November 2009 | Members



12:15pm (EST)


Netflix (NFLX, $58.47, up $0.28)

#1 Buy to OPEN NFLX December 65 calls (QNQLM, $0.80, up $0.05)

The current “bid” is 75 cents, the “ask” is 85 cents.  Use limit orders of 80 cents and you should get filled.  You can go up to 90-95 cents if action picks up.

#2 Buy to OPEN NFLX June 80 calls (QNQFP, $1.50)

The current “bid” is $1.60, the “ask” is $1.70.  Use limit orders of $1.65 and you should get filled.  You can go up to $1.80 if needed.

We think $60 is a given… 


9:15am (EST)

Netflix (NFLX, $58.19, down $1.25) is a company we are watching now because it has the look and feel of a stock that wants to go to $100.  Right now it’s at 52-week highs and we are waiting for a break above $60.  Nice round number huh?  Well, the exact 52-week high is $59.89 and a break above $60 could lead to more momentum.

For high risk traders, you could play the November calls for a day trade or longer but realize these options expire next Friday.  The safer play would be to look at the December calls.  If Netflix does break $60 then we may send out an alert based on market conditions.

One interesting thing and here is where our new trade comes into play. 

If Netflix could manage to make a run to $100 by June 2010 then we will do very well with this trade.  The big reason we think the stock could go to $100 by next summer is due the serious sense it makes for someone to buy them. 

Microsoft (MSFT, $29.36, up $24) already has a partnership with Netflix and would be the most logical choice.  Combining the xBox with Netflix’s Roku box seems like a match made in internet heaven. 

You want to know why Blockbuster (BBI, $0.83, up $0.02) is closing shops faster than a beach bar going into winter?  If you have a Netflix mailing plan you can get unlimited streaming of 50,000 movie and TV shows by getting this Roku box.  Just go to your computer, find the movie/show you want and enjoy it as soon as you get to the couch. 

Come to think of it, Apple (AAPL, $201.99, down $1.26) would make a good fit too.  Either way, even without a buyout offer, Netflix could have the muscle to make it to $100 in 8 months on its own.

We would love to see the stock come back down to $55-$56 which is where short-term support lies but we will also be watching for the break above $60.

So let’s try this… 

NEW TRADE!!!  2 possible trades, read carefully…

Netflix (NFLX, $58.19, down $1.25)

#1 Buy to OPEN NFLX June 80 calls (QNQFP, $1.50)

Action:  Set limit prices at $1.20 today and see if you get filled.  Remember we are hoping for the stock to fall back to $55-$56 and if it does, we could get filled at these prices. 

We are trying to get them cheaper so DO NOT buy them at the market price and DO NOT buy them at the open.  Set a limit price of $1.20, firm.  If we get filled today, great.  If not, no big deal. 

On Monday, we may try again.  

IMPORTANT!  If the stock breaks above $60, you can pull the trigger on these calls options at the market price. 

Also, if Netflix breaks $60 today:

#2 Buy to OPEN NFLX December 65 calls (QNQLM, $0.75)

These calls will be over $1 if NFLX breaks $60 and my best guess is they would be in the $1.20-$1.30 range.  I can’t give you an EXACT price on where these options will be because of volatility or market conditions but there are some tools that can give us a pretty good idea (which is explained in the trading manual).  If this range is 10 cents or so off then it won’t matter because we always target a double for all of our trades.  

To sum it up, if Neflix breaks $60 we will be in both trades.  If the stock doesn’t then we may or may not be in the June 2010 call options.  That would depend if the limit price of $1.20 is hit.   


Apollo Group (APOL, $54.54, down $0.16)

December 50 puts (OAQXJ, $1.85, up $0.10)

Entry Price:  $1.45 (11/5/09)
Exit Target: $2.90
Return: 28%
Stop Limit:  $1.00

Action:  Steady Eddie.  Continue to hold. 

Dendreon (DNDN, $28.67, down $0.96)

January 35 calls (UQBAT, $1.35, down $0.15)

Entry Price: $2.15 (10/15/09)
Exit Target: $5.00  
Return: -37%
Stop Limit: None

Action:  The stock lost a little luster after a rather dull third-quarter earnings report.  The big news we got out of the company’s conference call is that Provenge’s estimated FDA approval decision date will be April 30, 2010.