November 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.

 

12:15pm (EST)

PowerShares QQQ (QQQQ, $52.27, up $0.09)

January 53 calls (QQQQ110122C00053000, $1.75, up $0.10)

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: 14%

Stop Target: 75 cents, raise to $1.00

Action:  We raised the stop target a little and we were going to make it at our entry price but the volatility could whipsaw us a little.  We are expecting the QQQ’s to push $55-$56 by the end of the year which would be a double on anything over $56.  Continue to hold. 

 

American Tower (AMT, $51.63, up $0.02) 

April (2011) 60 calls (AMT110416C00060000, $0.80, down $0.05)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return: 23%

Stop Target: None

Action:  American Tower is off to a slow start after started the session slightly higher.  The 52-week high is $52.34 and we would like to see a close above this level by today or tomorrow.  Continue to hold.     


Biodel (BIOD, $1.98, down $1.65) (Strangle Trade)

November 7.50 calls (BIOD101120C00007500, $0.05, down $0.40) 

Entry Price:  $0.60 (10/18/10)

Exit Target: $1.20+

Return: -92%

Stop Target: None


November 2.50 puts (BIOD101120P00002500, $0.55, up $0.05)

Entry Price:  $0.50 (10/18/10)

Exit Target: $1.00 (CLOSED at 80 cents on 11/1/10)

Return: 60%

Stop Target: None


March (2011) 7.50 calls (BIOD110319C00007500, $0.10, down $0.60) 

Entry Price:  $1.10 (10/18/10)

Exit Target: $2.20+

Return: -91%

Stop Target: None  

Action:  We said to close the puts into strength this morning so you should have gotten 75-80 cents for them. 

We knew going into this trade that we had a 30/70 chance of the FDA granting Linjeta approval because of the data.  The upside for this drug is HUGE but it got denied because of “insufficient clinical data”.

When it comes to making the FDA happy, Biotech companies need to dot their “i’s” and cross their “t’s” and Biodel failed to do so.  The good news is that we are 90% certain the drug gets approval but it may take 6-12 months (or longer) to run another Phase 3 trial.  This is why we said buying half positions of the stock was a safer play.  If you did so, you can probably build the other half of the position here under $2.  Again, it may take a couple of years but this stock should be at double-digits once Linjeta hits the market. 

Close the November calls if you can get a bid and we will hold the March calls in case Biodel becomes an acquisition target now that it got a haircut.  The March calls have 137 days before expiration.


Juniper Networks (JNPR, $32.36, down $0.19)

November 33 calls (JNPR101120C00033000, $0.70, flat)

Entry Price:  $1.19 (10/13/10)

Exit Target: $2.00+

Return: -41%

Stop Target: None

Action:  The 52-week high is $32.84 and we need the stock to be at $34.19 by expiration to break even on the trade if we hold until expiration.  We are looking for shares to make a run to $35+.    


Brocade Communications Systems (BRCD, $6.45, up $0.10)

January (2011) 6 calls (BRCD110122C00006000, $0.85, up $0.10)

Entry Price:  $0.40 (10/13/10)

Exit Target: $1.00+

Return: 113%

Stop Target: 60 cents (HARD STOP)


April (2011) 6 calls (BRCD110416C00006000, $1.00, up $0.10)

Entry Price:  $0.60 (10/13/10)

Exit Target: $1.20+

Return: 67%

Stop Target: 70 cents (HARD STOP)

Action:  USE HARD STOPS TO LOCK IN PROFITS!

We want to lock up some gains in case the market slides over the next few days but we don’t want to close this trade because of the momentum it is showing.  Continue to hold.


Chesapeake Energy (CHK, $22.10, up $0.42)

January (2011) 25 calls (CHK110122C00025000, $0.45, up $0.10)

Entry Price:  $1.15 (10/13/10)

Exit Target: $2.30

Return: -61%

Stop Target: None

Action:  Continue to hold.      


Dendreon (DNDN, $36.89, up $0.39) (COVERED CALL)

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

Action:  Dendreon announces earnings this week so we may get some price movement.  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, $11.25, up $0.10)

November 12 calls (TIVO101120C00012000, $0.45, flat)

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

Action:  Big news coming by 11/9.  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.


Halliburton (HAL, $32.40, up $0.54)

November 30 puts (HAL101120P00030000, $0.70, down $0.15)

Action:  Halliburton upgraded the stock and the November options expire in 18 days so we will have to wait for a later date to short Halliburton.  There is still too much uncertainty surrounding this name to go long.    

 

3M Company (MMM, $85.11, up $0.89)

April 95 call (MMM110416C00095000, $1.30, up $0.15)

Action:  Shares fell $6 after the company announced earnings and we knew a bounce would be coming.  We were trying to get into these options for under a buck but may not get the opportinity.


Dish Network (DISH, $20.30, up $0.43)

November 19 puts (101120P00019000, $0.35, down $0.20) 

Action:  Dish may have to pay TiVo up to $2 billion on a litigation settlement.  Watch for now.


BMC Software (BMC, $45.53, up $0.07)

November 50 calls (BMC101120C00050000, $0.40, flat)

Action:  We may look at some December options if we decide to go long on this name.   


Riverbed Technology (RVBD, $56.78, down $0.81)

November 60 calls (RVBD101120C00060000, $1.15, down $0.55)

Action:  We are trying to get into some longer-term options on this trade and we may wait until after the stock split. Shares are acting exactly how we thought they would so we should drift lower to fill in some gaps before powering higher.


Aruba Networks (ARUN, $21.80, down $0.13)

December 22 calls (ARUN101218C00022000, $1.70, flat)

April 30 calls (ARUN110416C00030000, $0.80, down $0.05)

Action:  This is our favorite trade right now besides Riverbed that we might be taking action on over the next day or two.  We did a big write-up last night in our Weekly Wrap for those of you who may have missed it.  Watch for now. 

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