9:15am (EST)

NEW TRADE!!!

Infosys Technologies (INFY, $53.83, up $1.55)

Buy to OPEN November 60 calls (INFY111119C00060000, $0.80, up $0.20)

Action:  Set limit prices at 70 cents but we may have to send out a Trade Alert if the stock opens higher.  If shares break $54, use limit orders up to $1 to establish positions but do not pay over $1.05.  If the options open higher than $1.05, void the trade.


CURRENT TRADES

O’Reilly Automotive (ORLY, $69.57, up $1.90)

November 75 calls (ORLY111119C00075000, $0.75, up $0.30)

Entry Price:  $0.55 (10/10/11)
Exit Target: $1.10
Return:   36% 
Stop Target:  None

Action:  Shares went out near their high for the day and gained a solid 3%.  The 52-week high is $72 and if we can get a break above $70, odds are pretty good this level is taken out.  The November options have 38 days before they expire.


Potash (POT, $46.76, up $2.04)

November 52.50 calls (POT111119C00052500, $0.85, up $0.25)

Entry Price:  $1.00 (10/6/11)
Exit Target: $2.00
Return:   -15% 
Stop Target:  None

Action:  We are looking for a pop back over $50 which could get shares to $55 on momentum alone.  There will be slight resistance at $52.50-$53 if Potash can clear this level.      


Seattle Genetics (SGEN, $21.30, down $0.22)

November 17.50 puts (SGEN111119P00017500, $0.85, up $0.05)

Entry Price:  $0.60 (10/5/11)
Exit Target: $1.20

Return:  42%
Stop Target: None

Action:  There was a lot of activity in these options yesterday which means we aren’t the only ones expecting a drop below $20.


Pepsico (PEP, $61.87, up $0.85)

November 65 calls (PEP111119C00065000, $0.65, up $0.10)

Entry Price:  $0.50 (10/5/11)
Exit Target: $1.00

Return:  30%
Stop Target: None

Action:  Pepsi will announce earnings before the bell on Wednesday.  We may close half of the trade today to take some risk out of an earnings miss.  We did a lot of research on the company over the weekend and talked about the upcoming quarter in Sunday’s Weekly Wrap.  While we think Pepsi matches or beats estimates by a penny, some of the “downgrades” could weigh on the stock if they don’t impress Wall Street.  We will be watching the open and if we decide to take any action before our midday update, we will send out a Trade Alert.

 
Microsoft (MSFT, $26.94, up $0.69)

November 26 calls (MSFT111119C00026000, $1.55, up $0.30)

Entry Price:  $0.90 (10/5/11)
Exit Target: $1.80-$2.00
Return:  72%
Stop Target:  $1.25 (HARD STOP)

Action:  Another 2 minutes and shares might have busted $27 yesterday.  The move above $26.50 was beautiful and should lead to a continued run to $28.
 

Rambus (RMBS, $15.46, up $0.74)

November 16 calls (RMBS111119C00016000, $2.85, up $0.15)

Entry Price:  $2.40 (9/26/11)
Exit Target: $5+
Return:  19% 
Stop Target:  $2.00

Action:  Rambus also went out near its high and these options were active as well.  Over 1,400 contracts traded hands or nearly half of the open interest.  We are expecting to hear a settlement in Rambus’ favor this week.


Spreadtrum Communications (SPRD, $19.26, up $0.39)

January 25 calls (SPRD120121C00025000, $1.40, up $0.10)

Entry Price:  $1.50 (9/9/11)
Exit Target: $2.80
Return:  -7%
Stop Target:  75 cents 

Action:  Spreadtrum traded up to $19.75 and we are looking for a close above $20 this week.  These options have 101 days before they expire and our near-term target for the stock is $22.  On a breakout, shares could reach $25-$30.
 

Other 2011 Portfolio OPEN positions (6):  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.

Symantec October 20 calls (from June 2011)
Rediff.com India October 15 calls (from June 2011)
Qualcomm October 65 calls (from July 2011)
Clean Energy October 15 calls (from August 2011)
JDSU Uniphase January 20 calls (from August 2011)
                     January 16 calls (from August 2011)
Lufkin Industries December 80 calls (from September 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.


SanDisk (SNDK, $44.92, up $1.78) 

October 45 (WEEKLY) calls (SNDK111014C00045000, $0.80, up $0.10)

November 50 calls (SNDK111119C00050000, $1.15, up $0.20)

Thoughts:  We listed the October 45 weekly’s and they expire Friday which makes a trade extra risky.  Shares could challenge $50 but the November 50’s buy more time. 


Blue Nile (NILE, $38.87, up $1.29)

October 40 calls (NILE111022C00040000, $1.10, up $0.20)

November 45 calls (NILE111119C00045000, $1.25, up $0.20)

Thoughts:  We think Blue Nile can easily make a run above $40 and we would use the November calls if they do.  There will be further resistance at $42-$43 but shares have been known to make some big moves.  If there is a pullback in Blue Nile today and we can get the options for under a buck, we may make this trade an official recommendation.


Rockwell Automation (ROK, $61.59, up $2.42)

October 65 calls (ROK111022C00065000, $0.65, up $0.15)

November 70 calls (ROK111022C00070000, $1.10, up $0.20)

Thoughts:  Shares could test $65 on a run to resistance but we are looking for a breakout to $70.  We may buy the November 70’s if shares continue to show strength. 


iRobot (IRBT, $28.05, up $1.16)

November 30 calls (IRBT111119C00030000, $1.30, up $0.20)

Thoughts:  We have been following this stock off-and-on and the break above $27 was good to see.  Shares could be setting up for a run past $30.


Tiffany (TIF, $69.92, up $3.55)

October 70 calls (TIF111022C00070000, $2.40, up $1.00)     

November 75 calls (TIF111119C00075000, $2.85, up $1.00)

Thoughts:  Shares easily made a run past $70 and this was our favorite trade going into Monday’s open.  However, the October calls opened at $2.25 while the November 75’s opened at $2.90 so we didn’t want to chase.    


Vivus (VVUS, $8.26, up $0.31)     

March 10 calls (VVUS120317C00010000, $1.85, flat)

December 10 calls (VVUS111217C00010000, $0.45, flat)

Thoughts:  We like the December calls and may start a small position if $8 holds for the next day or two.


Intuit (INTU, $50.27, up $1.74)

November 52.50 calls (INTU111119C00052500, $1.40, up $0.35)

Thoughts:  The 52-week high for Intuit is at $56.46 which is also its all-time high.  If shares can get past $52-$53 then we could see a breakout to blue-sky territory.