October 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.

1:10pm (EST)

Molex (MOLX, $24.39, up $1.09)

November 25 calls (MOLX111119C00025000, $0.80, up $0.20)

Entry Price:  $0.80 (10/26/11)
Exit Target: $1.60
Return:  0%
Stop Target:  None 

Action:  The 52-week high is $28.51 and we are expecting a run up to new highs over the next 3 weeks.


Taiwan Semiconductor Manufacturing (TSM, $12.27, up $0.08)

December 12.50 calls (TSM111217C00012500, $0.50, flat)

Entry Price:  $0.50 (10/26/11)
Exit Target: $1.00
Return:  0%
Stop Target:  None 

Action:  The 52-week high is $14 which we expect shares to challenge.  We went with the Decemebr options to allow more time for the trade to play out.

 

Pepsico (PEP, $61.80, down $0.02)

January 65 calls (PEP120121C00065000, $0.75, flat)

Entry Price:  $0.70 (10/24/11)
Exit Target: $2.40
Return:  7%
Stop Target:  None 

Action:  One of the reasons we used the January calls was to protect ourselves from a pullback or the volatility.  Pepsico has traded higher today but is currently flat.        


Cabot Oil & Gas (COG, $64.13, down $1.99)

November 80 calls (COG111119C00080000, $0.50, down $0.20)

Entry Price:  $1.25 (10/24/11)
Exit Target: $2.50
Return:  -60%
Stop Target:  60 cents

Action:  We went with the November options because this was straight-up earnings trade and we knew it would be high risk/high reward and an all-or-nothing deal.  Cabot announces earnings after the close today.   


Spreadtrum Communications (SPRD, $24.57, up $1.07)

January 25 calls (SPRD120121C00025000, $2.80, up $0.30)

Entry Price:  $1.50 (9/9/11)
Exit Target: $2.80
Return:  87%
Stop Target:  $1.55

Action:  Shares are at new 52-week highs and we continue to love this position.


PowerShares QQQ (QQQ, $56.65, down $0.69)

November 58 calls (111119C00058000, $1.00, down $0.20)

Entry Price:  $1.60 (10/19/11)
Exit Target: $2.40
Return:  -38%
Stop Target:  $1.00 

Action:  Continue to hold.


Qualcomm (QCOM, $51.09, down $1.23)

November 57.50 calls (QCOM111119C00057500, $0.30, down $0.10)

Entry Price:  $0.95 (10/18/11)
Exit Target: $1.50-1.90
Return:  -68%
Stop Target:  None

Action:  Support is at $50 and we are still holding out for a run to $60.  The company will report earnings on November 2 which could be the catalyst to get us there on a blowout quarter.


Potash (POT, $48.05, down $0.44)

November 52.50 calls (POT111119C00052500, $0.60, down $0.15)

Entry Price:  $1.20 (10/18/11)
Exit Target: $1.80-$2.40
Return:  -50%
Stop Target:  None

Action:  Potash is down 1% and support is at $47.50-$47 should shares continue lower.   


O’Reilly Automotive (ORLY, $69.32, down $1.59)

November 75 calls (ORLY111119C00075000, $0.40, down $0.20)

Entry Price:  $0.55 (10/10/11)
Exit Target: $1.10
Return:  -27% 
Stop Target:  None

Action:  Shares were up 85 cents in after-hours which appeared to be good news for today’s earnings announcement but the company doesn’t announce until after the close. 


Seattle Genetics (SGEN, $20.72, up $0.07)

November 17.50 puts (SGEN111119P00017500, $0.40, flat)

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

Return:  -33%
Stop Target: None

Action:  We would like to see a close below $20 this week but if not, we can look forward to next week’s earnings announcement for a catalyst to take us higher or lower.


Rambus (RMBS, $16.92, up $0.05)

November 16 calls (RMBS111119C00016000, $2.85, flat) 

Entry Price:  $2.40 (9/26/11)
Exit Target: $5+ (closed half at $3.05 on 10/20/11)
Return:  23% 
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 this week or next could easily push the stock past $20 which means the options will trade at $4 or $5.         


Other 2011 Portfolio OPEN positions (2):  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
 

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.

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12:10pm (EST)

Molex (MOLX, $24.56, up $1.26)

November 25 calls (MOLX111119C00025000, $0.80, up $0.20)

Action:  Use limit prices up to 90 cents but do not pay over $1.00-$1.05 to establish positions.


Taiwan Semiconductor Manufacturing (TSM, $12.27, up $0.08)

December 12.50 calls (TSM111217C00012500, $0.50, flat)

Action:  Use limit orders up to 55-60 cents but do not pay over 65 cents to establish positions.

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8:45am (EST)

Pepsico (PEP, $61.82, down $0.28)

January 65 calls (PEP120121C00065000, $0.75, flat)

Entry Price:  $0.70 (10/24/11)
Exit Target: $2.40
Return:  7%
Stop Target:  None 

Action:  One of the reasons we used the January calls was to protect ourselves from a pullback or the volatility.  Pepsico held up well in a rough market yesterday but still faces risk down to $60.        


