January 2011 | 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. 

12:40pm (EST)

NEW TRADE!!!

Micron Technology (MU, $8.30, up $0.28)

Buy to OPEN April 9 calls (MU110416C00009000, $0.50, up $0.10)

Action:  Use limit orders up to 55 cents.

We said if shares clear $8 we may add these call options.  A 10 contract trade will cost $500 and if shares are at $10 by mid-April then the calls would be worth at least $1.00, or 100%, from current levels.  We love the risk/ reward on these options.


CURRENT TRADES

Riverbed Technology (RVBD, $37.91, up $2.74)

March 40 calls (RVBD110319C00040000, $2.75, up $1.05)

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40

Return: 62%

Stop Target: 85 cents

Action:  Shares have hit a fresh 52-week high.  Continue to hold.


Skyworks Solutions (SWKS, $29.60, up $0.97)

May 32 calls (SWKS110521C00032000, $2.00, up $0.40)

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40

Return: 18%

Stop Target: 85 cents

Action:  The May options have 137 days before they expire so we plan on holding the trade open until then.  We are expecting a strong move by Skyworks over the next 5 months with a price target of $35.

 

JDS Uniphase (JDSU, $15.01, up $0.53)

March 15 calls (JDSU110319C00015000, $1.10, up $0.25)

Entry Price:  $0.78 (12/27/10)

Exit Target: $1.60

Return: 41%

Stop Target: None

Action:  Continue to hold.


Seattle Genetics (SGEN, $15.57, up $0.62)

March 17.50 calls (SGEN110319C00017500, $0.85, up $0.10)

Entry Price:  $0.70 (12/27/10)

Exit Target: $1.40

Return: 21%

Stop Target: None

Action:  Continue to hold.


Jabil Circuit (JBL, $20.97, up $0.88)

March 19 calls (JBL110319C00019000, $2.70, up $0.60)

Entry Price:  $0.70 (12/14/10)

Exit Target: $1.50+ (closed half @ $1.70 on 12/21/10)

Return: 214%

Stop Target:  $1.30, raise to $1.90 (HARD STOP)

Action:  Continue to hold the other half but notice we have raised the hard stop.


THQ (THQI, $6.23, up $0.17)

June 6 calls (THQI110618C00006000, $1.20, up $0.10)

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 60%

Stop Target: None

Action:  The June options have 165 days before they expire.  Continue to hold.


Electronic Arts (ERTS, $16.30, down $0.08)

March 20 calls (ERTS110319C00020000, $0.18, down $0.02)

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: -18%

Stop Target: None

Action:  Continue to hold.


American Tower (AMT, $51.87, up $0.23)

April 60 calls (AMT110416C00060000, $0.30, up $0.05)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -54%

Stop Target: None

Action:  The April options have 102 days before they expire and we would like to see shares challenge their 52-week high of $53.52 this month which was set back in early November.  Continue to hold.


Chesapeake Energy (CHK, $26.49, up $0.58)

January 25 calls (CHK110122C00025000, $1.75, up $0.50)

Entry Price:  $1.15 (10/13/10)

Exit Target: $2.00

Return: 52%

Stop Target: $1.25

Action:  We are tempted to close half of the trade at current levels because these options expire in 18 days.  We are going to push this trade a little more but on any weakness we will close half.  Continue to hold but we have now placed a stop on the trade.  

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.

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.

Constellation Brands (STZ, $21.72, down $0.43) 

January 22.50 calls (STZ110122C00022500, $0.35, down $0.15)

February 22.50 calls (STZ110219C00022500, $0.50, down $0.25)

Thoughts:  Shares are down 2% and we may take a serious look at these options.  We want to do more research but we might be getting a buying opportunity.


Schnitzer Steel Industries (SCHN, $68.10, up $1.71)

January 70 calls (SCHN110122C00070000, $1.70, up $0.50)

Thoughts:  Shares have been hitting fresh 52-week highs lately.


Molycorp (MCP, $57.42, up $7.52)

January 60 calls (MCP110122C00060000, $3.50, up $2.75)

January 40 puts (MCP110122P00040000, $0.40, down $0.45)

Action:  We told you last week this could be the perfect strangle option trade.  The calls and puts were both near $1 last Thursday and we said we expected shares to move $10, quickly.  If you acted on our comments, you have doubled your money today.


Bank of America (BAC, $14.05, up $0.71)

February 14 calls (BAC110219C00014000, $0.70, up $0.30)

Thoughts:  Is the move real?   


Brocade Communications (BRCD, $5.38, up $0.09)

July 6 calls (BRCD110716C0006000, $0.63, up $0.03)

Thoughts:  Watch for now.  


Pan American Silver (PAAS, $41.33, up $0.12)

January 42 calls (PAAS110122C000042000, $1.05, flat)

Thoughts:  Watch for now.


Darden Restaurants (DRI, $46.95, up $0.51)

April 50 calls (DRI110416C00050000, $1.20, flat)

Thoughts:  Watch for now.

========================

9:00am (EST)

Riverbed Technology (RVBD, $35.17, down $1.22)

March 40 calls (RVBD110319C00040000, $1.70, down $0.40)

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40

Return: 0%

Stop Target: 85 cents

Action:   Shares fell 3% Friday and back to our entry price.  These options may get cheaper but we feel Riverbed can hit $44-$45 by March which would easily be a double from current levels.  One brokerage firm followed our lead last week and gave shares an “Outperform” rating with a $40 price target.  The March options have 74 days before expiration.  Continue to hold.


