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.

1:00pm (EST)

Patriot Coal (PCX, $26.48, up $1.02)

March 30 calls (PCX110319C00030000, $1.10, up $0.20)

Entry Price:  $1.25 (1/31/11)
Exit Target: $2.50
Return: -8%
Stop Target: 60 cents

Action:  Some of you are getting great entry prices if you decide to play this trade.  The company announces earnings on Tuesday so this is going to be a risky trade.  However, we like it and we think Patriot Coal is going to challenge $30 over the next month.     


CurrencyShares  Euro Trust (FXE, $136.42, up $0.82)

March 134 puts (FXE110319P00134000, $1.50, down $0.40)

Entry Price:  $1.60 (1/28/11)
Exit Target: $3.20
Return: -6%
Stop Target: 80 cents

Action:  Continue to hold.

 

Jabil Circuit (JBL, $20.44, up $0.63)

March 21 calls (JBL110319C00021000, $0.90, up $0.20)

Entry Price:  $0.70 (1/26/11)
Exit Target: $1.40
Return: 29%
Stop Target: None

Action:  Shares are back over $20 and looking strong.

PowerShares QQQ (QQQQ, $56.10, up $0.37)

March 58 calls (QQQQ110319C00058000, $0.60, up $0.10)

Entry Price:  $0.75 (1/21/11)
Exit Target: $1.50
Return: -20%
Stop Target: None

Action:  We are looking for the Q’s to test $60 which gets these options to $2.  Tech is holding support so continue to hold.


Spider S&P 500 (SPY, $128.70, up $0.98)

February 131 calls (SPY110219C00131000, $0.70, up $0.10)

Entry Price:  $0.95 (1/21/11)
Exit Target: $1.90
Return: -26%
Stop Target: None

Action:  Continue to hold.  


Micron Technology (MU, $10.54, down $0.17)

April 10 calls (MU110416C00010000, $1.20, up $0.10)

Entry Price:  $0.75 (1/21/11)
Exit Target: $1.50 (closed half @ $1.00 on 1/28/11)
Return: 47%
Stop Target: None

Action:  We closed half of the trade on Friday and we still have high expectations for Micron.    

JPMorgan Chase (JPM, $45.06, up $0.52)

February 46 calls (JPM110219C00046000, $0.55, up $0.10)

Entry Price:  $0.88 (1/12/11)
Exit Target: $1.75
Return: -38%
Stop Target: None

Action:  Continue to hold.


Apollo Group (APOL, $41.54, up $0.52)

February 34 puts (APOL110219P00035000, $0.10, flat)

Entry Price:  $0.85 (1/7/11)
Exit Target: $1.70 (closed half @ $1.70 on 1/10/11)
Return: 6%
Stop Target: None

Action:  We have decided to close this trade at current prices.  If shares do break below $40 we can use another put option but we want to free up some cash for other trades.  Sell to close the other half for 10 cents.


Brocade Communications (BRCD, $5.77, up $0.17)

July 6 calls (BRCD110716C00006000, $0.65, up $0.05)

Entry Price:  $0.67 (1/4/11)
Exit Target: $1.35
Return: -3%
Stop Target: None

Action:  The 52-week high is $8 which gets these calls to $2 on a continued turnaround story.  Brocade could also be a takeover target down the road and these options have 165 days before they expire.  Continue to hold. 
 

Other 2011 Portfolio OPEN positions (5):  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 2010)
American Tower April 60 calls (from October 2010)
Electronic Arts March 20 calls (from November 2010)
Constellation Brands February 22.50 calls (from January 2011)
Vivus June 14 calls (from January 2011)
 

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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10:00am (EST)

Patriot Coal (PCX, $26.85, up $1.39)

Buy to OPEN March 30 calls (PCX110319C00030000, $1.25, up $0.35)

Action:  The company announces earnings on Tuesday so this is going to be a risky trade.  However, we like it and we think Patriot Coal is going to challenge $30 over the next month.  Use limit orders up to $1.25 but do not pay over $1.35-$1.40 for the calls. 

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

9:00am (EST)

CurrencyShares  Euro Trust (FXE, $135.57, down $1.29)

March 134 puts (FXE110319P00134000, $1.90, up $0.45)

Entry Price:  $1.60 (1/28/11)
Exit Target: $3.20
Return: 19%
Stop Target: 80 cents

Action:  We may take quick profits on this trade if we can’t get below $135 over the next few days or if the market rebounds but we like it a lot.  We also wanted to make some quick profits so that we could keep some of our longer-term bullish positions open. 

 

Jabil Circuit (JBL, $19.81, down $0.80)

March 21 calls (JBL110319C00021000, $0.70, down $0.30)

Entry Price:  $0.70 (1/26/11)
Exit Target: $1.40
Return: 0%
Stop Target: None

Action:  This trade might get choppy but we plan on holding it open until March.  There is solid support at these levels but a break below $19 would not be good as it could lead to the mid-teens.  We don’t like to “day trade” our positions because momentum stocks can pop 10% or more on any given day and you can lose a lot of money chasing options or closing trades too early.

Also, whenever a trend changes, you are bound to have a few losing trades but we don’t feel the “overall” trend has changed, yet. 
PowerShares QQQ (QQQQ, $55.73, down $1.45)

March 58 calls (QQQQ110319C00058000, $0.50, down $0.40)

Entry Price:  $0.75 (1/21/11)
Exit Target: $1.50
Return: -33%
Stop Target: None

Action:  We are looking for the Q’s to test $60 which gets these options to $2.  Tech held support on Friday and we plan to keep this trade open into March as well.  However, if the Nasdaq breaks below 2,500 then we might have to bail if there is any premium left.  Continue to hold.
 

