October 2010 | Members

 

Please remember, ALL “Exit Targets” and “Stop Targets” are targets.  You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless we list one.  We will send out an “Alert” or “Trade Update” if we want you to close a position OR if a new trade comes out.  Otherwise, follow instructions at all times in the 9am and 1pm updates.  Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames but it is rare that we do.

1:00pm (EST)

American Tower (AMT, $50.65, down $0.16) 

April (2011) 60 calls (AMT110416C00060000, $0.65, flat) 

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return: 0%

Stop Target: None

Action:  Continue to hold.     


Biodel (BIOD, $3.87, up $0.04) (Strangle Trade)

November 7.50 calls (BIOD101120C00007500, $0.80, flat)

Entry Price:  $0.60 (10/18/10)

Exit Target: $1.20+

Return: 33%

Stop Target: None


November 2.50 puts (BIOD101120P00002500, $0.70, flat)

Entry Price:  $0.50 (10/18/10)

Exit Target: $1.00

Return: 40%

Stop Target: None


March (2011) 7.50 calls (BIOD110319C00007500, $1.10, flat) 

Entry Price:  $1.10 (10/18/10)

Exit Target: $2.20+

Return: 0%

Stop Target: None  

Action:  From this morning:

“The March call options traded over 5,000 contracts yesterday and we could get news any day on the company’s fast-acting insulin drug, Linjeta, for diabetics.  If we had to give an approval rate, we would go with 30/70 because we think the company may have to do additional Phase 3 trials because of the mishandling on a trial that was conducted in India.  However, the facts are too hard to ignore that this drug works.

Still, the FDA has been slamming the door on a number of other promising drugs in recent weeks, which is the negative, but an approval because of the strong data would sent shares soaring past $10, easily.

This drug WILL eventually get approved, so if shares sink to $2 then we might even establish a stock position.  This is why we say buying the stock is less risky than buying the options because the options will expire at some point.

We also think if the FDA rejects Linjeta, shares could fall as low as $1.50 which would get the put option to $1+.  We are still hoping we can close one of the call options as the implied volatility picks up before an announcement to lower our risk so stay locked and loaded in case we send out an alert.

Our normal press times are at 9am and 1pm, EST, but sometimes we will send out an alert in between or after those times if action is needed.  Just a heads-up for our new Members.”  


Juniper Networks (JNPR, $31.90, down $0.12)

November 33 calls (JNPR101120C00033000, $0.45, down $0.13)

Entry Price:  $1.19 (10/13/10)

Exit Target: $2.00+

Return: -62%

Stop Target: None

Action:  The 52-week high is $32.84 and a break above this level could carry shares to $35 which would get these options to $2+.  We have 24 days before they expire.  Continue to hold.


Brocade Communications Systems (BRCD, $5.87, down $0.01)

January (2011) 6 calls (BRCD110122C00006000, $0.43, flat)

Entry Price:  $0.40 (10/13/10)

Exit Target: $1.00+

Return: 8%

Stop Target: None


April (2011) 6 calls (BRCD110416C00006000, $0.60, flat)

Entry Price:  $0.60 (10/13/10)

Exit Target: $1.20+

Return: 0%

Stop Target: None

Action:  The January calls have 87 days before expiration while the April calls have 171 days.  Continue to hold.


Chesapeake Energy (CHK, $21.04, down $0.12)

January (2011) 25 calls (CHK110122C00025000, $0.30, flat)

Entry Price:  $1.15 (10/13/10)

Exit Target: $2.30

Return: -74%

Stop Target: None

Action:  Continue to hold.      


Dendreon (DNDN, $36.95, down $0.08) (COVERED CALL)

Entry Price:  $41.96 (9/13/10) sold October 45call @ $1.30
Exit Target: $45
Return: -9%
Stop Target: None

Action:  We are watching the January calls but want shares to move past $40 before we sell another covered call.

Dendreon opened at $41.96 and you could have sold the October 45 call option for $1.30 on 9/13/10.  This lowered the cost basis to $40.66. 


TiVo (TIVO, $11.08, up $0.22)

November 12 calls (TIVO101120C00012000, $0.50, up $0.05)

Entry Price:  $0.50 (8/17/10)
Exit Target: $1.00+
Return: 0%
Stop Target: None

Action:  We will do full write-up tonight on TiVo and after two months we are even.  This trade has taken awhile but the story never changed.  For those of you who have gotten in at lower prices, many of you are approaching a double.  Continue to hold.


Other 2010 Portfolio OPEN positions (1):  These are trades that are still open in the portfolio that have longer expiration dates or are on “hold” but are not worth mentioning until they turn around.  We are still keeping track of the trade and we will record the results, accordingly, when we close them or the options expire.  Click on the 2010 Portfolio link in the Members Area to view ALL open/ closed trades. 

Intel November 18 puts (from October) (Strangle Trade, call options closed for 42% profit)


WATCH LIST SECTION 

These trades are NOT recommendations until we send out an alert.  These are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices.  We will not list entry prices because these stocks are on the verge of breaking out or they could sell-off.


Deckers Outdoor (DECK, $54.18, up $0.32)

November 60 calls (DECK101120C00060000, $1.00, up $0.10)

Action:  If had to pick one earnings trade this week, this would be it.  The 52-week high is $56.17 and these options opened at 60 cents yesterday.  We don’t want to chase here as we may have already missed our opportunity but we will watch for now.


BMC Software (BMC, $44.00, down $0.20)

November 50 calls (BMC101120C00050000, $0.70, down $0.10)

Action:  This is another stock that is making the water-cooler talk as a takeover candidate.  If they can come in with a good quarter on Thursday then the chatter could get louder.  


Riverbed Technology (RVBD, $57.32, up $1.44)

November 60 calls (RVBD101120C00060000, $1.65, up $0.40)

Action:  From this morning:

“We were watching this stock yesterday and have been following the company after reading about their earnings.  They recently be the Street by 7 cents while revenue for the quarter was nearly $150 million, versus estimates of $135 million.  The company also announced a 2-for-1 stock split, which takes effect next week.  There is usually a nice little run before the split so watch these calls this week.  If they get under $1, we may take a shot.”


Aruba Networks (ARUN, $20.43, up $0.15)

December 22 calls (ARUN101218C00022000, $0.90, flat)

April 30 calls (ARUN110416C00030000, $0.45, flat)

Action:  We may jump on the April calls on Wednesday.  From the 9am update:

“Shares of Aruba have been in a strong uptrend and we like the chart.  We would love to see a test back to $18 which is string support but we said If shares can hold $20, we might get in.  We have also listed the April calls which have the potential to explode and have 6 months before they expire.  The company announces earnings on 11/18.”

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