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.

12:50pm (EST)

Discover Financial Services (DFS, $17.91, down $0.62)

January 17.50 puts (DFS110122P00017500, $0.55, up $0.15)

Entry Price:  $0.45 (12/17/10)

Exit Target: $1.00+

Return: 22%

Stop Target: None

Action:  We normally don’t open new positions on Friday but we want to add some protection to our portfolio as insurance against our call options and this trade looks good.  If you haven’t gotten in yet, we like these options up to 60-65 cents.   

 

Jabil Circuit (JBL, $17.21, up $0.15)

March 19 calls (JBL110319C00019000, $0.75, flat)

Entry Price:  $0.70 (12/14/10)

Exit Target: $1.50+

Return: 7%

Stop Target: None

Action:  Jabil announces earnings this Monday, December 20.  Continue to hold.   

 

THQ (THQI, $6.09, up $0.15)

June 6 calls (THQI110618C00006000, $1.10, up $0.10)

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 47%

Stop Target: None

Action:  These options have 182 days before they expire, plenty of time to hit a homerun. 

For those of you joining us this week, there are three catalysts that should get shares to $8, maybe $10 by mid-June.  The company’s uDraw is a big hit for the Wii and the release of Homefront is expected to be one of the hottest games in early 2011.  Also, they remain an acquisition target once a bigger fish realizes the company only has a $400 million market cap. 

Analysts could be under-estimating revenues which could lead to upgrades.  There are currently 22 analysts following the company with 4 “Strong Buys”, 17 “Holds” and 1 “Underperform” rating.  Folks, 17 Hold ratings…

Continue to hold, no pun intended, as the options will be worth at least $2 if shares are at $8, and $4 if the stock is at $10.  This is one of our favorite and safest trades for 2011, we believe, that could hit massive returns if everything falls into place.

 

Electronic Arts (ERTS, $15.90, up $0.03)

March 20 calls (ERTS110319C00020000, $0.23, flat) 

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: 5%

Stop Target: None

Action:  We said $16 would be strong resistance for EA, and it has been all week, but we think the levy will break which should get shares to the upper teens.  Continue to hold.


JDS Uniphase (JDSU, $14.31, up $0.03)

March 12 calls (JDSU110319C00012000, $2.70, flat) 

Entry Price:  $1.25 (11/19/10)

Exit Target: $2.50 (closed half @ $2.70 on 12/13/10)

Return:  116%

Stop Target: $2.00

Action:  The March options have 91 days before they expire.  We closed half at $2.70 on Monday and we are trying to squeeze a little more out of the other half.  Continue to hold.

      

Aruba Networks (ARUN, $22.10, down $0.33)

January 25 calls (ARUN110122C00025000, $0.45, down $0.10) 

Entry Price:  $1.20 (11/2/10)

Exit Target: $2.40+

Return: -63%

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

Action:  We are still holding for a run past $25 but a break below $22 may have us exiting this trade early.  Most of our “newer” trades are with the March and April options which should carry us through the holidays as this trade is over a month old. 

We haven’t gotten the action we wanted even though shares traded up to $24+ in late November.  Shares are building a nice base at current levels and are capable of making big moves but we are watching this one closely.  Continue to hold but we may cut the cord next week if there is weakness ahead.       


PowerShares QQQ (QQQQ, $54.57, up $0.10)

January 53 calls (QQQQ110122C00053000, $2.15, flat) 

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: 40%

Stop Target: $1.55 (HARD STOP)

Action:  Close half of the trade at current levels and continue to hold the other half.  We are still expecting a higher market but we are protecting our profits as we wind down 2010. 


American Tower (AMT, $49.68, down $0.31)

April (2011) 60 calls (AMT110416C00060000, $0.20, down $0.05) 

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -69%

Stop Target: None

Action:  American Tower has put us on the spot because we said we might be gone on a close below $50.  These options have 4 months before expiration and these were “cheap” out-of-the-money options, meaning they were below 75 cents when we recommended them.  These types of “cheap” trades can lose 70%-80% of their value before rebounding which is why we don’t carry 50% stop targets on options under a buck.  Continue to hold.