Spider S&P 500 (SPY, $127.72, down $2.27)

February 131 calls (SPY110219C00131000, $0.60, down $0.60)

Entry Price:  $0.95 (1/21/11)
Exit Target: $1.90
Return: -37%
Stop Target: None

Action:  We said this is going to be a short-term trade and that we could be out by last Friday or early this week.  The calls traded up to $1.27 on Friday and we could have gotten out for a 25% gain which sounds good right now.  However, we have expected the rally to last until mid-February and fund managers are still buying stocks.  We are hoping shares can rebound this week and they should if support holds. 
 

Micron Technology (MU, $10.37, down $0.22)

April 10 calls (MU110416C00010000, $1.10, down $0.15)

Entry Price:  $0.75 (1/21/11)
Exit Target: $1.50 (closed half @ $1.00 on 1/28/11)
Return: 40%
Stop Target: None

Action:  We closed half of the trade on Friday and we still have high expectations for Micron.  If shares resume their strong uptrend we can also add some March call options but let’s see if the Nasdaq can rebound first. 

 
JPMorgan Chase (JPM, $44.54, down $0.56)

February 46 calls (JPM110219C00046000, $0.45, down $0.15)

Entry Price:  $0.88 (1/12/11)
Exit Target: $1.75
Return: -49%
Stop Target: None

Action:  This has done one of our better trades over the past 5 months and we knew when we got into it that it was going to be hard to trust the Financial stocks.  We also felt the current rally would also need the group to rebound and earnings have been mixed.  JPMorgan had one of the better earnings report and this position has teased us as it has almost turned into a profitable one.  The problem is we have February options and they will expire in 3 weeks.  Continue to hold for now but we will need a big rebound just to break even.

Apollo Group (APOL, $41.02, down $1.27)

February 34 puts (APOL110219P00035000, $0.10, flat)

Entry Price:  $0.85 (1/7/11)
Exit Target: $1.70 (closed half @ $1.70 on 1/10/11)
Return: 6%
Stop Target: None

Action:  If shares can break below $40 this week, we are back in business.  We closed half of the trade at $1.70 on 1/10/11 and the current 10 cents on the other half gives an average price of $0.90 so far.  We cannot lose money on this trade so we can leave it open until expiration.  Continue to hold the other half.
 

Brocade Communications (BRCD, $5.60, down $0.28)

July 6 calls (BRCD110716C00006000, $0.60, down $0.10)

Entry Price:  $0.67 (1/4/11)
Exit Target: $1.35
Return: -10%
Stop Target: None

Action:  The 52-week high is $8 which gets these calls to $2 on a continued turnaround story.  Brocade could also be a takeover target down the road and these options have 165 days before they expire.  Continue to hold.
 

Skyworks Solutions (SWKS, $31.15, down $1.60)

May 32 calls (SWKS110521C00032000, $2.80, down $0.50)

Entry Price:  $1.70 (12/29/10)
Exit Target: $3.40 (closed half @ $3.30 on 1/18/11)
Return: 79%
Stop Target: $1.20, raise to $2.00 (HARD STOP on other half)

Action:  We closed the other half of this trade on Friday to protect profits.  However, we have a feeling we will back in this name again as Skyworks is showing incredible momentum.  Don’t be surprised if we get back into some May or longer-term options with Skyworks, quickly.
 

Other 2011 Portfolio OPEN positions (5):  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 2010)
American Tower April 60 calls (from October 2010)
Electronic Arts March 20 calls (from November 2010)
Constellation Brands February 22.50 calls (from January 2011)
Vivus June 14 calls (from January 2011)

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.

Pan American Silver (PAAS, $33.22, up $0.88)

March 36 calls (PAAS110319C00036000, $1.20, up $0.25)

Thoughts:  We think shares can run back towards $40 over the next 6 weeks.

Orexigen Therapeutics (OREX, $8.32, down $0.42)

February 5 puts (OREX110219P00005000, $0.55, up $0.10)

Thoughts:  We are expecting BIG news on this stock any day now.  These options are a lottery play but it’s a bet on the company’s diet drug, Contrave, not getting the green light from the FDA.
Molycorp (MCP, $45.89, down $0.86)

February 50 calls (MCP110219C00050000, $1.50, down $0.50)

Thoughts:  We would love to get the 50’s for a buck but we may have to move out to the March options while we find the perfect entry point for getting in a trade.  The company is also offering additional shares which some investors feel is a bad thing but it’s not.  Molycorp could double and hit $100 this year if shares get the momentum we think they are going to get. It’s hard to say when but that is what our gut is telling us.
Patriot Coal (PCX, $25.46, up $0.67)

March 28 calls (PCX110319C00028000, $1.40, up $0.30)

Thoughts:  The company announces earnings on Tuesday and we think they could surprise Wall Street.  Watch for now but we may be missing a good opportunity.

 
Imax (IMAX, $25.57, down $0.51)

June 30 calls (IMAX110618C00030000, $1.30, down $0.20)

Thoughts:  Shares have lost 20% since the high of $32.30 which was hit on
the last trading day for 2010.  The company is subject to takeover rumors
but continues to do well as it expands and grows into new markets. We are now watching the 30’s instead of the 35’s.
Green Mountain Coffee Roasters (GMCR, $33.76, down $0.91)

March 36 calls (GMCR110319C00036000, $1.05, down $0.35)

Thoughts:  We switched the 38’s for the 36’s as shares continue to drop ahead of the company earnings report.  We took a long look at Green Mountain in our Weekly Wrap and while we think they could beat earnings, we just don’t know due to past accounting issues.  We may list some puts in our afternoon update as a possible strangle option trade.