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.

1:05pm

JPMorgan Chase (JPM, $44.55, down $0.20)

February 46 calls (JPM110219C00046000, $0.65, down $0.13) 

Entry Price:  $0.88 (1/12/11)

Exit Target: $1.75  

Return: -26%

Stop Target: None

Action:  We have been telling you that we expect a down week because of January expiration is Friday.  Over the past decade, the Dow has dropped 2% on a few occasions so we have been planning for this.  The good news is that we expect our near-term targets for the indexes to be broken as the bulls in January on a strong note.

The 52-week high for JPM is $48.20 and if shares can reach this level by mid-February these options will be worth at least $2, or more than a double from current levels.  Continue to hold.


Vivus (VVUS, $10.73, down $0.38)        

June 14 calls (VVUS110618C00014000, $1.15, down $0.10)

Entry Price:  $1.10 (1/12/11)

Exit Target: $1.70    

Return: 5%

Stop Target: 75 cents         

Action:  These options have 149 days before they expire and could get cheaper but we aren’t trying to “trade” these call options.  They could get cheaper but we are committed to this trade because we are looking for shares to push $20 by summertime.

Vivus should be meeting with the FDA by the end of this month to discuss the content of the proposed resubmission for Qnexa, the company’s diet drug which they are hoping to get a fast-track approval on.  Vivus is also filing a new drug application (NDA) filing for Avanafil, its “good wood” drug, in the second quarter of 2011.   

 

Apollo Group (APOL, $42.70, down $0.60)

February 34 puts (APOL110219P00035000, $0.15, flat)

Entry Price:  $0.85 (1/7/11)

Exit Target: $1.70 (closed half @ $1.70 on 1/10/11)   

Return: 9%

Stop Target: None

Action:  We closed half at $1.70 on 1/10/11 and the current 15 cents on the other half gives an average price of $0.925.  We may end up breaking even on this trade but we feel when the other Educational stocks start to report earnings, and miss expectations, then Apollo will reverse course.  In the meantime, we will have to wait it out.


Louisiana-Pacific (LPX, $9.89, down $0.12)

May 11 calls (LPX110521C00011000, $0.70, down $0.05)

Entry Price:  $0.70 (1/5/11)

Exit Target: $1.40

Return: 0%

Stop Target: None

Action:  Continue to hold.     

 

Brocade Communications (BRCD, $5.70, down $0.14)

July 6 calls (BRCD110716C00006000, $0.65, down $0.07)

Entry Price:  $0.67 (1/4/11)

Exit Target: $1.35

Return: -3%

Stop Target: None   

Action:  We had listed a stop target because the trade was profitable.   However, it was not a HARD STOP.  We don’t carry stops on options under $1 if we are entering a trade and these calls have plenty of time to mature.  Continue to hold.   

   

Micron Technology (MU, $9.31, down $0.35)

April 9 calls (MU110416C00009000, $1.00, down $0.25)

Entry Price:  $0.50 (1/3/11)

Exit Target: $2.00 (closed half @ $1.25 on 1/18/11)    

Return: 125%

Stop Target:  $1.00 (HARD STOP)

Action:  We have been stopped out of our other half as the $1.00 HARD STOP has been hit today.  We still like MU so we may look to get back into this trade with different options.  For now, let’s take our 125% return and wait for better entry prices.


Riverbed Technology (RVBD, $38.27, down $0.79)     

March 40 calls (RVBD110319C00040000, $2.70, down $0.40)

Entry Price:  $1.70 (12/29/10)

Exit Target: $4+ (closed half @ $3.00 on 1/7/11)   

Return: 68%

Stop Target: $2.50 (HARD STOP on other half) 

Action:  Our hard stop hasn’t been hit, yet, but we are expecting it could be by the close.  If so, we will lock in profits and look at February 45 calls for next week.  Possibly.        


Skyworks Solutions (SWKS, $32.25, down $0.51)

May 32 calls (SWKS110521C00032000, $3.20, down $0.30)   

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40 (closed half @ $3.30 on 1/18/11)

Return: 91%

Stop Target: $2.50       

Action:  With earnings coming up on Thursday, after the bell, we wanted to lock in at least half profits because the trade reached a double in 3 weeks.  Our price target has been $35 for the stock, so, an earnings beat and raise by Skyworks will probably get us there.  The March options will list next week so we may take a look at adding more calls if the momentum is there.

