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.

12:45pm (EST)

PowerShares QQQ (QQQQ, $51.78, down $0.25)

January 53 calls (QQQQ110122C00053000, $1.52, down $0.03)

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: -1%

Stop Target: 75 cents

Action:  Everyone should be in this trade for $1.55 or less.  The calls have dipped to a low of $1.44 so some of you may have gotten better prices.  Our target is $3 for the calls with a stop of 75 cents.

 

American Tower (AMT, $50.35, down $0.39) 

April (2011) 60 calls (AMT110416C00060000, $0.55, down $0.10) 

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return: -15%

Stop Target: None

Action:  The company announces earnings next Monday.  Continue to hold.     


Biodel (BIOD, $3.55, down $0.20) (Strangle Trade)

November 7.50 calls (BIOD101120C00007500, $0.60, down $0.10) 

Entry Price:  $0.60 (10/18/10)

Exit Target: $1.20+

Return: 0%

Stop Target: None


November 2.50 puts (BIOD101120P00002500, $0.75, up $0.05)

Entry Price:  $0.50 (10/18/10)

Exit Target: $1.00

Return: 50%

Stop Target: None


March (2011) 7.50 calls (BIOD110319C00007500, $0.90, down $0.10) 

Entry Price:  $1.10 (10/18/10)

Exit Target: $2.20+

Return: -18%

Stop Target: None  

Action:  We should get news by Friday on this trade.  Continue to hold. 


Juniper Networks (JNPR, $31.90, down $0.48)

November 33 calls (JNPR101120C00033000, $0.55, down $0.15)

Entry Price:  $1.19 (10/13/10)

Exit Target: $2.00+

Return: -54%

Stop Target: None

Action:  Continue to hold.


Brocade Communications Systems (BRCD, $6.17, up $0.28)

January (2011) 6 calls (BRCD110122C00006000, $0.60, up $0.17)

Entry Price:  $0.40 (10/13/10)

Exit Target: $1.00+

Return: 50%

Stop Target: None


April (2011) 6 calls (BRCD110416C00006000, $0.80, up $0.18)

Entry Price:  $0.60 (10/13/10)

Exit Target: $1.20+

Return: 33%

Stop Target: None

Action:  Shares are up nearly 5% today and above $6.  The January calls have 86 days before expiration while the April calls have 170 days.  We are looking for shares to trade to $10+ on a buyout or turnaround story.  Continue to hold.


Chesapeake Energy (CHK, $21.17, down $0.09)

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, $36.89, down $0.14) (COVERED CALL)

Entry Price:  $41.96 (9/13/10) sold October 45 call @ $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, $11.38, up $0.26)

November 12 calls (TIVO101120C00012000, $0.55, up $0.05)

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

Action:  From this morning:

“Circle 11/9 on your calendars.  That is when we are expecting to hear some patent litigation news between Dish Network (DISH, $19.75, up $0.26) and TiVo.  The U.S. Patent and Trademark Office recently backed the validity of TiVo’ “Time Warp” patent, which was a huge win and helped TiVo’s position.  In fact, we think Dish has lost all of its leverage power and should have settled sooner.  We have been following this dispute for years and initially had TiVo winning $500 million in damages but there are whispers Dish may have to pay TiVo more than $2 billion as part of a settlement.

This type of verdict would be a windfall for TiVo which is slowly reinventing itself.  The firm remains a likely takeover candidate (Apple or Google) and the 52-week high is $18.93.  We doubt shares jump that much on a settlement, but they could.  A more reasonable pop would be north of $15 which would make these call options worth at least $3.”

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, $54.07, down $1.66)

November 60 calls (DECK101120C00060000, $1.25, down $0.25)

Action:  We said yesterday ff had to pick one earnings trade this week, this would be it.  The calls opened at 90 cents and traded to a low of 75 cents before ending with a 65% pop.  The 52-week high is $56.17 and these options opened at 60 cents on Monday.  


Dish Network (DISH, $19.36, down $0.39)

November 19 puts (101120P00019000, $0.65, up $0.10)

Action:  Good news for TiVo means bad news for Dish.  If the company doesn’t settle, they could lose a lot of subscribers if there is an injunction.  If shares are under $20 by the time the news comes out then there is a chance the stock corrects 10%.  This would knock the stock down to $18 and the puts would be worth at least $1, or a double from current levels.


Genworth Financial (GNW, $13.19, down $0.25)

November 14 calls (GNW101120C00014000, $0.40, down $0.10)

November 13 puts (GNW101120P00013000, $0.50, up $0.10)

Action:  The puts opened at 54 cents while the calls started at 35 cents.  


BMC Software (BMC, $43.63, down $0.55)

November 50 calls (BMC101120C00050000, $0.60, 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, $57.78, up $0.57)

November 60 calls (RVBD101120C00060000, $1.85, up $0.20)

Action:  These calls opened at 95 cents yesterday and have traded as high as $1.84 today.  If you are a course member, check pages 96-101 in your option manual, How to trade options on momentum Stocks”.  Here is your gift-wrapped double for those of you who have purchased the course and applied our homework.


