June 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.

12:35pm (EST)

NEW TRADE!!!

LinkedIn (LNKD, $71.31, down $3.31)

Buy to OPEN July 55 puts (LNKD110716P00055000, $1.25, up $0.30)

Action:  We have a feeling LinkedIn could drop to $50 if Tech does break to new lows over the next month.  However, these options are expensive and are $15+ out-of-the-money.  Still, we just have this feeling that the selling pressure continues.  Use limit orders up to $1.30 but do not pay more than $1.40 for these options.

 

CURRENT TRADES

Krisp Kreme (KKD, $8.93, up $0.26)

July 10 calls (KKD110716C00010000, $0.30, up $0.05)

Entry Price:  $0.20 (6/14/11)

Exit Target: $0.40+  

Return:  50%

Stop Target:  None

Action:  Open interest is at 4,500 contracts for these options so there are a lot of traders expecting a move above $10.  We were in before the crowd and once we get the pop over $10, these options should worth at least 75 cents.  

 

RealD (RLD, $24.69, up $0.42)

July 20 puts (RLD110716P00020000, $0.45, down $0.05) 

Entry Price:  $0.45 (6/9/11)

Exit Target: $0.90+ (closed half at $1.60 on 6/10/2011)

Return:  128%

Stop Target:  75 cents

Action:  We are looking for shares to trade down to $18 by mid-July.  This would get the options to $2 on the other half.  We do not recommend new positions but we are looking at a piggy-back trade. 


Research In Motion (RIMM, $35.36, up $0.19)

July 32.50 puts (RIMM110716P00032500, $1.35, down $0.10)

Entry Price:  $0.75 (6/6/11)  

Exit Target: $1.50 (closed half at $1.35 on 6/15/2011)

Return:  80%

Stop Target:  None

Action:  For those of you who want to lock in an 80% profit please feel free to do so.  Shares got upgraded this morning by one brokerage firm and RIMM”s earnings bar is so low they might beat expectations.  However, we have closed half the trade to lock in profits so if the puts do tank we can still escape the trade with a small profit or minor loss.  We are leaving the other half of the trade open.    


Zagg (ZAGG, $12.43, up $0.28)

July 12 calls (ZAGG110716C00012000, $1.00, up $0.20)

Entry Price:  $0.35 (6/1/11)

Exit Target: $0.70 (closed half at $1.00 on 6/15/2011)

Return:  186%

Stop Target:  40 cents (on other half) 

Action:  Continue to hold as we have a near-term target of $14-$15 for Zagg. 


Darling International (DAR, $18.36, down $0.28)

July 20 calls (DAR110716C00020000, $0.30, down $0.05)

Entry Price:  $0.50 (5/27/11)
Exit Target: $1.00
Return:  -40%
Stop Target: None

Action:  We have a $20-$21+ target on the stock by mid-July which should get these options to $1.00 or more.   


Vivus (VVUS, $7.87, up $0.10)

September 10 calls (VVUS110917C00010000, $0.30, flat)

Entry Price:  $0.65 (5/20/11)
Exit Target: $1.30
Return:  -54%
Stop Target:  None

Action:  The company may have a winner with Qnexa on two fronts which is what most analysts are forgetting.  The drug has completed Phase 3 trials for obesity and is still awaiting approval from the FDA.  However, Qnexa has also completed Phase 2 clinical trials and is hoping to get approval to treat diabetes and obstructive sleep apnea as well.   


Seattle Genetics (SGEN, $18.98, down $0.36)

September 20 calls (SGEN110917C00020000, $2.00, down $0.20)

Entry Price:  $1.50 (5/9/11)

Exit Target: $3.00 (closed half at $2.20 on 6/8/2011)

Return:  40%

Stop Target:  $1.60 (HARD STOP on other half)

Action:  Shares are down today on news cancer drug stocks could be at risk due to the FDA budget battle.  Some want companies to help fund the FDA which has approved a number of cancer drugs in recent years.  On the plus side, Seattle Genetics is getting a review of two of its drugs in mid-July.  Today’s pullback is an overreaction in our opinion.


Other 2011 Portfolio OPEN positions (8):  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.  This means we would not open any new positions.  We are still keeping track of the trades and we will record the results, accordingly, when we close them or the options expire.  Click on the 2011 Portfolio link in the Members Area to view ALL open/ closed trades.

Vivus June 14 calls (from January 2011)

eBay July 40 calls (from February 2011)

RF MicroDevices August 10 calls (from February 2011)

Dendreon August 50 calls (from April 2011)

KLA-Tencor June 48 calls (from May 2011)

Starbucks June 38 calls (from May 2011)

MGM Resorts International September 17 calls (from May 2011)

Rediff.com India October 15 calls (from June 2011)


WATCH LIST SECTION

These trades are NOT recommendations.  They 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 try not to have more than 12-15 open trades at any one time which is why we created a Watch List.  We will not list entry prices because these stocks are on the verge of breaking out or they could sell-off.


OpenTable (OPEN, $78.60, down $0.83)

July 90 calls (OPEN110716C00090000, $0.90, down $0.20)

July 67.50 puts (OPEN110716P00067500, $1.00, up $0.10)

Thoughts:  Shares are right near the middle with the 52-week high at $118 and the low at $40.  This strangle trade could do really well as shares either continue their recent downtrend or they bounce back from the bullish wedge forming. 


Titan Machinery (TWI, $21.52, up $0.01)

July 22.50 calls (TWI110716C00022500, $1.00, flat)

Thoughts:  Continue to watch.  


VeriFone Systems (PAY, $40.66, down $0.69)

July 45 calls (PAY110716C00045000, $0.70, down $0.20)

July 38 puts (PAY110716P00038000, $1.25, up $0.20)

Thoughts:  Short-term resistance is at $44 but a break past this level will lead to $46-$47.  However, the magnet at $40 could pull shares there before a rebound.  A break below $40 could lead to $35.  This is almost setting up nicely for a strangle trade but the premiums are a little juiced.


Symantec (SYMC, $18.61, up $0.08)

October 20 calls (SYMC111022C00020000, $0.75, flat) 

Thoughts:  We would like to see shares come down to $18 for a good entry point as we feel the stock will challenge new highs by October.  The current 52-week high is $20.50.


S&P 500 Spiders (SPY, $127.46, up $0.44)

July 125 put (SPY110716P00125000, $2.00, down $0.10)

July 130 call (SPY110716C00130000, $1.20, up $0.15) 

Thoughts:  Waiting for a breakout or breakdown.


Polycom (PLCM, $56.65, down $1.21) 

July 62.50 calls (PLCM110716C00062500, $0.90, down $0.30)

Thoughts:  We cover stock-splits in our trading manual and said that they are positive events.  After a run-up on the announcement, there is usually a pullback, followed by another uptrend.  After the split, we will see where shares are at and wait for the next leg higher.  


Wells Fargo (WFC, $26.73, up $0.18)

July 26 puts (WFC110716P00026000, $0.65, down $0.10)

Thoughts:  We are looking for Wells to make a run to $28 which is where we want to target entry positions.   


Caterpillar (CAT, $96.32, up$0.67)

July 95 puts (CAT110716P00095000, $3.10, up $1.10)

Thoughts:  Shares were below $95 in pre-market but have held this level and traded higher today.  We would love to see another run back to $100 which is where we would look to go short.