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.

12:15pm (EST)

Cigna (CI, $45.99, down $0.56)

September 44 puts (CI110917P00044000, $1.45, up $0.45)

Entry Price:  $1.20 (8/4/11)
Exit Target: $2.40+
Return:  21%
Stop Target:  None

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

 

Rambus (RMBS, $12.74, down $0.59)

September 17 calls (RMBS110917C00017000, $0.20, flat)

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -69%
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 (RMBS110820P00012500, $0.50, up $0.20)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  233%
Stop Target:  None

Action:  We still think the puts have a chance to make up the difference on the calls as shares of Rambus could fall to $10 from the technical side.  The company is still tied up in litigation and any positive developments could send shares soaring.   

Qualcomm (QCOM, $52.03, down $0.70)

October 65 calls (QCOM111022C00065000, $0.20, down $0.05)

Entry Price:  $0.85 (7/11/11)
Exit Target: $1.70
Return:  -76%
Stop Target:  None

Action:  Continue to hold.  

 
Symantec (SYMC, $17.36, down $0.91)

October 20 calls (SYMC111022C00020000, $0.30, down $0.10)

Entry Price:  $0.93 (6/21/11)
Exit Target: $2.00
Return:  -68%
Stop Target:  None

Action:  Symantec held support, reported good earnings, and is still a takeover target.  These calls could get cheaper but we plan on holding them until mid-October as have a $22 price target by then for the stock. 

 
Other 2011 Portfolio OPEN positions (11):  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)
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)  


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. 

LinkedIn (LNKD, $103.50, down $2.15)

August 125 calls (LNKD110820C00125000, $1.80, down $0.20)   

August 80 puts (LNKD110820P00080000, $1.90, up $0.40) 

Thoughts:  The total cost of this trade would cost $3.70 which is a little pricey for us but we really feel this trade could double.

We will update the rest of the Watch List tomorrow.

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10:15am (EST)

Cigna (CI, $46.22, down $0.33)

Buy to OPEN September 44 puts (CI110917P00044000, $1.20, up $0.25)

Action:  Use limit orders up to $1.25 but do not pay more than $1.30-$1.35 to establish positions.  The decrease in Medicaid funding by the government could land shares of Cigna below $40.

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

9:00am (EST)

Rambus (RMBS, $13.33, up $0.09)

September 17 calls (RMBS110917C00017000, $0.20, down $0.05)

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -69%
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 (RMBS110820P00012500, $0.30, flat)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  100%
Stop Target:  None

Action:  Continue to hold.  

Qualcomm (QCOM, $53.73, up $0.72)

October 65 calls (QCOM111022C00065000, $0.25, flat)

Entry Price:  $0.85 (7/11/11)
Exit Target: $1.70
Return:  -71%
Stop Target:  None

Action:  Continue to hold.  

 
Symantec (SYMC, $18.27, down $0.24)

October 20 calls (SYMC111022C00020000, $0.40, down $0.10)

Entry Price:  $0.93 (6/21/11)
Exit Target: $2.00
Return:  -57%
Stop Target:  None

Action:  Symantec held support, reported good earnings, and is still a takeover target.  These calls could get cheaper but we plan on holding them until mid-October as have a $22 price target by then for the stock. 

MGM Resorts International (MGM, $14.19, up $0.31)

September 17 calls (MGM110917C00017000, $0.25, flat)

Entry Price:  $0.70 (5/13/11)
Exit Target: $1.40
Return:  -64%
Stop Target:  None

Action:  The company announces earnings on August 8 which could be the catalyst for a big rebound if MGM knocks the cover off the ball.

Other 2011 Portfolio OPEN positions (11):  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)
Vivus September 10 calls (from May 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)  


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, $57.26, up $0.42)

September 60 calls (POT110917C00060000,

Thoughts:  If support holds again today we think Potash to make a run to $60+ over the next few weeks.


LinkedIn (LNKD, $105.65, up $3.89)

August 125 calls (LNKD110820C00125000, $2.00, up $0.50)   

August 80 puts (LNKD110820P00080000, $1.40, down $0.20) 

Thoughts:  LinkedIn reports earnings on Thursday.  Of the five analysts that cover the stock, estimates call for a loss of 3 cents a share, on average.  The high estimate has the company earning a profit of 3 cents a share while the loss estimate is as high as 8 cents a share.  LinkedIn would have to move 15%-20% for this strangle trade to make a profit which shows the premium these options are commanding right now.

We think shares will move up or down at least $20, maybe $30, and we like this trade a lot.  LinkedIn will explode higher if they report a profit, much the same way Google did when they announced their earnings for the first time after going public.  If losses are larger-than-expected then shares could trade back down to $75.   


Garmin (GRMN, $30.86, down $0.67)

September 30 puts (GRMN110917P00030000, $0.75, down $0.25)

September 34 calls (GRMN110917C00034000, $0.15, down $0.40)

Thoughts:  The puts traded to high of $1.35 after the open but shares rebounded late in the day and the puts gave up a lot of their premium.  The calls got smashed as well which is why we told you Garmin is tough to trade.  

 
Lufkin Industries (LUFK, $76.61, down $1.02)

September 90 calls (LUFK110917C00090000, $0.70, down $0.70)

Thoughts:  Shares are down nearly 20% from their 52-week high of $97 set back in April and shares we recently at $90 at the beginning of July.
There is open interest of over 2,000 contracts in the September 100 calls
which tells us traders are expecting a run back towards these levels.  We aren’t sure if shares will break triple-digits by then but these options look good on a bounce.

Pepsi (PEP, $64.48, up $1.30)

October 67.50 calls (PEP111022C00067500, $0.65, up $0.25)

September 65 calls (PEP110917C00065000, $1.05, up $0.45)

Thoughts:  Pepsi was a $70 stock at the beginning of July and has fallen to multi-year support following a not-so-great earnings report a few weeks ago.  These call options might be good for a quick trade on a bounce.

Quality Systems (QSII, $89.37, up $0.87)

September 100 calls (QSII110917C00100000, $0.70, up $0.20)

Thoughts:  Shares could trade to $100 up into the 2-for-1 stock-split which will take place at the end of October but even quality stocks are getting taken to woodshed.

Polycom (PLCM, $26.67, up $0.73)

September 30 calls (PLCM11091700030000, $0.45, up $0.10)

Thoughts:  Watch for now.

Williams-Sonoma (WSM, $34.74, up $0.96)

September 38 calls (WSM110917C00038000, $0.75, up $0.25)

Thoughts:  Watch for now.