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.

1:30pm (EST)

Spider S&P 500 (SPY, $124.59, down $0.90)

August 135 calls (SPY110820C00135000, $0.05, down $0.05)

Entry Price:  $0.95 (7/27/11)
Exit Target: $1.40-$1.90
Return:  -95%
Stop Target:  None

Action:  Continue to hold but obviously we will be moving this trade to the hold section.   

Spider Dow Jones Industrial Average (DIA, $117.66, down $0.80)

August 126 calls (DIA110820C00126000, $0.05, down $0.05)

Entry Price:  $1.05 (7/27/11)
Exit Target: $1.60-$2.20
Return:  -95%
Stop Target:  None

Action:  Continue to hold.       

Mead Johnson Nutrition (MJN, $69.65, down $0.40)

November 80 calls (MJN111119C00080000, $0.65, down $0.05)

Entry Price:  $0.55 (7/26/11)
Exit Target: $1.10+ (closed half at $1.25 on 7/28/2011, half at 65 cents on 8/3/11)
Return:  77%
Stop Target:  75 cents

Action:  We closed half of the trade at $1.25 last Thursday.  Today’s close of 65 cents on the other half gave us an average price of 95 cents.    

Rambus (RMBS, $13.15, down $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, $0.35, up $0.05)

Entry Price:  $0.15 (7/29/11)
Exit Target: $1.20+
Return:  133%
Stop Target:  None

Action:  We may lock in some profits on the puts but not today as there is still risk down to $10 for Rambus and the puts should continue to do well if the market hits new lows.

Shares could still hit $20 over the next few weeks if they can get a legal victory.

  
Qualcomm (QCOM, $53.11, up $0.09)

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.  

Freeport-McMoRan (FCX, $49.76, down $1.68)

August 57 calls (FCX110820C00057000, $0.20, down $0.10)

Entry Price:  $1.18 (7/1/11)
Exit Target: $2.40
Return:  -83%
Stop Target:  $0.60

Action:  Continue to hold.  

Symantec (SYMC, $18.28, down $0.23)

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, $13.50, down $0.38)

September 17 calls (MGM110917C00017000, $0.20, down $0.05)

Entry Price:  $0.70 (5/13/11)
Exit Target: $1.40
Return:  -71%
Stop Target:  None

Action:  Support at $14.50 failed and shares could test $12.  However, 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 (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)
TiVo August 11 calls (from July 2011) 

iShares Russell 2000 August 86 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 update this section in the morning.

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

10:40am (EST)

 
Mead Johnson Nutrition (MJN, $69.65, down $0.40)

November 80 calls (MJN111119C00080000, $0.65, down $0.05)

Entry Price:  $0.55 (7/26/11)
Exit Target: $1.10+ (closed half at $1.25 on 7/28/2011)
Return:  73%
Stop Target:  75 cents

Action:  Shares have broken below $70 so let’s take profits on the other half of this trade.  Close the calls at current prices.

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

9:00am (EST)

Spider S&P 500 (SPY, $125.49, down $3.29)

August 135 calls (SPY110820C00135000, $0.10, down $0.25)

Entry Price:  $0.95 (7/27/11)
Exit Target: $1.40-$1.90
Return:  -89%
Stop Target:  None

Action:  Coming into July, our overall portfolio was up 5% and we got aggressive as we finally figured the bulls would finally break through resistance.  On July 21-22, the S&P reached a high of 1,347 and 1,346.  We thought a debt-limit deal would get done.  It got delayed and the market went to hell in a hand basket.        

We also knew yesterday when we typed in the fact that the S&P had traded to a low of 1,262 in June there was a good chance this level failed.  While we hope these options come back, truth is we may run out of time as the August contracts only have 17 days before expiration.  In other words we may get caught.

While many of you have asked why we didn’t recommend put options, we have to a degree, but we try not to trade over 12-15 positions at once.  With auto-trading available, some of our subscribers take all of our trades so we try to keep them in mind so that we don’t blow up new subscribers’ accounts who decide to join the service.  This is why we also have a Watch List.

Still, the market has made us look we Todd it (get it?) but there is still a chance we can make back some of the premium and take smaller losses.  We have seen positions lose 90% and come back to be profitable but we will need a knock-it-out-the-park jobs numbers on Thursday and Friday to get a rebound strong enough to get us back in the green. 

The good news is we should be getting clearer setups to play more downside movement or if we do get the incredible bounce we have been hoping to see materialize we can add a position or two.  We are currently down 10% for the portfolio with all open trades and closed trades but we hope to make back some as we map out our next batch of trades.  We may have to wait a week or two as we make room for new trades but stay on the lookout because we may close another trade today.   We will have a couple of open slots after closing another recommendation yesterday.

