November 2009 | Members


11:30am (EST)

New Trades!!!

Trade #1

Imax (IMAX, $10.41, up $0.14)

Buy to OPEN IMAX November 10 calls (IMQKB, $0.80, up $0.15)

Imax will report earnings on Thursday BEFORE the bell and this may well be an “all-or-nothing” trade.  There are a couple of reasons why we like this trade. 

The last time the company reported earnings they posted a profit which was a first in quite some time (if ever).  From August 4th, here were my thoughts before earnings when the stock was at $9:

“I will agree that the stock is risky because Imax hasn’t turned a profit in years. That could all change Thursday when the company reports current earnings. Wall Street is expecting a profit of 2 cents. Last quarter, Imax was expected to lose 8 cents a share and came in at a loss of 6 cents. There are only 5 analysts who follow the company so the chance for upgrades are there if Imax does report a profit or beats estimates.” (END)

Two days later on August 6th:

“Imax (IMAX, $9.84, up $0.34) finally turned a profit. We were in this trade like wool on sheep and Imax didn’t let us down. For the quarter, the company posted a profit of $2.6 million, or $0.05 a share versus a loss of $12.2 million, or $0.29, a year earlier. Revenue came in at $41 million or a 94% increase.” (END) 

As you can see, Imax did not get a big pop that day after a sweet earnings report but the stock also didn’t sell-off.  We are still in a choppy market and if Imax doesn’t turn back-to-back profits then share could take a hit.

Well, if you will notice from the August 4th update, an analyst DID come out with a “Overweight” rating just last week. 

Trade #2

Barrick Gold (ABX, $38.97, up $2.46)

Buy to OPEN November 40 calls (ABXKH, $1.20, up $0.73)

These calls have been exploding this morning.  They OPENED at 40 cents and we started watching them at 60 cents.  These calls could make a run to $2.00 and they are moving fast.  Do not pay over $1.30-$1.35 for them.  This will only be a one or two day trade and the stock appears to be headed to over $40.  Its 52-week high is $42.10.