 

JDS Uniphase (JDSU, $16.55, down $0.44)

March 15 calls (JDSU110319C00015000, $2.40, down $0.70)

Entry Price:  $0.78 (12/27/10)

Exit Target: $4 (closed half @ $1.80 on 1/7/11)

Return: 150%

Stop Target: $2.10 (HARD STOP)

Action:  We have been stopped out on the other half of this trade as well.  We can’t complain though, it was a triple-digit winner.   


Seattle Genetics (SGEN, $16.50, down $0.41)

March 17.50 calls (SGEN110319C00017500, $0.90, down $0.20) 

Entry Price:  $0.70 (12/27/10)

Exit Target: $1.40 (closed half @ $1.20 on 1/18/11)

Return: 50%

Stop Target: 75 cents (HARD STOP)

Action:  Continue to hold the other half.


THQ (THQI, $5.76, down $0.18) 

June 6 calls (THQI110618C00006000, $0.80, down $0.10) 

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 7%

Stop Target: 50 cents

Action:  Close the trade at current levels.  We may revisit the story but let’s take a small profit and look for more explosive trades.   


Electronic Arts (ERTS, $15.97, down $0.03)

March 20 calls (ERTS110319C00020000, $0.15, flat) 

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: -32%

Stop Target: None

Action:  Continue to hold.  


Other 2011 Portfolio OPEN positions (3):  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)

American Tower April 60 calls (from October)

Constellation Brands February 22.50 calls (from January) 


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 AM.

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

9:00am (EST)

JPMorgan Chase (JPM, $44.75, down $0.16)

February 46 calls (JPM110219C00046000, $0.78, down $0.07) 

Entry Price:  $0.88 (1/12/11)

Exit Target: $1.75  

Return: -11%

Stop Target: None

Action:  The 52-week high for JPM is $48.20 and if shares can reach this level by mid-February these options will be worth at least $2, or more than a double from current levels.  Continue to hold.


Vivus (VVUS, $11.11, down $0.10)        

June 14 calls (VVUS110618C00014000, $1.25, down $0.15)

Entry Price:  $1.10 (1/12/11)

Exit Target: $1.70    

Return: 14%

Stop Target: 75 cents         

Action:  Vivus should be meeting with the FDA by the end of this month to discuss the content of the proposed resubmission for Qnexa, the company’s diet drug which they are hoping to get a fast-track approval on.  Vivus is also filing a new drug application (NDA) filing for Avanafil, its “good wood” drug, in the second quarter of 2011.    These options have 150 days before they expire.  Continue to hold.

 

Apollo Group (APOL, $43.30, up $0.99)

February 34 puts (APOL110219P00035000, $0.15, down $0.05)

Entry Price:  $0.85 (1/7/11)

Exit Target: $1.70 (closed half @ $1.70 on 1/10/11)   

Return: 9%

Stop Target: None

Action:  We closed half at $1.70 on 1/10/11 and the current 15 cents on the other half gives an average price of $0.925.  We may end up breaking even on this trade but we feel when the other Educational stocks start to report earnings, and miss expectations, then Apollo will reverse course.  In the meantime, we will have to wait it out.


Louisiana-Pacific (LPX, $10.01, up $0.08)

May 11 calls (LPX110521C00011000, $0.75, up $0.05)

Entry Price:  $0.70 (1/5/11)

Exit Target: $1.40

Return: 7%

Stop Target: None

Action:  Continue to hold.     

 

Brocade Communications (BRCD, $5.84, down $0.14)

July 6 calls (BRCD110716C00006000, $0.72, down $0.10)

Entry Price:  $0.67 (1/4/11)

Exit Target: $1.35

Return: 7%

Stop Target: 68 cents  

Action:  Continue to hold.   

   

Micron Technology (MU, $9.66, down $0.05)

April 9 calls (MU110416C00009000, $1.25, down $0.05)

Entry Price:  $0.50 (1/3/11)

Exit Target: $2.00 (closed half @ $1.25 on 1/18/11)    

Return: 150%

Stop Target:  $1.00 (HARD STOP)

Action:  We will continue to hold the other half but we want to protect profits if $10 proves to be a brick wall.  These options have 86 days before they expire.  


