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.

12:20pm (EST)

CBOE Holdings (CBOE, $24.48, down $0.36)

December 25 calls (CBOE101218C00025000, $0.85, down $0.05)

Entry Price:  $0.75 (11/8/10)

Exit Target: $2.40+

Return: 13%

Stop Target: None

Action:  The bid/ask is holding up well for these options.  Continue to hold.

 

Juniper Networks (JNPR, $34.28, down $0.27)

December 35 calls (JNPR101218C00035000, $1.10, down $0.15)

Entry Price:  $1.05 (11/8/10)

Exit Target: $2.10+

Return: 5%

Stop Target: None

Action:  Cisco dragged shares of Juniper down but Cisco seems to be having its own problems and it doesn’t appear market related.  We mentioned this morning Wall Street like Juni’s numbers and shares have held up well.  Continue to hold.

 

Darden Restaurants (DRI, $49.05, up $0.83)

December 49 calls (DRI101218C00049000, $1.60, up $0.30)

Entry Price:  $1.20 (11/8/10)

Exit Target: $2.40+

Return: 33%

Stop Target: 60 cents

Action:  We are looking for Darden to make a push above $50 over the next 6 weeks.

 

Aruba Networks (ARUN, $22.99, down $0.63)

January (2011) 25 calls (ARUN110122C00025000, $1.45, down $0.15)

Entry Price:  $1.20 (11/2/10)

Exit Target: $2.40+

Return: 21%

Stop Target: 90 cents

Action:  Continue to hold.


PowerShares QQQ (QQQQ, $53.23, down $0.49)

January 53 calls (QQQQ110122C00053000, $1.85, down $0.20) 

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: 20%

Stop Target: $1.50

Action:  Continue to hold. 

 

American Tower (AMT, $53.14, up $0.03) 

April (2011) 60 calls (AMT110416C00060000, $0.95, down $0.05)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return: 46%

Stop Target: None

Action:  Continue to hold.


Chesapeake Energy (CHK, $22.93, down $0.48)

January (2011) 25 calls (CHK110122C00025000, $0.60, down $0.10)

Entry Price:  $1.15 (10/13/10)

Exit Target: $2.30

Return: -48%

Stop Target: None

Action:  Continue to hold.     


Dendreon (DNDN, $36.70, up $1.87) (COVERED CALL)

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

Action:  Sell the December 40 call (DNDN101218C00040000, $1.75, up $0.10) at current prices and collect the premium. 

This now lowers the cost of the original position to $38.91.  If shares get called away at $40 in mid-December the return on the trade would be 3%.  Annualized we are looking at double-digit returns if we don’t get called away and shares hold up.

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.  We are looking to sell another call option but we may BUY longer-term call options if the stock trades down to $30 and holds.


TiVo (TIVO, $9.27, down $0.26)

November 12 calls (TIVO101120C00012000, $0.05, down $0.05)

Entry Price:  $0.50 (8/17/10)
Exit Target: $1.00+
Return: -90%
Stop Target: None

Action:  A few analysts are saying yesterday’s pullback is a buying opportunity and we would agree but we only have until next Friday for the shares to move up to $12.50 for us to breakeven on this trade.

We will need a big 30% move in the stock which seems unlikely.  We are moving this trade to the “hold” position and will no longer cover it unless we get a rebound.  After 3 months of waiting, it looks as though they might expire with no value.  However, keep an eye on this story and because these were cheap out-of-the-money options, we may be able to make up for it on our next go round with TiVo.


Other 2010 Portfolio OPEN positions (2):  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 (strangle trade from October) 

Biodel March 7.50 calls (from October) 


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. 

JC Penney (JCP, $32.39, down $0.28)

November 35 calls (JCP101120C00035000, $0.31, up $0.04)

November 30 puts (JCP101120P00030000, $0.25, up $0.03)

Action:  We think shares of JCP are going to move at least 10% and if they do, this trade should do well.  We are a little hesitant to pull the trigger on this one but our gut is telling us there will be a positive return with this strangle trade.  The company reports in the morning.


JDS Uniphase (JDSU, $11.49, down $0.28)

March 13 calls (JDSU110319C00013000, $0.70, down $0.13)

Action:  We have played JDSU once this year and we didn’t have much luck with it.  However, shares are cheap and the company is turning itself around.  Watch for now. 


3M Company (MMM, $85.53, down $0.72)

December 90 calls (MMM101218C00090000, $0.50, down $0.10)

April 95 call (MMM110416C00095000, $1.15, down $0.15) 

Action:  Continue to watch. 


BMC Software (BMC, $45.49, down $0.52)

December 50 calls (BMC101218C00050000, $0.75, down $0.15)

Action:  BMC continues to be a rumored buyout target.  


Riverbed Technology (RVBD, $29.01, down $0.64)

December 35 calls (RVBD101120C00060000, $0.40, down $0.10)

Action:  Watch for now.