we might be headed lower.  Which is why we have been loading up on put options lately. If you have just joined us this week then please go back and read our archives from the last week or two to get familiar how fast things move in the options world and why we are taking the time to explain a lot of things this morning. The trades below have been on the books for 2 weeks or so and they have gotten crushed. Usually when a trade is down like the ones we have listed, we still keep them in the portfolio but we DO NOT discuss once they are closed.  Also, if we are in a trade and we have no stop on the position and it has suffered significant losses then we drop coverage. We DO NOT erase it off our books to make our results look better.  We count the trade as a loss and move on.  Yu will notice in the 2009 portfolio that there is a number by the trades in red.  That represents a loss BUT the trade is still open because the options have not expired.  However, we don’t want people getting into a trade because the options appear “cheap”.  If any of these trades or the ones below make a comeback, we wll bring them back to the Current Trades section.  We will not bring them back until the reach our original entry price or are pretty close and it looks like the position might rebound. There are two trades? in the portfolio that are accounted for as losses, Sirius S Radio and Citigroup but they are still active.  These options below do not expire until November and January.  We are taking these trades out of the Members Area TODAY and we are dropping coverage until they rebound, if they rebound.  This is a regular thing we do but we wanted to make sure everyone knows that come tomorrow these trades will NOT be here.    We have quite a few new faces this week so we wanted to go over this before we drop coverage.  Oh, and if you have just signed on with us, please read the Welcome Guide which is visible as soon as you log in to the Members Area.  Download it, print it, and read it in your spare time.     Chesapeake Energy (CHK, $24.77, down $1.57)  November 30 calls (HKWKF, $0.15, down $0.07) Entry Price: $1.05 (10/19/09) Exit Target: $2.00  Return: -86% Stop:  None Action:  We opened this trade 10 days ago when the stock was at $29.  We were hoping for a run to $30 which was a 52-week high just 5 days earlier.  The weak dollar has just punished this trade and started breaking down the day we profiled this one.  The stock went down five straight trading sessions before breaking that streak Tuesday.  Earnings are in November but we doubt this trade makes a comeback.   Blackstone Group (BX, $12.90, down $1.49)  January 20 calls (BXAD, $0.10, down $0.10)  Entry Price: $0.65 (10/15/09) Exit Target: $1.30   Return: -85% Stop:  None Action:  These options and the ones in Dendreon do not expire until January 15th, 2010.  A lot can happen between now and then and all we have left is time… Dendreon (DNDN, $25.10, down $1.60) January 35 calls (UQBAT, $0.85, down $0.30) Entry Price: $2.15 (10/15/09) Exit Target: $5.00   Return: -60% Stop:  None Action:  This is a speculative trade based on a buyout.  We will get some news in November as the company plans to submit its application for the drug Provenge.  Dendreon returned some of our subscribers nearly 2,600% and we know this trade probably won’t return quite that much.  However, if the stock can trade $39.30 by January then these calls will be worth at least $4.30 which would represent a 100% return. One last Special Note:  None of these trades should be considered a “buy’ at current levels and remember they won’t be here on Friday.  They will still be on the books and the portfolio is updated daily.  We will try to keep the one on the website visible in the Members Area. We want to thank everybody for writing us and offering us suggestions.  We do listen and please keep them coming.  As far as auto-trade down the road…we have decided against it because we do not want to grow our option newsletter like other websites.  We are going to be limiting the number of subscribers we take in so that our trades go under Wall Street’s radar.  Some stocks we put you in may have little analyst coverage and if the big boys see a huge spike in option volume they will know something is up.  Other option trades will be really liquid so if we get you in nobody is going to notice.  Folks, the stuff we are teaching you would take years to learn but we are only teaching a handful of option traders who want to really learn options and make some incredible returns along the way.  Many of you have followed me from the blog which I wrote for nearly two years before starting this website.  We have a great support staff and research team that is excited about the opportunities o teach you option trading. A lot of the blog memberships expire in November so we wanted to give people first crack at signing up with us before we get full.  The educational manual that contains everything you need to know is coming soon.  It has taken me two years to write it because I have been doing this full-time since the blog but it is almost ready. Look, you will not learn the market overnight.  And if you are trading options it only complicates things because you have to be right more often then you are wrong.  If you are new to options trading or even if you are a seasoned vet, this manual will save you thousands of dollars.  Getting a “real” options education can be expensive and there are firms out there that will charge you $6,000, $10,000 and upwards of $20,000 by the time you buy there materials and their “computer automated trading systems”.  All these crooks are doing is upselling you and they are not worried about your education. If you just want our trades picks then that is okay too but we wanted to talk about this manual and get our “Waiting List” ready for those of you who want to learn option trading at its finest.        If you would like to take your trading to the next level, please send support@MomentumOptionsTrading.com an email with the subject line “Trading Manual”.  We have to print them up and want to get a head count on how many we may need.  Subscribers who sign-up now will probably receive a HUGE discount and a free one-year membership to our newsletter.  We hope to have them ready by mid-November…]]>