Spider Dow Jones Industrial Average (DIA, $118.46, down $2.65)

August 126 calls (DIA110820C00126000, $0.10, down $0.25)

Entry Price:  $1.05 (7/27/11)
Exit Target: $1.60-$2.20
Return:  -90%
Stop Target:  None

Action:  At 10 cents, all we can do is hold.    

Mead Johnson Nutrition (MJN, $70.05, down $1.14)

November 80 calls (MJN111119C00080000, $0.70, down $0.15)

Entry Price:  $0.55 (7/26/11)
Exit Target: $1.10+ (closed half at $1.25 on 7/28/2011)
Return:  77%
Stop Target:  75 cents

Action:  Shares traded to a low of $70.03 and we said to close the trade if the stock fell below $70 yesterday.  Leave it to the bears to play head games with us.  Let’s give the trade some wiggle room at the open and if $70 is busted we will send out an alert if we close the other half.  We want to watch the action before rushing out on a head-fake.  Forbes came out with a positive piece on the company and followed our lead but we still have to protect profits.  

Rambus (RMBS, $13.24, down $0.49)

September 17 calls (RMBS110917C00017000, $0.25, down $0.05)

Entry Price:  $0.65 (7/22/11)
Exit Target: $1.30+
Return:  -62%
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, up $0.05)

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


Action:  We may lock in some profits on the puts but there is still risk down to $10 for Rambus and the puts should continue to do well if the market hits new lows.

Shares could still hit $20 over the next few weeks if they can get a legal victory.

      
Broadcom (BRCM, $35.34, down $1.77)

August 38 calls (BRCM110820C00038000, $0.35, down $0.50)

Entry Price:  $0.55 (7/20/11)
Exit Target: $1.50 (closed half at $1.65 on 7/26, half @ $0.45 on 8/2)
Return:  91%
Stop Target:  70 cents

Action:  We closed the other half of this trade yesterday after watching shares fall below $36.  Our average selling price was $1.05 and while the trade nearly turned a triple-digit profit, we feel Ricky-Bobby-ed by the whipsaw action. 

Qualcomm (QCOM, $53.01, down $1.11)

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.  

Freeport-McMoRan (FCX, $51.44, down $1.73)

August 57 calls (FCX110820C00057000, $0.30, down $0.25)

Entry Price:  $1.18 (7/1/11)
Exit Target: $2.40
Return:  -75%
Stop Target:  $0.60

Action:  We will need a run back to $55 by week’s end to get this trade back on track.  

Symantec (SYMC, $18.51, down $0.53)

October 20 calls (SYMC111022C00020000, $0.50, down $0.10)

Entry Price:  $0.93 (6/21/11)
Exit Target: $2.00
Return:  -46%
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, $13.88, down $1.33)

September 17 calls (MGM110917C00017000, $0.25, down $0.20)

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

Action:  Support at $14.50 failed and shares could test $12.  However, 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 (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)
TiVo August 11 calls (from July 2011) 

iShares Russell 2000 August 86 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, $101.76, down $2.29)

August 125 calls (LNKD110820C00125000, $1.50, down $0.20)

August 80 puts (LNKD110820P00080000, $1.60, up $0.15)

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, $31.53, down $0.66)

September 30 puts (GRMN110917P00030000, $1.00, up $0.15)

September 34 calls (GRMN110917C00034000, $0.55, down $0.05)

Thoughts:  We just don’t trust Garmin to take a trade but we would go with the puts if forced to.    

Lufkin Industries (LUFK, $77.63, down $3.64)

September 90 calls (LUFK110917C00090000, $1.30, down $0.30)

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, $63.18, down $0.68)

October 67.50 calls (PEP111022C00067500, $0.40, down $0.10)

September 65 calls (PEP110917C00065000, $0.60, down $0.20)

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, $88.50, down $2.21)

September 100 calls (QSII110917C00100000, $0.50, down $0.30)

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 but even quality stocks are getting taken to woodshed.
 

RealD (RLD, $13.57, down $0.83)

August 17.50 puts (RLD110820P00017500, $4.50, up $0.90)

Thoughts:  Well, we couldn’t help but to list this trade one more day.  We have gotten some of the incredible emails you have sent us which is another reason we started the Watch List.

 
Polycom (PLCM, $25.94, down $0.57)

September 30 calls (PLCM11091700030000, $0.35, down $0.10)

Thoughts:  Watch for now.

Williams-Sonoma (WSM, $33.78, down $2.14)

September 38 calls (WSM110917C00038000, $0.40, down $0.45)

Thoughts:  Watch for now.