November 2009 | Members


9:10am (EST)

Hewlett-Packard (HPQ, $51.02, up $0.98)

December 55 calls (HPQLK, $0.31, up $0.15)

Entry Price:  $0.24 (11/23/09)
Exit Target: $0.50

Return: 29%

Stop Limit:  None

Action:  This was a “cheap” option trade because you could have picked up 20 contracts for under $500 yesterday.  Nearly 20,000 contracts traded hands and we said this might be an “all-or-nothing” trade. 

That doesn’t appear to be the case.  The stock held up well in after-hours trading and looks like it will only open slightly lower.  These options still have plenty of time before they expire so we will continue to hold them.


Microsoft (MSFT, $29.94, up $0.34) 

December 30 calls (MSQLF, $0.65, up $0.07) 

Entry Price:  $0.65 (11/16/09)
Exit Target: $1.30
Return: 0%

Stop Limit:  30 cents 

Action:  Microsoft keeps teasing us with the pops to $30 but we can’t seem to get enough momentum for a bigger push.  We are only looking for the stock to run to $31-$32 which would make this trade a double.

Netflix (NFLX, $60.38, up $0.41)

December 65 calls (QNQLM, $0.75, down $0.05)

Entry Price:  $0.80 (11/13/09)
Exit Target: $1.60+
Return: -13%
Stop Limit:  NO STOP

2010 June 80 calls (QNQFP, $2.05, up $0.10)

Entry Price:  $1.65 (11/13/09)
Exit Target: $3.30++
Return: 24%

Stop Limit: NO STOP

Action:  Continue to hold. 

Dendreon (DNDN, $27.54, down $0.47)

2010 January 35 calls (UQBAT, $0.55, down $0.25)

Entry Price: $2.15 (10/15/09)
Exit Target: $5.00  
Return: -74%

Stop Limit: NO STOP

Action:  For those of you just joining us, this trade was profiled back on October 15th.  When we first profiled the trade the stop was approaching its 52-week high of $30.42.  Shares fell to a low of $25 two weeks later and we dropped coverage of the trade as we have already accounted for it as a loss in our portfolio.

Since it was an open trade we started coverage again a couple of weeks ago when the options came back and the position was down less than 50%.  The stock tested $30 for much of last week but it appears we could be falling back down to the lower end of the trading range.  

We doubt shares fall back to $25 but they could.  The “double top” is still $30.42 which is where we may see some explosive action.  However, until then we will have to live with what we got.  If you don’t feel like waiting this one out and want to cut your losses then do so.  

Since we have already accounted for the trade being a loss we are going to drop coverage until something else develops.  The FDA ruling is still six months away but we are hoping a buyout offer comes in by January 2010.  The trade will still be listed in our portfolio…