9:00am (EST)

Spider S&P 500 (SPY, $128.78, down $0.55)

August 135 calls (SPY110820C00135000, $0.35, down $0.35)

Entry Price:  $0.95 (7/27/11)
Exit Target: $1.40-$1.90
Return:  -63%
Stop Target:  None

Action:  Options can lose 75%-90% of their value before coming back to hand you a profit and we are hoping this is the case with our current Spider plays.  We went long last Wednesday because we thought a debt deal would have been done before now but that wasn’t the case.

The S&P hit an intraday low of 1,262 on June 23 and rallied to a high of 1,356 by July 7.  It only took 10 trading days to get this type of move and we believe the S&P can get there by mid-August.  However, there is a ton of economic news that will sway direction this week so it will be crucial the S&P holds support with only 17 days remaining on these options.  If not, we could get trapped.

Spider Dow Jones Industrial Average (DIA, $121.11, down $0.02)

August 126 calls (DIA110820C00126000, $0.35, down $0.20)

Entry Price:  $1.05 (7/27/11)
Exit Target: $1.60-$2.20
Return:  -67%
Stop Target:  None

Action:  By comparison, the Dow closed at 12,050 on June 23 and was at 12,719.  The charts are still bullish and if there is a rally it could mirror this move and then some.     

Mead Johnson Nutrition (MJN, $71.19, down $0.18)

November 80 calls (MJN111119C00080000, $0.85, down $0.10)

Entry Price:  $0.55 (7/26/11)
Exit Target: $1.10+ (closed half at $1.25 on 7/28/2011)
Return:  91%
Stop Target:  75 cents

Action:  It will be hard to keep the other half of this trade open with the current volatility but we have locked in profits on the other half so it’s a little easier.  Shares of Mead hit a 52-week high of $72.86 last Thursday and kissed $72 yesterday.  Although there was a slight dip below $70, shares recovered by the close. 

Continue to hold but if the stock falls below $70 again, we may have to ring the register.

Rambus (RMBS, $13.73, down $0.16)

September 17 calls (RMBS110917C00017000, $0.30, flat)

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -54%
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, $0.25, up $0.05)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  67%
Stop Target:  None

Action:  Rambus could go to $10 or $20 over the next few weeks.  If they can get a legal victory in their ongoing litigation then shares should trade up to $20 which was prior support. 

 risk of kissing $10 and possibly, single-digits.  However, Rambus is also turning its books around so we are hoping short-term support at $13.50 holds if there is further weakness.  If not, the puts could make enough to offset the calls.

    
Broadcom (BRCM, $37.11, up $0.04)

August 38 calls (BRCM110820C00038000, $0.85, down $0.10)

Entry Price:  $0.55 (7/20/11)
Exit Target: $1.50 (closed half at $1.65 on 7/26/2011)
Return:  127%
Stop Target:  70 cents

Action:  Shares have been holding strong support just above $36 and we are looking for a run up to $42 which has been strong resistance.  We liked yesterday’s upgrade by Wall Street and the $46 price target but we will close the other half of the trade if shares fall below $36.

Qualcomm (QCOM, $54.12, down $0.66) 

October 65 calls (QCOM111022C00065000, $0.25, down $0.10)

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

Action:  These options have until mid-October and a run past $60 is still in the cards.  However, we need to get back above double-nickels first.     

Freeport-McMoRan (FCX, $53.17, up $0.21)

August 57 calls (FCX110820C00057000, $0.55, down $0.10)

Entry Price:  $1.18 (7/1/11)
Exit Target: $2.40
Return:  -53%
Stop Target:  $0.60

Action:  Freeport is holding support and we will need a run up to $58 to breakeven on this trade.  Shares moved from $47 to $56 from the same June-July time frame we mentioned earlier and demand for copper could get squeezed.  The company recently reported earnings and revenue that beat Wall Street’s expectations and one brokerage firm upgraded shares to “Buy” with a $75 price target a couple of weeks ago.

We have a price target of $60 by mid-August but we would agree by year-end shares could reach $75 if the market holds up.

Symantec (SYMC, $19.04, down $0.03)

October 20 calls (SYMC111022C00020000, $0.60, down $0.10)

Entry Price:  $0.93 (6/21/11)
Exit Target: $2.00
Return:  -35%
Stop Target:  None

Action:  Symantec is switching out CEO’s put the transition should be smooth.  The company reported earnings last Thursday which also beat estimates and 2 brokerage firms came out with “Buy” rating and $22-$23 price targets after the fact.  We have said we expect a run to $22 but we also think Symantec could be a buyout candidate.

MGM Resorts International (MGM, $15.21, up $0.10)

September 17 calls (MGM110917C00017000, $0.45, down $0.05)

Entry Price:  $0.70 (5/13/11)
Exit Target: $1.40
Return:  -36%
Stop Target:  None

Action:  Shares traded to a high of $15.74 yesterday which still represents short-term resistance.  Support is strong down to $14.50 and the 52-week high is $16.94.  The company announces earnings on August 8.

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.

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)
Seattle Genetics September 20 calls (from May 2011)
Global Payments August 55 calls (from July 2011)

iShares Russell 2000 August 86 calls (from July 2011)

TiVo August 11 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.


Amgen (AMGN, $53.77, down $0.93)

September 55 calls (AMGN110917C00055000, $1.10, down $0.60)

Thoughts:  Healthcare is falling out of favor right now so we may have to drop coverage of AMGN until there is a break back above $55-$56.    


Garmin (GRMN, $32.19, down $0.44)

September 30 puts (GRMN110917P00030000, $0.85, up $0.05)

September 34 calls (GRMN110917C00034000, $0.60, down $0.10)

Thoughts:  Look who is back.  Can this be the quarter that sinks the stock?  The company reports earnings Wednesday.  We have also listed the call options as a possible strangle option trade because Garmin has a history of erratic earnings where they tend to beat by a wide margin or miss by a boat.  Current estimates range from


Lufkin Industries (LUFK, $81.27, down $0.21)

September 90 calls (LUFK110917C00090000, $1.50, flat)

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.


Pepsi (PEP, $63.86, down $0.18)

October 67.50 calls (PEP111022C00067500, $0.50, down $0.05)

September 65 calls (PEP110917C00065000, $0.80, down $0.05)

Thoughts:  Pepsi was a $70 stock at the beginning of July and has fallen to multi-year support at $64 following a not-so-great earnings report a few weeks ago.  
 

Quality Systems (QSII, $90.71, down $0.65)   

September 100 calls (QSII110917C00100000, $0.80, down $0.20)

Thoughts:  The stock traded to a 52-week high of $93.64 yesterday before fading.  Shares could trade to $100 up into the 2-for-1 stock-split which will take place at the end of October.
 

RealD (RLD, $14.40, down $1.08)

August 17.50 puts (RLD110820P00017500, $3.60, up $0.60)

Thoughts:  Shares of Real D fell to another 52-week low of $14.21 yesterday.  We profiled this trade in mid-July when the puts were under $1 but we missed a great opportunity as it wasn’t an “official” recommendation.  Following yesterday’s move, we are dropping coverage but make sure you lock up profits if you took the trade.
 

Polycom (PLCM, $26.51, down $0.52)

September 30 calls (PLCM11091700030000, $0.45, down $0.15)

Thoughts:  Watch for now. 
 

Williams-Sonoma (WSM, $35.95, down $1.07)

September 39 calls (WSM110917C00039000, $0.85, down $0.20) 

Thoughts:  Watch for now.