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.

1:20pm (EST)

Seattle Genetics (SGEN, $21.21, up $0.66)

August 22.50 calls (SGEN110820C00022500, $1.15, up $0.20)

Entry Price:  $1.10 (6/28/11)

Exit Target: $2.50

Return:  5%

Stop Target:  $0.55 


September 20 calls (SGEN110917C00020000, $3.20, up $0.50) 

Entry Price:  $1.50 (5/9/11)

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

Return:  80%

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

Action:  Hopefully we don’t confuse anyone by listing our original Seattle trade with the new one we released this morning.  We have been in the September 20 calls since early May and we have a price target of $30 for the stock.  We are expecting big news in July and possible approval of their drug(s) over the next month or two.

 

LinkedIn (LNKD, $83.76, up $7.38)

July 55 puts (LNKD110716P00055000, $0.45, down $0.30)

Entry Price:  $1.20 (6/24/11)

Exit Target: $2.40 

Return:  -63%  

Stop Target:  None

Action:  LinkedIn has rallied another 10% today but this should be the lid.  The options are holding up well but further upside you start to whack any premium we have left. 

The good news is that we still expect volatility to the downside and the puts held up well all things considering.  We can also use these puts as “insurance” in case the market continues to rally and then falls off a cliff.  In any event, we plan to let this trade run its course so let’s see how it plays out. 

 

Symantec (SYMC, $19.50, up $0.46)

October 20 calls (SYMC111022C00020000, $1.10, up $0.20) 

Entry Price:  $0.93 (6/21/11)

Exit Target: $2.00  

Return:  18%

Stop Target:  None

Action:  Symantec has tradeded to a high of $19.18 and we are looking for a close above $19.65 today.  The 52-week high of $20.50 would then be in play.  These options have 115 days before they expire and we are expecting shares to run up to $22+ by mid-October which gets these calls to $2.

 

Wells Fargo (WFC, $27.48, up $0.03)  

July 26 puts (WFC110716P00026000, $0.30, flat)

Entry Price:  $0.50 (6/20/11)

Exit Target: $1.00+  

Return:  -40%

Stop Target:  None

Action:  The financial stocks are lagging today.  Resistance at $28 should continue to hold but if it doesn’t the trade will be in trouble.  We only need shares to drop to $25 to make a double so we still like the risk/ reward as the options were only 50 cents.  

 

Rambus (RMBS, $14.38, up $0.31)

August 17 calls (RMBS110820C00017000, $0.40, up $0.05)

Entry Price:  $0.60 (6/20/11)

Exit Target: $1.20+  

Return:  -33%

Stop Target:  None

Action:  If Rambus can win it current litigation case then there is a big gap to fill on positive news.


Krispy Kreme Doughnuts (KKD, $9.73, up $0.21)

July 10 calls (KKD110716C00010000, $0.40, up $0.05)

Entry Price:  $0.20 (6/14/11)

Exit Target: $0.40+  

Return:  100%

Stop Target:  None

Action:  We have another triple-digit winner but we are looking for a whole lot more.  We would like to see a run past $10 this week which could lead to a breakout up to $12.


RealD (RLD, $22.97, down $0.19)       

July 20 puts (RLD110716P00020000, $0.60, flat)

Entry Price:  $0.45 (6/9/11)

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

Return:  147%

Stop Target:  30 cents

Action:  We have already sold half the position at $1.60 and our entry price was 45 cents.  The gain on the closed half was 256% so even if these puts expire worthless the trade will make 78%.  However, a test back to $18 gets these options at $2.


Other 2011 Portfolio OPEN positions (7):  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.

eBay July 40 calls (from February 2011)

RF MicroDevices August 10 calls (from February 2011)

Dendreon August 50 calls (from April 2011)

MGM Resorts International September 17 calls (from May 2011)

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

Darling International July 20 calls (from May 2011)
Vivus (September 10 calls (from May 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.

We will update this section in the morning.      