Dendreon (DNDN, $36.21, down $0.44) (COVERED CALL)

December 40 call (DNDN101218C00040000, $0.03, down $0.02)

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: -7%

Stop Target: None

Action:  The December options expire today and settle on Saturday.  We will be looking to SELL a January or February call option to lower our cost and we will do the research over the weekend to figure out what our best trade is.  This will lower our cost basis even further.

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.    


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 on Monday.

****************

10:20am (EST)

NEW TRADE!!!

Discover Financial Services (DFS, $18.09, down $0.44)

Buy to OPEN January 17.50 puts (DFS110122P00017500, $0.45, up $0.05)

Action:  Use limit prices of 45-50 cents but do not pay over 60-65 cents for these options.  We normally don’t open new positions on Friday but we want to add some protection to our portfolio as insurance against our call options and this trade looks good.     

**************************

9:00am (EST)

Jabil Circuit (JBL, $17.06, up $0.14)

March 19 calls (JBL110319C00019000, $0.75, down $0.10)

Entry Price:  $0.70 (12/14/10)

Exit Target: $1.50+

Return: 7%

Stop Target: None

Action:  Jabil announces earnings this Monday, December 20.  Continue to hold.   

 

THQ (THQI, $5.94, down $0.03)

June 6 calls (THQI110618C00006000, $1.00, flat)

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 33%

Stop Target: None

Action:  For those of you joining us this week, there are three catalysts that should get shares to $8, maybe $10 by mid-June.  The company’s uDraw is a big hit for the Wii and the release of Homefront is expected to be one of the hottest games in early 2011.  Also, they remain an acquisition target once a bigger fish realizes the company only has a $400 million market cap. 

Analysts could be under-estimating revenues which could lead to upgrades.  There are currently 22 analysts following the company with 4 “Strong Buys”, 17 “Holds” and 1 “Underperform” rating.  Folks, 17 Hold ratings…

Continue to hold, no pun intended, as the options will be worth at least $2 if shares are at $8, and $4 if the stock is at $10.  This is one of our favorite and safest trades for 2011, we believe, that could hit massive returns if everything falls into place.

   

Electronic Arts (ERTS, $15.87, up $0.16)

March 20 calls (ERTS110319C00020000, $0.23, up $0.02) 

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: 5%

Stop Target: None

Action:  We were serious when we said Microsoft should buy EA yesterday as they have so much momentum right now with the Kinect.  We said $16 would be strong resistance for EA, and it has been all week, but we think the levy will break which should get shares to the upper teens.  Continue to hold.


JDS Uniphase (JDSU, $14.28, up $0.41)

March 12 calls (JDSU110319C00012000, $2.70, up $0.40) 

Entry Price:  $1.25 (11/19/10)

Exit Target: $2.50 (closed half @ $2.70 on 12/13/10)

Return:  116%

Stop Target: $2.00

Action:  We closed half at $2.70 on Monday and we are trying to squeeze a little more out of the other half.  Continue to hold.

      

Aruba Networks (ARUN, $22.43, up $0.08)

January 25 calls (ARUN110122C00025000, $0.55, flat) 

Entry Price:  $1.20 (11/2/10)

Exit Target: $2.40+

Return: -54%

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

Action:  We are still holding for a run past $25 but a break below $22 may have us exiting this trade early.  Most of our “newer” trades are with the March and April options which should carry us through the holidays as this trade is over a month old. 

We haven’t gotten the action we wanted even though shares traded up to $24+ in late November.  Shares are building a nice base at current levels and are capable of making big moves but we are watching this one closely.  Continue to hold.       


