December 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)

FedEx (FDX, $94.84, up $3.72)

January 100 calls (FDX110122C00100000, $1.95, up $0.85)

Entry Price:  $1.25 (11/30/10)

Exit Target: $2.00-$2.50

Return: 56%

Stop Target: 60 cents

Action:  Continue to hold.

 

Foster Wheeler (FWLT, $29.41, up $1.41)

January 30 calls (FWLT110122C00030000, $1.45, up $0.50)

Entry Price:  $1.00 (11/30/10)

Exit Target: $2.00+

Return: 45%

Stop Target: None

Action:  The January options have 51 days before expiration.  There is strong resistance at $30 but a break above it will easily get shares to $32.  There is a chance shares can break the 52-week high of $35 if we get a run past $32 but let’s focus on $30, first.

 

Electronic Arts (ERTS, $15.14, up $0.23)

March 20 calls (ERTS110319C00020000, $0.24, up $0.02)

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: 9%

Stop Target: None

Action:  The March options have 107 days before they expire.  Continue to hold.


JDS Uniphase (JDSU, $12.22, up $0.35)

March 12 calls (JDSU110319C00012000, $1.30, up $0.10)

Entry Price:  $1.25 (11/19/10)

Exit Target: $2.50

Return:  4%

Stop Target: 60 cents

Action:  The 52-week high is $13.95 and we have nearly 4 months to wait for a run to $15.  Continue to hold.


Juniper Networks (JNPR, $34.93, up $0.91)

January 35 calls (JNPR110122C00035000, $1.75, up $0.35)

Entry Price:  $1.30 (11/17/10)

Exit Target: $2.60

Return: 35%

Stop Target: $1.00 

Action:  We are looking for shares to rebound back towards $36, and if cleared, should pave the way for a run to $40.  Continue to hold.


Riverbed Technology (RVBD, $34.42, up $0.49)

March 35 calls (RVBD110319C00035000, $4.00, up $0.40)

Entry Price:  $1.40 (11/17/10)

Exit Target: $2.80 (closed half @ $3.00 on 11/23/10)

Return: 150%

Stop Target:  $2.70 (HARD STOP on other half) 

Action:  Continue to hold.


CBOE Holdings (CBOE, $24.00, up $0.31)

December 25 calls (CBOE101218C00025000, $0.40, up $0.05) 

Entry Price:  $0.75 (11/8/10)

Exit Target: $2.40+

Return: -47%

Stop Target: None

Action:  Continue to hold.


Darden Restaurants (DRI, $49.93, up $0.98)

December 49 calls (DRI101218C00049000, $1.75, up $0.50) 

Entry Price:  $1.20 (11/8/10)

Exit Target: $2.40+ (closed half @ $1.80 on 12/1/10)

Return: 50%

Stop Target: $1.25

Action:  We closed half shortly after the market.  Shares have traded to a high of $50.24.  Continue to hold the other half.


Aruba Networks (ARUN, $22.93, up $1.69)

January 25 calls (ARUN110122C00025000, $1.05, up $0.45)

Entry Price:  $1.20 (11/2/10)

Exit Target: $2.40+

Return: -13%

Stop Target:  Close the trade is shares fall below $20.

Action:  Aruba has come back strong today.  Continue to hold.


PowerShares QQQ (QQQQ, $53.34, up $1.26)

January 53 calls (QQQQ110122C00053000, $1.70, up $0.45)

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: 10%

Stop Target: 75 cents

Action:  We think the Q’s can rally to $55+.  Continue to hold.


American Tower (AMT, $51.10, up $0.53)

April (2011) 60 calls (AMT110416C00060000, $0.60, up $0.05)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -8%

Stop Target: None

Action:  Continue to hold.


Dendreon (DNDN, $37.32, up $1.74) (COVERED CALL)

December 40 call (DNDN101218C00040000, $0.25, up $0.08)

Entry Price:  $41.96 (9/13/10) sold October 45 call @ $1.30, (11/11/10) sold December call @$1.75

Exit Target: $45

Return: -4%

Stop Target: None

Action:  Shares got an upgrade this morning, imagine that.  We said this morning Dendreon seems to bounce off the $35-$36 level and makes a run up to $40 before fading. 

