August 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.

1:10pm (EST)

Cigna (CI, $45.74, up $0.24)

September 44 puts (CI110917P00044000, $1.75, flat)

Entry Price:  $1.20 (8/4/11)
Exit Target: $2.40+
Return:  46%
Stop Target:  None

Action:  The decrease in Medicaid funding by the government could land shares of Cigna below $40.  The options have traded up to $2.35 and we probably should have closed half but we feel comfortable holding the trade over the weekend.


Rambus (RMBS, $11.66, down $0.57)

September 17 calls (RMBS110917C00017000, $0.15, flat) 

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -77%
Stop Target:  None

 
August 17 calls (RMBS110820C00017000, $0.10, flat)

Entry Price:  $0.60 (6/20/11)
Exit Target: $1.20+
Return:  -83%
Stop Target:  None


August 12.50 puts (RMBS110820P00012500, $1.50, up $0.75)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+ (closed half at $1.70 on 8/5/2011)
Return:  967%
Stop Target:  None

Action:  Continue to hold the other half.  

Other 2011 Portfolio OPEN positions (14):  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.


RF MicroDevices August 10 calls (from February 2011)
Dendreon August 50 calls (from April 2011)
MGM Resorts International September 17 calls (from May)

Vivus September 10 calls (from May 2011)
Symantec October 20 calls (from June 2011)

Rediff.com India October 15 calls (from June 2011)
Seattle Genetics August 22.50 calls (from June 2011)
                       September 20 calls (from May 2011)
Global Payments August 55 calls (from July 2011)
TiVo August 11 calls (from July 2011) 

iShares Russell 2000 August 86 calls (from July 2011)

Spider S&P 500 August 135 calls (from July 2011)

Spider Dow Jones Industrial Average August 126 calls (from July 2011)

Freeport-McMoRan August 57 calls (from July 2011)  

Qualcomm October 65 calls (from July 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 be back with some fresh ideas on Monday.

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10:40am (EST)

Rambus (RMBS, $11.66, down $0.57)

August 12.50 puts (RMBS110820P00012500, $1.70, up $0.95)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  967%
Stop Target:  None

Action:  Close HALF of the trade at current prices.  We told you once the negative court verdict came out shares could drop to $10.  We said the puts should easily offset the losses for the calls.  Shares have dipped below $12 and let’s take advantage of the dip to lock in profits ahead of the weekend.

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9:00am (EST)

Cigna (CI, $45.50, down $1.05)

September 44 puts (CI110917P00044000, $1.75, up $0.75)

Entry Price:  $1.20 (8/4/11)
Exit Target: $2.40+
Return:  46%
Stop Target:  None

Action:  The decrease in Medicaid funding by the government could land shares of Cigna below $40.

 

Rambus (RMBS, $12.23, down $1.10)

September 17 calls (RMBS110917C00017000, $0.15, down $0.05) 

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -77%
Stop Target:  None

August 17 calls (RMBS110820C00017000, $0.10, flat)

Entry Price:  $0.60 (6/20/11)
Exit Target: $1.20+
Return:  -83%
Stop Target:  None


August 12.50 puts (RMBS110820P00012500, $0.75, up $0.45)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  400%
Stop Target:  None

Action:   We may lock in profits on half the puts today.  Wait for an alert.    

Other 2011 Portfolio OPEN positions (14):  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.

RF MicroDevices August 10 calls (from February 2011)
Dendreon August 50 calls (from April 2011)
MGM Resorts International September 17 calls (from May)

Vivus September 10 calls (from May 2011)
Symantec October 20 calls (from June 2011)

Rediff.com India October 15 calls (from June 2011)
Seattle Genetics August 22.50 calls (from June 2011)
                       September 20 calls (from May 2011)
Global Payments August 55 calls (from July 2011)
TiVo August 11 calls (from July 2011) 

iShares Russell 2000 August 86 calls (from July 2011)

Spider S&P 500 August 135 calls (from July 2011)

Spider Dow Jones Industrial Average August 126 calls (from July 2011)

Freeport-McMoRan August 57 calls (from July 2011)  

Qualcomm October 65 calls (from July 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.


Potash (POT, $53.38, down $3.88)

September 60 calls (POT110917C00060000, $1.10, down $0.70) 

August 50 puts (POT110820P00050000, $0.91, up $0.74)

Thoughts:  Potash dropped 7% yesterday and these calls are getting tempting.  However, given the current atmosphere they could get cheaper.  The August puts opened at 50 cents, dropped to 20 cents, then traded up to $1.00 before ending up 435% from the previous day.  Insane gains.   


LinkedIn (LNKD, $95.52, down $10.13)

August 125 calls (LNKD110820C00125000, $1.20, down $0.80)   

August 80 puts (LNKD110820P00080000, $3.70, up $2.20) 

Thoughts:  The total cost of this trade would have been $3.70 round-trip yesterday in our midday update.  The trade would have made a profit if you sold the puts at the close and the calls.  The return would have been 32%. 

You could have also sold the puts and made it a risk-free trade while leaving the calls up for further gains.  Or, they get deflated or lose 90% because shares soldoff then you still lose nothing.  This is the main goal of a strangle option trade – to make enough or more on one side of the trade while keeping the other side open.

 
Lufkin Industries (LUFK, $70.36, down $6.25)

September 90 calls (LUFK110917C00090000, $0.30, down $0.40)

Thoughts:  Make that 30%.  We said yesterday shares are down nearly 20% from their 52-week high of $97 set back in April.  The bid/ ask is too large for us to get a good entry price but we may list put options with this trade as well next week. 

 
Pepsi (PEP, $63.35, down $1.13)

October 67.50 calls (PEP111022C00067500, $0.60, down $0.25)

September 65 calls (PEP110917C00065000, $0.90, down $0.20)

Thoughts:  We are making a wish list while there is blood on the streets.  Pepsi didn’t give back all of its gains from the prior session so there was some strengh here.


Bank of America (BAC, $8.83, down $0.71)

September 7 puts (BAC110917P00007000, $0.15, up $0.10)

May (2012) 15 calls (BAC120519C00015000, $0.15, flat)

Thoughts:  The U.S. is in better shape than a lot of other countries and we don’t see BofA dying off the planet.  At these levels, the calls are worth a lottery ticket.

Williams-Sonoma (WSM, $32.99, down $1.75)

September 38 calls (WSM110917C00038000, $0.45, down $0.30)

Thoughts:  We are going to revisit the chart for this one over the weekend.