PowerShares QQQ (QQQQ, $54.58, up $0.42)

January 53 calls (QQQQ110122C00053000, $2.15, up $0.25) 

Entry Price:  $1.54 (10/27/10)

Exit Target: $3.00+

Return: 40%

Stop Target: $1.55 (HARD STOP)

Action:  We may close half of the trade into strength and ahead of the weekend.  If we do, we will send out an alert.  Continue to hold. 


American Tower (AMT, $49.99, down $0.14)

April (2011) 60 calls (AMT110416C00060000, $0.25, flat) 

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -62%

Stop Target: None

Action:  American Tower has put us on the spot because we said we might be gone on a close below $50.  These options have 4 months before expiration and these were “cheap” out-of-the-money options, meaning they were below 75 cents when we recommended them.  These types of “cheap” trades can lose 70%-80% of their value before rebounding which is why we don’t carry 50% stop targets on options under a buck.  Continue to hold.


Dendreon (DNDN, $36.65, up $0.43) (COVERED CALL)

December 40 call (DNDN101218C00040000, $0.05, up $0.02)

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: -6%

Stop Target: None

Action:  The December options expire today and settle on Saturday.  We will be looking to SELL a January or February call option to lower our cost and we will do the research over the weekend to figure out what our best trade is.  This will lower our cost basis even further.

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.    


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.

Discover Financial Services (DFS, $18.53, down $0.60)

January 17.50 puts (DFS110122P00017500, $0.40, up $0.10)

Action:  Shares fell 3% yesterday but could be headed further south if traders continue to attack Visa and MA.


Pan American Silver (PAAS, $38.54, down $0.55)

January 42 calls (PAAS110122C000042000, $0.80, down $0.20)

Action:  These options traded to a low of 65 cents and we nearly pulled the trigger but we are holding out to see if shares can come down to $35 which is solid support. 


FedEx (FDX, $94.22, up $1.83)

January 100 calls (FDX110122C00100000, $0.85, down $0.10)

Action:  We were in this trade way before yesterday’s earnings announcement and our entry price was $1.25 on November 30.  We closed half at $2.15, 3 days later, and we pushed the other half but had to close at $1.05.  The overall return was 28% but the chopping trading after hitting resistance lead us to exit.  We are dropping coverage of this trade but it may still end up doing well from current levels if shares break $100.


Adobe Systems (ADBE, $28.52, up $0.80)

January 30 calls (ADBE110122C00030000, $0.60, down $0.10) 

April 31 calls (ADBE110416C00031000, $1.10, down $0.10) 

April 26 puts (ADBE110416P00026000, $1.55, up $0.15)

Action:  Shares spiked on takeover chatter yesterday and the company announces earnings next week.  We are pretty certain we are going to play this one but we are sure if it will be a combination trade or straight up.  We will also try to cover this with a video over the weekend for those of you who have ordered our trading course so you can see how we set them up and do the math.

Watch for now.


Darden Restaurants (DRI, $49.72, up $0.72)

April 55 calls (DRI110416C00055000, $1.10, up $0.15)

Action:  We wanted to release this trade as an official recommendation yesterday but we are still watching.  We think Darden is worth $60 a share and these options will be worth $5 if shares can get there by mid-April.


DryShips (DRYS, $5.99, up $0.02)

March 7 calls (DRYS110319C00007000, $0.35, flat) 

June 7 calls (DRYS110618C00007000, $0.55, flat) 

Action:  Continue to watch.  


Juniper Networks (JNPR, $36.70, up $0.77)

January 35 calls (JNPR110122C00035000, $2.40, up $0.55)

Action:  This could be the breakout over $36 that gets shares to $40.  We are still on the sidelines though.


CurrencyShares Euro Trust (FXE, $131.88, up $0.19)

January 130 puts (FXE110122P00130000, $1.55, flat)

Action:  We keep getting close to $135 which is where we want to go short. 


Skyworks Solutions (SWKS, $27.81, up $0.81)

January 28 calls (SWKS110122C00028000, $1.25, up $0.40)

Action:  Shares popped 3% yesterday and these options made nearly a 50% jump.  Watch for now.

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