Aruba Networks (ARUN, $21.14, up $0.90)

December 22 calls (ARUN101218C00022000, $1.30, up $0.40)

April 30 calls (ARUN110416C00030000, $0.65, up $0.20)

Action:  We are really starting to love this trade.  Shares of Aruba have been in a strong uptrend.  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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10:15am (EST)

PowerShares QQQ (QQQQ, $52.02, down $0.01)

Buy to OPEN January 53 calls (QQQQ110122C00053000, $1.54, down $0.01)

Action:  The bid/ask is only a penny so use limit orders to get in at current prices.  We are looking for the Nasdaq to break through 2,500 and challenge 2,600+ by year-end.  These options have 86 days before they expire and we are expecting the Q’s to run to $55-$56 which is an easy double on these options at current levels.

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9:00am (EST)

American Tower (AMT, $50.84, up $0.03) 

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, $3.75, down $0.08) (Strangle Trade)

November 7.50 calls (BIOD101120C00007500, $0.70, down $0.10) 

Entry Price:  $0.60 (10/18/10)

Exit Target: $1.20+

Return: 17%

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, $1.00, down $0.10) 

Entry Price:  $1.10 (10/18/10)

Exit Target: $2.20+

Return: -9%

Stop Target: None  

Action:  Continue to hold. 


Juniper Networks (JNPR, $32.38, up $0.36)

November 33 calls (JNPR101120C00033000, $0.70, up $0.12)

Entry Price:  $1.19 (10/13/10)

Exit Target: $2.00+

Return: -41%

Stop Target: None

Action:  The calls traded to a low of 42 cents yesterday before rebounding to finish higher for the day.  Shares went out a penny below their high and the 52-week high is $32.84.  A break above this level could carry shares to $35 which would get these options to $2+.  We have 23 days before the options expire.  Continue to hold.


Brocade Communications Systems (BRCD, $5.89, up $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, $0.62, up $0.02)

Entry Price:  $0.60 (10/13/10)

Exit Target: $1.20+

Return: 3%

Stop Target: None

Action:  The January calls have 86 days before expiration while the April calls have 170 days.  Continue to hold.


Chesapeake Energy (CHK, $21.26, up $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, $37.03, flat) (COVERED CALL)

Entry Price:  $41.96 (9/13/10) sold October 45 call @ $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, $11.12, up $0.26)

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:  Circle 11/9 on your calendars.  That is when we are expecting to hear some patent litigation news between Dish Network (DISH, $19.75, up $0.26) and TiVo.  The U.S. Patent and Trademark Office recently backed the validity of TiVo’ “Time Warp” patent, which was a huge win and helped TiVo’s position.  In fact, we think Dish has lost all of its leverage power and should have settled sooner.  We have been following this dispute for years and initially had TiVo winning $500 million in damages but there are whispers Dish may have to pay TiVo more than $2 billion as part of a settlement.

This type of verdict would be a windfall for TiVo which is slowly reinventing itself.  The firm remains a likely takeover candidate (Apple or Google) and the 52-week high is $18.93.  We doubt shares jump that much on a settlement, but they could.  A more reasonable pop would be north of $15 which would make these call options worth at least $3.

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, $55.73, up $1.87)

November 60 calls (DECK101120C00060000, $1.50, up $0.50)

Action:  We said yesterday ff had to pick one earnings trade this week, this would be it.  The calls opened at 90 cents and traded to a low of 75 cents before ending with a 65% pop.  The 52-week high is $56.17 and these options opened at 60 cents on Monday.  


Dish Network (DISH, $19.75, up $0.26)

November 19 puts (101120P00019000, $0.55, down $0.05)

Action:  Good news for TiVo means bad news for Dish.  If the company doesn’t settle, they could lose a lot of subscribers if there is an injunction.  If shares are under $20 by the time the news comes out then there is a chance the stock corrects 10%.  This would knock the stock down to $18 and the puts would be worth at least $1, or a double from current levels.


Genworth Financial (GNW, $13.44, down $0.07)

November 14 calls (GNW101120C00014000, $0.40, down $0.10)

November 13 puts (GNW101120P00013000, $0.50, up $0.10)

Action:  We like this strangle trade as both options can be picked up for under a buck.  We think shares could move 15% on their earnings announcement on Thursday which could this trade 50% no matter which way the stock moves.  The breakeven point would be if shares are at $15 or $12 after the announcement.


BMC Software (BMC, $44.18, down $0.02)

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, $57.31, up $1.33)

November 60 calls (RVBD101120C00060000, $1.60, up $0.35)

Action:  These calls opened at 95 cents and we mentioned a pre-stock split run could be in the cards.  Riverbed announced a 2-for-1 split and we cover how stock splits can be played in our option trading manual, How to Trade Options on Momentum Stocks, before the split and after the official date.


Aruba Networks (ARUN, $20.24, down $0.04)

December 22 calls (ARUN101218C00022000, $0.90, flat)

April 30 calls (ARUN110416C00030000, $0.45, flat)

Action:  Shares of Aruba have been in a strong uptrend.  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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