The chart clearly shows the tight range we have been in since August which is exactly what we like to see when doing covered call trades.  The longer shares stay in this range, the bigger the breakout (or breakdown) will be.  We think Dendreon can hit $60 in 2011 as they get their manufacturing plants up to full speed.

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.

On 11/11/10 we sold the December 40 call option for $1.75 which lowered our cost basis to $38.91.  If the stock gets “called away” from us by mid-December then we make 3% in 3 months.


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.   

Biodel March 7.50 calls (from October)

Chesapeake Energy January 25 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.

We will update this section in the morning.

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10:05am (EST)

Darden Restaurants (DRI, $50.00, up $1.05)

December 49 calls (DRI101218C00049000, $1.80, up $0.55) 

Entry Price:  $1.20 (11/8/10)

Exit Target: $2.40+

Return: 50%

Stop Target: $1.25

Action:  Darden has hit $50 which is a 52-week high.  We think there is more room to run but let’s close HALF of the trade at current levels.  These are December options so we want to close on strength.  Continue to hold the other half.

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8:45am (EST)

FedEx (FDX, $91.12, down $0.47)

January 100 calls (FDX110122C00100000, $1.10, up $0.10)

Entry Price:  $1.25 (11/30/10)

Exit Target: $2.00-$2.50

Return: -12%

Stop Target: 60 cents

Action:  We are calling for $100 by Christmas for shares of FedEx and if we get there these options should be at a double.   

 

Foster Wheeler (FWLT, $28.00, down $1.11)

January 30 calls (FWLT110122C00030000, $0.95, down $0.40)

Entry Price:  $1.00 (11/30/10)

Exit Target: $2.00+

Return: -5%

Stop Target: None

Action:  There is strong resistance at $30 but a break above it will easily get shares to $32.  There is a chance shares can break the 52-week high of $35 if we get a run past $32 but let’s focus on $30, first.

 

Electronic Arts (ERTS, $14.91, down $0.10)

March 20 calls (ERTS110319C00020000, $0.22, down $0.01)

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: 0%

Stop Target: None

Action:  The company’s CEO was in a talking mood yesterday and we happened to hear some comments in an interview.  We loved what we were hearing as EA is starting to figure it out.  After a couple of years of being stuck in a rut, the company has shifted its focus to online gaming which is the next wave coming.  EA wants gaming to be everywhere and the latest technology gadgets are helping pump new blood back into their veins. 

EA is also on the hunt for acquisition targets but remains one itself. 


JDS Uniphase (JDSU, $11.87, down $0.21)

March 12 calls (JDSU110319C00012000, $1.10, down $0.15)

Entry Price:  $1.25 (11/19/10)

Exit Target: $2.50

Return:  -12%

Stop Target: 60 cents

Action:  The 52-week high is $13.95 and we have nearly 4 months to wait for a run to $15.  Continue to hold.


Juniper Networks (JNPR, $34.02, up $0.08)

January 35 calls (JNPR110122C00035000, $1.40, up $0.05)

Entry Price:  $1.30 (11/17/10)

Exit Target: $2.60

Return: 8%

Stop Target: $1.00 

Action:  We are looking for shares to rebound back towards $36, and if cleared, should pave the way for a run to $40.  Continue to hold.


Riverbed Technology (RVBD, $33.93, down $0.29)

March 35 calls (RVBD110319C00035000, $3.60, down $0.10)

Entry Price:  $1.40 (11/17/10)

Exit Target: $2.80 (closed half @ $3.00 on 11/23/10)

Return: 136%

Stop Target:  $2.50, raise to $2.70 (HARD STOP) 

Action:  We recommended closing half of the trade shortly before Thanksgiving and we have placed a HARD STOP on the other half.  Hopefully, the new stop target never gets hit and we enjoy further gains on this trade, but if not, we are protected.  The hard stop represents a little over a 100% return if it is hit which could happen on a drop below $33.  However, we think shares continue higher from here and we will raise the stop along the way.  Continue to hold.


