9:15am (EST)

Imax (IMAX, $10.77, up $0.50)

November 10 calls (IMQKB, $1.20, up $0.55) 

Entry Price:  $0.80 (11/3/09)
Exit Target: $2.00
Return: 50%
Stop: None

Action: Imax caught fire late in the afternoon and these call options were pretty active.  Over 1,000 contracts traded hands yesterday so maybe some of the boys on Wall Street are getting in ahead of earnings.  The company reports Thursday BEFORE the bell. 

Now, if by chance these calls double today or get above $1.60, you can always sell half of your position and make it a risk free trade going into earnings.  Either way, we are likely to be out of the trade on Thursday or Friday.  If the company misses earnings and the stock gets hammered we will automatically close the trade, book the loss, and move on.

If we move higher, we will have to see what kind of momentum the stock has but we are playing with the November options which expire in two weeks. Either way, we got a nice pop yesterday but remember last time out there wasn’t that big of a move when the company announced earnings.  Technically, these options are only 77 cents in-the-money so you can see the premiums are a little inflated heading into earnings.

If Imax can get a head of steam and power its way to $12 then the calls will be worth $2.00-$2.50 at least which is where we would close the trade, regardless. 

 

Barrick Gold (ABX, $39.17, up $2.66)

November 40 calls (ABXKH, $1.36, up $0.89)

Entry Price:  $1.20 (11/3/09)
Exit Target: $2.00
Return: 13%
Stop: 90 cents

Action: Gold was hot on Tuesday and I wish we would have sent this one out a little earlier.  However, we wanted to confirm the push higher but we knew when we saw the volume that these options were going to take off.

We could get caught at short-term resistance which is right at $39-$40 but a break above those levels should clear the way for the stock to test its 52-week high of $42.  If not and we got caught in a trap then our stop will take us out of the trade with only a small loss.

 

Research in Motion (RIMM, $59.61, up $3.87)

November 55 puts (RFYWK, $0.80, down $1.25)

Entry Price:  $1.00 (10/30/09)
Exit Target: $2.00
Return: 140%
Stop: CLOSED (sold half @ $2.80 on 11/2, stopped out at $2 on 11/3)

Action:  We saw this coming before the opening bell and we nailed it when we said RIMM would run back up to $60 which represented resistance yesterday.  The stock traded as high as $60.14 and was in a strong uptrend after bulls came to the rescue.  However, once shares reached $60 they stalled and hopefully we stay right here for a few days.

We didn’t expect the quick drop to $55 on Monday but that is where our target was and you can see why you need to have targets and stops for every position going into a trade.  If you spend a lot time preparing for a trade; the last thing you want to do is give back your profits.

You have seen us time and time again sell into strength or close half positions and set stops.  We still think there is downward pressure on RIMM and these puts have a chance to rebound but we have already made the easy money.  We can take the 140% return and maybe roll them into some December put options.  But not yet.  We would like to see the stock test $60 all week and fail.

 

Garmin (GRMN, $31.41, up $0.95)

December 25 puts (GQRXE, $0.72, down $0.18)

Entry Price:  $0.75 (10/29/09)
Exit Target: $1.50+
Return: -4%
Stop:  50 cents, lower to 40 cents

Action:  The puts traded to a low of 66 cents and we were a little disappointed that the stock gained 3% in a crummy market.  However, our stop was not hit but the position is now slightly negative.  Also notice that the stop WAS only 33% off from the entry price but has been lowered.

We were not in any danger of getting stopped out but we want o give the trade a little room.  We were using the 50 cent stop because the options were over a $1.00 but the bulls are trying to hold the shares above $30.  These are December options and we have 45 days before they expire so we have plenty of time to see if this level holds.  This is why we lowered the stop a little and it is set a little below a 50% loss exit.

 

Apollo Group (APOL, $57.29, down $0.26)

November 55 puts (OAQWK, $1.60, flat)

Entry Price:  $1.00 (10/28/09)
Exit Target: $2.00
Return: 60%
Stop: $1.10

Action:  These put options traded to a low of $1.30 as shares of Apollo reached a high of $58.34 but rebounded to remain unchanged as the stock ended the day in the red.  The 52-week low is $55.35 and that is the area we are targeting.  A break below that and we could find some gold at the end of this rainbow…