Skyworks Solutions (SWKS, $28.63, down $0.45)

May 32 calls (SWKS110521C00032000, $1.60, down $0.20)

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40

Return: -6%

Stop Target: 85 cents

Action:  The May options have 137 days before they expire so we plan on holding the trade open until then.  We are expecting a strong move by Skyworks over the next 5 months with a price target of $35.

 

JDS Uniphase (JDSU, $14.48, down $0.12)

March 15 calls (JDSU110319C00015000, $0.85, down $0.06)

Entry Price:  $0.78 (12/27/10)

Exit Target: $1.60

Return: 9%

Stop Target: None

Action:  Continue to hold.


Seattle Genetics (SGEN, $14.95, down $0.39)

March 17.50 calls (SGEN110319C00017500, $0.75, down $0.10)

Entry Price:  $0.70 (12/27/10)

Exit Target: $1.40

Return: 7%

Stop Target: None

Action:  Continue to hold.


Jabil Circuit (JBL, $20.09, up $0.23)

March 19 calls (JBL110319C00019000, $2.10, up $0.10)

Entry Price:  $0.70 (12/14/10)

Exit Target: $1.50+ (closed half @ $1.70 on 12/21/10)

Return: 171%

Stop Target:  $1.30 (HARD STOP)

Action:  We recommended this position when shares we near $17 and we said a run to $20 was in the cards.  The stock closed back above $20 on Friday and we would like to see continued strength.  However, if shares retreat and our hard stop of $1.30 is taken out, it will still lock in a triple-digit return.  We may also move the stop up if we see any weakness to protect our profits even more.  Continue to hold the other half.


THQ (THQI, $6.06, down $0.10)

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

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 47%

Stop Target: None

Action:  The June options have 165 days before they expire.  Continue to hold.


Electronic Arts (ERTS, $16.38, down $0.24)

March 20 calls (ERTS110319C00020000, $0.20, down $0.02)

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: -9%

Stop Target: None

Action:  Shares finally broke through and held $16 all last week which is a bullish sign going forward.  EA could be a takeover target of it could try to acquire Take-Two (TTWO, $12.27, down $0.01) again which was the case a couple of years ago.  We believe there will some consolidation in the industry in 2011 and we profiled Take-Two in our Weekly Wrap last night.  However, EA is the 800-pound gorilla and we think shares will test the upper teens over the near-term with a shot of breaking $20 if the sector stays in favor.


American Tower (AMT, $51.64, up $0.17)

April 60 calls (AMT110416C00060000, $0.25, flat)

Entry Price:  $0.65 (10/20/10)

Exit Target: $1.30+

Return:  -62%

Stop Target: None

Action:  The April options have 102 days before they expire and we would like to see shares challenge their 52-week high of $53.52 this month which was set back in early November.  Continue to hold.


Chesapeake Energy (CHK, $25.91, down $0.06)

January 25 calls (CHK110122C00025000, $1.25, down $0.05)

Entry Price:  $1.15 (10/13/10)

Exit Target: $2.00

Return: 9%

Stop Target: None

Action:  The January options have 18 days before they expire and we should be out of the trade, honestly.  This is normally considered the “danger zone” which is what we like to call options that expire in less than 3 weeks. 

This trade was down 70% at one point and is now slightly positive.  It has also been our longest, ongoing, current trade.  The last thing we want to do is take a loss and we hope the stocks gets off to a good start this week.  If not, we may have to close the position and look out to further options to buy us more time or we will look for other opportunities.  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.

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.

Constellation Brands (STZ, $22.15, up $0.21) 

January 22.50 calls (STZ110122C00022500, $0.50, up $0.05)

February 22.50 calls (STZ110219C00022500, $0.75, up $0.05)

Thoughts:  These options are cheap and we think the company is going to have a great quarter.  This is an under the radar trade before the official 4Q season gets underway.



Schnitzer Steel Industries (SCHN, $66.39, up $0.08)

January 70 calls (SCHN110122C00070000, $1.20, flat)

Thoughts:  Shares have been hitting fresh 52-week highs lately.


Molycorp (MCP, $49.90, down $2.09)

January 60 calls (MCP110122C00060000, $0.80, down $0.50)

January 40 puts (MCP110122P00040000, $0.85, up $0.15)

Action:  Watch for now.


Bank of America (BAC, $13.34, up $0.06)

February 14 calls (BAC110219C00014000, $0.40, flat)

Thoughts:  Watch for now.   


Brocade Communications (BRCD, $5.29, up $0.01)

July 6 calls (BRCD110716C0006000, $0.60, flat)

Thoughts:  Watch for now.  


Micron Technology (MU, $8.02, up $0.12)

July 10 calls (MU10716C00010000, $0.40, up $0.03)

Thoughts:  We said if shares clear $8 we may add these call options.  A 10 contract trade would cost $400 and if shares are at $11 (which is our 6-month price target) then the calls would be worth at least $1,000, or 150%, from current levels.  We love the risk/ reward these options and we may add them today after we see how the market opens.


Pan American Silver (PAAS, $41.21, up $0.22)

January 42 calls (PAAS110122C000042000, $1.05, flat)

Thoughts:  Watch for now.


Darden Restaurants (DRI, $46.44, down $0.41)

April 50 calls (DRI110416C00050000, $1.20, down $0.10)

Thoughts:  Watch for now.