Riverbed Technology (RVBD, $39.06, down $0.38)     

March 40 calls (RVBD110319C00040000, $3.10, down $0.30)

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40, raise to $4+ (closed half @ $3.00 on 1/7/11)   

Return: 79%

Stop Target: $2.50 (HARD STOP on other half) 

Action:  The company announces earnings on January 27 and a break above $40 is a sign they will have a blowout quarter.  We are also looking at the February 45 call options which are at 80-90 cents but we may wait until next Monday to get in if we take action.    


Skyworks Solutions (SWKS, $32.76, up $0.25)

May 32 calls (SWKS110521C00032000, $3.50, up $0.10)   

Entry Price:  $1.70 (12/29/10)

Exit Target: $3.40 (closed half @ $3.30 on 1/18/11)

Return: 100%

Stop Target: $2.50       

Action:  With earnings coming up, we wanted to lock in at least half profits because the trade reached a double in 3 weeks.  Our price target has been $35 for the stock, so, an earnings beat and raise by Skyworks will probably get us there.  The March options will list next week so we may take a look at adding more calls if the momentum is there.

 

JDS Uniphase (JDSU, $16.99, down $0.78)

March 15 calls (JDSU110319C00015000, $2.40, down $0.70)

Entry Price:  $0.78 (12/27/10)

Exit Target: $4 (closed half @ $1.80 on 1/7/11)

Return: 169%

Stop Target: $2.25, lower to $2.10 (HARD STOP)

Action:  JDSU fell out of bed yesterday but our stop wasn’t hit.  However, we have adjusted it so make sure you do to give the trade a little more wiggle room.  If the new HARD STOP is hit, we will move on to the next trade.   


Seattle Genetics (SGEN, $16.91, down $0.24)

March 17.50 calls (SGEN110319C00017500, $1.10, down $0.20) 

Entry Price:  $0.70 (12/27/10)

Exit Target: $1.40 (closed half @ $1.20 on 1/18/11)

Return: 59%

Stop Target: 75 cents (HARD STOP)

Action:  Continue to hold the other half.


THQ (THQI, $5.94, up $0.02) 

June 6 calls (THQI110618C00006000, $0.90, flat) 

Entry Price:  $0.75 (12/8/10)

Exit Target: $2.00

Return: 20%

Stop Target: 50 cents

Action:  Continue to hold.   


Electronic Arts (ERTS, $16.00, up $0.05)

March 20 calls (ERTS110319C00020000, $0.15, flat) 

Entry Price:  $0.22 (11/24/10)

Exit Target: $0.50+

Return: -32%

Stop Target: None

Action:  Continue to hold.  


Other 2011 Portfolio OPEN positions (3):  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)

American Tower April 60 calls (from October)

Constellation Brands February 22.50 calls (from January) 


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.

Cree (CREE, $62.71, down $1.06)

June 60 calls (CREE11618C00060000, $8.95, down $0.75)

March 55 calls (CREE110319C00055000, $9.80, down $0.85)

Thoughts:  We would love to get the June (or March) options for under $2 but it might be a stretch.  There will be a huge overreaction but we see shares recovering.  However, the 52-week low is $47.30 so we also have to watch for a breakdown as well.


Veeco (VECO, $49.16, up $0.43)

February 55 calls (VECO110219C00055000, $1.15, up $0.25)

Thoughts:  Veeco can move but these options only trade in increments of $5 and volume is just okay which may keep us on the sidelines.  It’s another play/rebound off Cree. 


Jabil Circuit (JBL, $21.62, up $0.28)

February 22 calls (JBL110219C00019000, $0.80, up $0.10)

Thoughts:  We might be pulling the trigger on this trade if things look good.


Imax (IMAX, $27.39, down $0.07)

June 35 calls (IMAX110618C00035000, $0.80, down $0.10)

Thoughts:  We may take a flyer on these options as the bid/ask is now down to 70/90 cents.  We have a feeling the buyout rumors surrounding IMAX might come true.  We called for a buyout of Marvel Entertainment a few years back and there are a few companies that could make a run at Imax.


Green Mountain Coffee Roasters (GMCR, $35.30, down $0.03)

February 40 calls (GMCR110219C00040000, $0.50, down $0.05)

Thoughts:  These options are getting “cheap” enough to where they are worth a serious look.  Green Mountain is also a takeover possibility.