July 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)

Special Note:  We only have 3 trades in play this week that have a July expiration date.  Ebay is a call option trade from February, and LinkedIn and Wells Fargo are put options.  LNKD is lost but WFC could make a comeback.  Many of you who have been with us for years have seen options come back from being 70%-80% down before handing you a profit.  It recently happened with Alpha Natural Resources where the position was down nearly 90% before coming back to post a double-digit gain.

Most of our current trades have major catalysts coming up over the next few months that have nothing to do with the market.  For the ones that do, we have gone out until August and September and October to allow plenty of time for the trades to play out in our favor.  However, some of these positions may trade lower over the near-term and some of you are nervous.  We understand.

Look, the market could drop another 20% from here.  We don’t know.  What seems certain now though is that the U.S. debt crisis will be the main event that will push the market to new highs on some kind of resolution, or, we hit a full-blown bear market as no deal gets done and the U.S goes into default.  For the first time ever. 

Folks, it’s hard for us to believe that our government would allow this to happen and it is a joke they are playing a game of chicken on our tax dollars.

Obama wants a deal done in 2 weeks.  That is July 22-25 at the latest.  The only question is can good earnings hold support or will they bears roam as earnings disappoint and the world debt picture becomes cloudier?

The market is still higher for July, even with the past few beatings.  Remember, we only have 3 July trades we need to worry about near-term.  Don’t panic….

 

CURRENT TRADES

Qualcomm (QCOM, $56.61, down $1.63)

October 65 calls (QCOM111022C00065000, $0.65, down $0.25)

Entry Price:  $0.85 (7/11/11)

Exit Target: $1.70

Return:  -24%

Stop Target:  None 

Action:  We think Qualcomm can trade to $70 over the next 3 months but we said a test to $55 could be in the cards, first.  If we do get a support and hold, we may add an August call option to play a bounce back to $60.  We don’t double-down on positions but we do see an opportunity to make another quick trade if shares fall to double-nickels.

The company reports earnings on July 20 and is rumored to be the chip of choice in the iPhone5. 

 

TiVo (TIVO, $10.43, up $0.12)

August 11 calls (TIVO110820C00011000, $0.40, up $0.05)

Entry Price:  $0.55 (7/1/11)

Exit Target: $1.10

Return:  -27%

Stop Target:  None 

Action:  Tivo shares were showing a strong bid in pre-market action and are slightly higher for the day.  We still feel shares will continue to test their 2-year resistance level of $11 and a breakout is coming. 

If TiVo can get through this area then we could see a quick run up to $18 on short covering, buyout news, or a partnership with Google or someone else.  Our breakeven point is $11.55 and we have a little over a month to wait for a surge past resistance.


iShares Russell 2000 (IWM, $83.56, up $0.24)

August 86 calls (IWM110820C00086000, $1.15, up $0.05)

Entry Price:  $1.10 (7/1/11)

Exit Target: $2.20

Return:  5%

Stop Target:  $0.55 

Action:  Continue to hold.


Freeport-McMoRan (FCX, $54.17, up $0.87)

August 57 calls (FCX110820C00057000, $1.30, up $0.25)

Entry Price:  $1.18 (7/1/11)

Exit Target: $2.40

Return:  10%

Stop Target:  $0.60

Action:  We would love to see a close back above $55 today and we have recouped half of yesterday’s losses.  We think Freeport can trade to $60 if the market holds up.


Seattle Genetics (SGEN, $19.85, down $0.69)

August 22.50 calls (SGEN110820C00022500, $0.70, down $0.30)

Entry Price:  $1.10 (6/28/11)

Exit Target: $2.50

Return:  -36%

Stop Target:  $0.55 


September 20 calls (SGEN110917C00020000, $2.20, down $0.30) 

Entry Price:  $1.50 (5/9/11)

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

Return:  47%

Stop Target:  $2.20   

Action:  The FDA “reviewers” will meet this Thursday to discuss Seattle’s two drug applications and there are some concerns on the size of the clinical trials.  This is a preliminary meeting so we aren’t too concerned with today’s action because we think all systems will be go by the end of August.  The FDA usually takes the panel’s review pretty seriously so we can’t ignore there could be some bad news coming though.  Support is strong in this area which was prior resistance. 

   

Symantec (SYMC, $19.25, down $0.11)

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

Entry Price:  $0.93 (6/21/11)

Exit Target: $2.00  

Return:  -3%

Stop Target:  None

Action:  The 52-week high is $20.50 and we are expecting shares to run up to $22+ by mid-October.   


Rambus (RMBS, $14.19, down $0.07)

August 17 calls (RMBS110820C00017000, $0.25, flat)

Entry Price:  $0.60 (6/20/11)

Exit Target: $1.20+  

Return:  -58%

Stop Target:  None

Action:  Resistance is at $15 and there is a big gap to fill from $15 up to $19 which was prior support.  If Rambus can win its current litigation case then expect a breakout and a run into the $20’s.


Rediff.com India (REDF, $11.45, down $0.10)

October 15 calls (REDF111022C00015000, $0.90, flat)

Entry Price:  $1.25 (6/01/11)

Exit Target: $2.50

Return:  -28%

Stop Target:  None

Action:  The October options 3 months before they expire and Rediff.com remains a likely takeover target for a company wanting to get a footprint in India’s online community of users.    


MGM Resorts International (MGM, $14.64, up $0.57)

September 17 calls (MGM110917C00017000, $0.45, up $0.10)

Entry Price:  $0.70 (5/13/11)

Exit Target: $1.40

Return:  -36%

Stop Target:  None

Action:  Continue to hold.


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)   

Darling International July 20 calls (from May 2011

Vivus September 10 calls (from May 2011)

LinkedIn July 55 puts (from June 2011)   

Wells Fargo July 26 puts (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.

We will update this section in the morning.