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

10:35am (EST)

Seattle Genetics (SGEN, $21.10, up $0.55)

Buy to OPEN August 22.50 calls (SGEN110820C00022500, $1.10, up $0.15)

Action:  We want to add to our current Seattle Genetics trade by using these August calls.  Use limit prices of $1.10 but do not pay over $1.20-$1.25 to establish positions.   

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

9:00am (EST)

LinkedIn (LNKD, $76.38, up $6.44)

July 55 puts (LNKD110716P00055000, $0.75, down $0.75)

Entry Price:  $1.20 (6/24/11)

Exit Target: $2.40 

Return:  -38%  

Stop Target:  None

Action:  This is what a short-squeeze feels like as LinkIn rallied 9% yesterday.  We thought about making this a strangle trade but after shares failed at $73 we thought we had another green light. 

The good news is that we still expect volatility to the downside and the puts held up well all things considering.  We can also use these puts as “insurance” in case the market continues to rally and then falls off a cliff.  In any event, we plan to let this trade run its course so let’s see how it plays out. 

 

Symantec (SYMC, $19.04, up $0.29)

October 20 calls (SYMC111022C00020000, $0.90, up $0.05) 

Entry Price:  $0.93 (6/21/11)

Exit Target: $2.00  

Return:  -3%

Stop Target:  None

Action:  Symantec made a nice rebound yesterday and traded to a high of $19.18.  If the stock can make it past $19.65 then we have a good shot at the 52-week high of $20.50 be taken out. 

These options have 115 days before they expire and we are expecting shares to run up to $22+ by mid-October.  This will easily double the price of these options as they would be worth at least $2.

 

Wells Fargo (WFC, $27.45, up $0.19)  

July 26 puts (WFC110716P00026000, $0.30, down $0.10)

Entry Price:  $0.50 (6/20/11)

Exit Target: $1.00+  

Return:  -40%

Stop Target:  None

Action:  The financial stocks had a good Monday but Wells Fargo could only manage a run to $27.65.  Resistance at $28 should continue to hold but if it doesn’t the trade will be in trouble.  We only need shares to drop to $25 to make a double so we still like the risk/ reward as the options were only 50 cents.  

 

Rambus (RMBS, $14.07, down $0.14)

August 17 calls (RMBS110820C00017000, $0.35, down $0.05)

Entry Price:  $0.60 (6/20/11)

Exit Target: $1.20+  

Return:  -42%

Stop Target:  None

Action:  If Rambus can win it current litigation case then there is a big gap to fill on positive news.


Krispy Kreme Doughnuts (KKD, $9.52, up $0.39)

July 10 calls (KKD110716C00010000, $0.35, up $0.05)

Entry Price:  $0.20 (6/14/11)

Exit Target: $0.40+  

Return:  75%

Stop Target:  None

Action:  Krispy Kreme hit a 52-week high of $9.63 yesterday as our options got another bump higher.  We would like to see a run past $10 this week which could lead to a breakout up to $12.


RealD (RLD, $23.16, down $1.45)       

July 20 puts (RLD110716P00020000, $0.60, up $0.25)

Entry Price:  $0.45 (6/9/11)

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

Return:  147%

Stop Target:  30 cents

Action:  RealD traded to a low of $22.31 yesterday which is right in the area of a major breakdown.  There was heavy action in the August 20 puts as well so traders are taking positions.  We have an $18 price target for RealdD over the next few weeks.

We have already sold half the position at $1.60 and our entry price was 45 cents.  The gain on the closed half was 256% so even if these puts expire worthless the trade will make 78%.  However, a test back to $18 gets these options at $2.


Vivus (VVUS, $7.64, up $0.03)

September 10 calls (VVUS110917C00010000, $0.20, down $0.05)

Entry Price:  $0.65 (5/20/11)
Exit Target: $1.30
Return:  -69%
Stop Target:  None

Action:  Vivus offered up some impressive data on Qnexa last week but shares failed to get a pop.  We will also moving this trade to the “hold” section until shares show some signs off life.  Trading ranges are boring and until the stock breaks above $8, the action will be dull.  These options still have 3 months before expiration so let’s sit tight.   


