Special Notice: We normally don’t like purchasing options ahead of the weekend but we have made some incredible gains in October which we can parlay into longer-term trades and “cheap” options on a few speculative plays. We have been aggressive with our trading and some of you may want to only open “half” positions on these double dippers. However, when there is and has been a clear trend, it’s usually when we try to make our profits for the YEAR.
Alcoa (AA, $11.20, up $0.84)
Buy to OPEN November 12 calls (AA111119C00012000, $0.22, up $0.16)
Buy to OPEN December 13 calls (AA111217C00013000, $0.41, up $0.23)
Action: These are “cheap” options on a bet Alcoa can make a run to $13, maybe $14 by Thanksgiving and Christmas. Use limit orders up to 30 cents for the November 12 calls and 50 cents for the December 13 calls. If shares open lower, try to get these options for cheaper prices but don’t get too picky as we expect both to be worth $1 when expiration rolls around. We like both of the options and would split purchases evenly to create a “full” position but don’t go overboard.
Vivus (VVUS, $9.23, up $0.33)
Buy to OPEN December 10 calls (VVUS111217C00010000, $0.50, up $0.15)
Buy to OPEN March 12 calls 2012 (VVUS120317C00012000, $1.55, up $0.20)
Action: We can’t take it anymore and yesterday’s push above $9 was confirmation. We feel like if we don’t get into Vivus now, we could miss the boat on unexpected good news over the next few months. Use limit prices up to 60-65 cents for the December calls and $1.75 for the March calls. Same deal here. We like both of the options and would split purchases evenly to create a “full” position.
Molex (MOLX, $25.88, up $1.39)
November 25 calls (MOLX111119C00025000, $1.60, up $0.50)
Entry Price: $0.80 (10/26/11)
Exit Target: $1.60
Stop Target: $1.00 (HARD STOP)
Action: Molex traded up to $26.15 yesterday and the 52-week high is $28.51. We may close half of the trade before the weekend hits and we have made our stop target a Hard Stop to protect profits because we are in a higher premium trade now.
Taiwan Semiconductor Manufacturing (TSM, $12.95, up $0.70)
December 12.50 calls (TSM111217C00012500, $0.85, up $0.35)
Entry Price: $0.50 (10/26/11)
Exit Target: $1.00
Stop Target: 50 cents
Action: Shares traded up to $13.06 yesterday and the 52-week high is $14 which we expect to challenge. At $14, the options would be worth at least $1.50 so there is a chance we could make 200% with this trade.
Pepsico (PEP, $62.88, up $0.87)
January 65 calls (PEP120121C00065000, $0.85, up $0.10)
Entry Price: $0.70 (10/24/11)
Exit Target: $2.40
Stop Target: None
Action: Shares traded to a high of $63.06 yesterday and were looking for $63 to stick. In any event, resistance is up ahead at $63.50-$64 but a break above this area will easily get shares to $65-$66.
Qualcomm (QCOM, $53.52, up $1.92)
November 57.50 calls (QCOM111119C00057500, $0.55, up $0.20)
Entry Price: $0.95 (10/18/11)
Exit Target: $1.50-1.90
Stop Target: None
Action: We got our close above $53.50 as shares made a high of $54 on Thursday. The company will announce earnings next Wednesday.
Potash (POT, $50.92, up $1.39)
November 52.50 calls (POT111119C00052500, $1.25, up $0.30)
Entry Price: $1.20 (10/18/11)
Exit Target: $1.80-$2.40
Stop Target: None
Action: If shares can reach $55 over the next 3 weeks this trade will be a double as the options would be worth at least $2.50.
Rambus (RMBS, $18.05, up $0.84)
November 16 calls (RMBS111119C00016000, $3.35, up $0.30)
Entry Price: $2.40 (9/26/11)
Exit Target: $5+ (closed half at $3.05 on 10/20/11)
Stop Target: $2.45
Action: We are keeping this trade open as we continue to wait for the company’s current litigation issues to play out. A favorable ruling today or next could easily push the stock past $20 which means the options will trade at $4 or $5. We may use some December options as a “piggy-back” if shares break $19.
Spreadtrum Communications (SPRD, $25.36, up $0.04)
January 25 calls (SPRD120121C00025000, $3.00, down $0.10)
Entry Price: $1.50 (9/9/11)
Exit Target: $2.80 (closed half at $2.90 on 10/27/11)
Stop Target: $2
Action: What a ride. Spreadtrum has been known for massive selloffs and we got twitchy yesterday when shares sank shortly after the open after hitting another 52-week high of $25.98. The company reports earnings on November 9 and we may also “piggy-back” this trade depending on how shares are acting.
Other 2011 Portfolio OPEN positions (3): 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.
JDSU Uniphase January 20 calls (from August 2011)
January 16 calls (from August 2011)
Lufkin Industries December 80 calls (from September 2011)
Seattle Genetics November 17.50 puts (from October 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.
U.S. Bancorp (USB, $26.22, up $0.73)
December 26 calls (USB111217C00026000, $1.30, up $0.20)
Thoughts: The 52-week high is $29 and a run past $30 could be in the mix if the Financial stocks can stay strong. We are so skeptical of the Financial stocks but we like this one and JPMorgan (JPM, $37.02, up $0.84) which added 8% yesterday.
Las Vegas Sands (LVS, $45.40, up $1.93)
October 40 puts (LVS111028P00040000, $0.20, down $0.20)
November 45 calls (LVS111119C00045000, $2.75, up $0.90)
Thoughts: This would have been a great strangle trade this week as the calls easily offset the losses on the puts.
SkullCandy (SKUL, $17.00, up $0.54)
December 17.50 calls (SKUL111217C00017500, $1.00, up $0.20)
Thoughts: Possible short-squeeze coming.
NetApp (NTAP, $41.71, up $3.13)
November 35 puts (NTAP111119P00035000, $0.30, down $0.35)
Thoughts: Continue to watch.
Apollo Group (APOL, $49.71, up $2.12)
November 45 puts (APOL111119P00045000, $0.45, down $0.55)
Thoughts: Continue to watch.
SanDisk (SNDK, $52.01, up $1.70)
November 52.50 calls (SNDK111119C00052500, $1.90, up $0.65)
Action: We are still looking at maybe adding some December calls on a break past $53.
Tempur Pedic International (TPX, $69.34, up $1.40)
November 75 calls (TPX111119C00075000, $0.85, up $0.30)
December 80 calls (TPX111217C00080000, $1.20, up $0.40)
Thoughts: We have an $80 price target for the stock but these options are thinly traded.
iRobot (IRBT, $34.96, up $1.72)
November 30 calls (IRBT111119C00030000, $5.70, up $1.70)
Thoughts: If you got into these calls earlier in the week, start looking in profits.