CBOE Holdings (CBOE, $23.79, up $0.16)

December 25 calls (CBOE101218C00025000, $0.35, up $0.05) 

Entry Price:  $0.75 (11/8/10)

Exit Target: $2.40+

Return: -53%

Stop Target: None

Action:  We wish we would have gone out a little further with this trade because the overhang of the share buyback has delayed the stock’s march past $25-$26.  We still think there is time but we would like the stock to get there this week.  If not, we will see where we are at on Friday as these are December options.  The options do not expire for another 17 days but we will need a run back above $25-$26 to break even or make money.  Continue to hold.


Darden Restaurants (DRI, $48.95, down $0.31)

December 49 calls (DRI101218C00049000, $1.25, down $0.05) 

Entry Price:  $1.20 (11/8/10)

Exit Target: $2.40+

Return: 4%

Stop Target: $1.25

Action:  Shares traded up to $49.39 on Tuesday and we still think a breakout above $50 is coming.  However, these are December options as well so we need to see a Ulysses Grant print this week.  Continue to hold.


Aruba Networks (ARUN, $21.24, down $1.81)

January 25 calls (ARUN110122C00025000, $0.60, down $0.45)

Entry Price:  $1.20 (11/2/10)

Exit Target: $2.40+

Return: -50%

Stop Target:  Close the trade is shares fall below $20.

Action:  There is strong support for shares at $20, but if broken, we will close the trade.  The stock has lost some momentum this week after hitting a 52-week high of $24.28 last week.  Continue to hold but CLOSE the trade if shares fall below $20.


PowerShares QQQ (QQQQ, $52.08, down $0.65)

January 53 calls (QQQQ110122C00053000, $1.25, down $0.20)

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: -19%

Stop Target: 75 cents

Action:  We think the Q’s can rally to $55+.  Continue to hold.


American Tower (AMT, $50.57, down $0.25)

April (2011) 60 calls (AMT110416C00060000, $0.55, down $0.05)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -15%

Stop Target: None

Action:  Continue to hold.


Dendreon (DNDN, $35.58, down $0.83) (COVERED CALL)

December 40 call (DNDN101218C00040000, $0.17, down $0.08)

Ennry Price:  $41.96 (9/13/10) sold October 45 call @ $1.30, (11/11/10) sold December call @$1.75

Exit Target: $45

Return: -8%

Stop Target: None

Action:  Shares seem to bounce off the $35-$36 level before making a run at $40.  The chart clearly shows the tight range we have been in since August which is exactly what we like to see when doing covered call trades.  The longer shares stay in this range, the bigger the breakout (or breakdown) will be.  We think Dendreon can hit $60 in 2011 as they get their manufacturing plants up to full speed.

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.

On 11/11/10 we sold the December 40 call option for $1.75 which lowered our cost basis to $38.91.  If the stock gets “called away” from us by mid-December then we make 3% in 3 months.


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.   

Biodel March 7.50 calls (from October)

Chesapeake Energy January 25 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.


CurrencyShares Euro Trust (FXE, $129.30, down $1.43)

January 125 puts (FXE110122P00125000, $1.50, up $0.35)

Action:  We haven’t gotten a good entry point for this one as the euro continues to tank.  We were hoping to pick these up for under a buck but the options opened at $1.44 yesterday.  Continue to watch.


Skyworks Solutions (SWKS, $25.45, down $0.35)

January 26 calls (SWKS110122C00026000, $1.30, down $0.20)

Action:  Watch for now.    


THQ (THQI, $5.08, down $0.03)

March 5 calls (THQI110319C00005000, $0.65, down $0.05)

Action:  Continue to watch. 


Ingersoll-Rand (IR, $41.00, down $0.08)

January 42.50 calls (IR110122C00042500, $1.00, up $0.10)

Action:  Watch for now.

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