Seattle Genetics (SGEN, $20.55, down $0.15)

September 20 calls (SGEN110917C00020000, $2.70, down $0.10) 

Entry Price:  $1.50 (5/9/11)

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

Return:  63%

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

Action:  Continue to hold.


Other 2011 Portfolio OPEN positions (6):  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.


eBay July 40 calls (from February 2011)

RF MicroDevices August 10 calls (from February 2011)

Dendreon August 50 calls (from April 2011)

MGM Resorts International September 17 calls (from May 2011)

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

Darling International July 20 calls (from May 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.


Apollo Group (APOL, $41.88, down $0.06)

July 40 puts (APOL110716P00038000, $1.20, flat)

Thoughts:  Apollo Group will announce earnings after the bell on Thursday and many of you who have been with us a few years know our feelings on the stock and on the company.   We don’t like or trust either. 

Most of these non-profit or not “colleges” are a waste of government money and most of the students use the loans for other needs.  The “online” classrooms that many of these courses offer are incomplete and you really don’t have a “teacher”.  Even if you do get a good education or learn a skill, jobs are still hard to come by. 

If Apollo misses Wall Street’s estimates then shares could finally start to crack.  These options are “expensive” based on the premium which is holding us back from making this an official recommendation. 


Polycom (PLCM, $62.80, up $2.04)

July 67.50 calls (PLCM110716C00067500, $0.85, up $0.30)

Thoughts:  After the 2-for-1 stock split announcement, shares surged and then pulled back like we expected.  There should be continued strength as the split takes effect this week.  Our subscribers made 60% last time out on a Polycom trade so stay locked and loaded if we go back to the well.  If we do take action, we will send out a Trade Alert. 


PowerShares QQQ Trust (QQQ, $55.24, up $0.86)

July 55 calls (QQQ110701C00055000, $0.75, up $0.30)

Thoughts:  These are the WEEKLY options which could do well if the Nasdaq breaks out this week.       


Potash (POT, $54.16, up $1.52)

July 55 calls (POT110716C00055000, $1.15, up $0.45)

Thoughts:  We said yesterday morning shares were poised for a run to $55 and they kissed $54.69 yesterday.  These options opened at 72 cents and we should have jumped on them as they traded up to $1.38 and nearly doubled. 


The WEEKLY options for Potash were active as the July 55 calls (POT110701C00055000, $0.50, up $0.25) did double after opening at 21 cents and trading to a high of 73 cents.  Wow.  

If there is continued strength then we may look at getting in but we don’t want to chase as shares have already approached our $55 target we had set over the short-term.  


Williams-Sonoma (WSM, $36.50, down $0.76)

August 39 calls (WSM110716C00039000, $0.95, down $0.30)

Thoughts:  We are now following the August calls and we really like this trade for under a buck.  These options were active yesterday as over 500 contracts traded hands and shares are right back at strong support.  We think shares can make a run back up to $40, possibly $45 if the stock regains any momentum.


Ancestry.com (ACOM, $40.84, up $0.92)

July 40 calls (ACOM110716C00040000, $2.10, up $0.40)

Thoughts:  Keep riding the gravy train if you are in this trade from last week when we profiled these options at 80 cents.  Although it’s not an “official” trade, many of you are having success with it judging by your emails.  Set stops at $1.60 and sell half into continued strength or a pullback if you are in it.   


SanDisk (SNDK, $40.36, up $1.42)

July 39 puts (SNDK110716P00039000, $0.80, down $0.70)

August 35 puts (SNDK110820P00035000, $1.05, flat)

Thoughts:  Following Friday’s plunge, SanDisk rebounded back over $40 which was great because we would love to short it at $44.  We have also listed some August puts as we wait for a retracement but the chart is saying a drop below $35 could be in the cards.