Cabot Oil & Gas (COG, $66.12, down $4.50)

November 80 calls (COG111119C00080000, $0.70, down $0.60)

Entry Price:  $1.25 (10/24/11)
Exit Target: $2.50
Return:  -44%
Stop Target:  60 cents

Action:  We went with the November options because this was straight-up earnings trade and we knew it would be high risk/high reward and an all-or-nothing deal.  Cabot announces earnings after the close today.   


Spreadtrum Communications (SPRD, $23.50, down $0.40)

January 25 calls (SPRD120121C00025000, $2.50, flat)

Entry Price:  $1.50 (9/9/11)
Exit Target: $2.80
Return:  67%
Stop Target:  $1.55

Action:  We sold the November 24 calls for a 45% profit yesterday.  We still have the January options open and we may also get back into this trade with the December 25 call options if support at $22 holds.


PowerShares QQQ (QQQ, $57.34, down $1.15)

November 58 calls (111119C00058000, $1.20, down $0.60)

Entry Price:  $1.60 (10/19/11)
Exit Target: $2.40
Return:  -25%
Stop Target:  $1.00 

Action:  We would have liked to have seen $57.50 hold and there is risk down to $55 if the Q’s continue to slip.  We knew the Europe debacle would influence this trade dramatically and we are betting on a good outcome and a possible run to $60.  These options still have over 3 weeks before expiration so a lot can and will happen.


Qualcomm (QCOM, $52.32, down $1.29)

November 57.50 calls (QCOM111119C00057500, $0.40, down $0.20)

Entry Price:  $0.95 (10/18/11)
Exit Target: $1.50-1.90
Return:  -58%
Stop Target:  None

Action:  We just can’t seem to catch a break with Qualcomm as shares get dragged down by the overall market.  Support is at $50 and we are still holding out for a run to $60.  The company will report earnings on November 2 which could be the catalyst to get us there on a blowout quarter.


Potash (POT, $48.49, down $1.74)

November 52.50 calls (POT111119C00052500, $0.75, down $0.50)

Entry Price:  $1.20 (10/18/11)
Exit Target: $1.80-$2.40
Return:  -38%
Stop Target:  None

Action:  Potash fell over 3% and back below $50 on yesterday’s pullback and support is at $47.50-$47 should shares continue lower.   


O’Reilly Automotive (ORLY, $71.91, down $0.15)

November 75 calls (ORLY111119C00075000, $0.60, flat)

Entry Price:  $0.55 (10/10/11)
Exit Target: $1.10
Return:  9% 
Stop Target:  None

Action:  Shares were up 85 cents in after-hours which appeared to be good news for today’s earnings announcement but the company doesn’t announce until after the close. 


Seattle Genetics (SGEN, $20.65, down $0.34)

November 17.50 puts (SGEN111119P00017500, $0.40, flat)

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

Return:  -33%
Stop Target: None

Action:  We would like to see a close below $20 this week but if not, we can look forward to next week’s earnings announcement for a catalyst to take us higher or lower.


Rambus (RMBS, $16.87, down $0.56)

November 16 calls (RMBS111119C00016000, $2.85, down $0.50)

Entry Price:  $2.40 (9/26/11)
Exit Target: $5+ (closed half at $3.05 on 10/20/11)
Return:  23% 
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 this week or next could easily push the stock past $20 which means the options will trade at $4 or $5.         
 

Other 2011 Portfolio OPEN positions (2):  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
 

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.

Molex (MOLX, $23.30, down $0.13)

November 25 calls (MOLX111119C00025000, $0.60, down $0.05)

Thoughts:  The company reported a good quarter on Tuesday but it went unnoticed.  The 52-week high is $28 and a run past $25 could get it there.  We are doing a write-up on the stock for our Weekly Wrap on Sunday as we have been thinking of making it a covered call trade. 


Las Vegas Sands (LVS, $42.05, down $2.31)

October 40 puts (LVS111028P00040000, $0.72, up $0.39)

November 45 calls (LVS111119C00045000, $1.30, down $0.80)

Thoughts:  This is a twist on a strangle trade as LVS trades WEEKLY options.  Our gut feeling is shares are headed lower but they could surprise Wall Street with better-than-expected numbers.  A trip to $40 could be in the cards on a disappointment, and perhaps, $37 if things are slowing down in Sin City (and China) again.


NetApp (NTAP, $38.17, down $0.96)

November 35 puts (NTAP111119P00035000, $0.75, up $0.20)

Thoughts:  There was heavy volume in these put options yesterday as nearly 12,000 contracts traded hands.  The puts opened at 60 cents and gained over 35% for the day.


Apollo Group (APOL, $47.46, down $0.78)

November 45 puts (APOL111119P00045000, $1.00, up $0.25)

Thoughts:  Longtime readers know how much we dislike this stock and what a scam the company is.  In any event, we think shares are headed for a trip below $45 and we like these options up to $1.10. 


Taiwan Semiconductor Manufacturing (TSW, $12.19, down $0.29)

January 12.50 calls (TSW120121C00012500, $0.65, down $0.10)

Thoughts:  There was heavy volume for these call options despite shares slipping 2%.  Over 11,000 contracts were in the mix versus open interest of just 6,000 as of Tuesday’s close.  The company could be a takeover target or traders are expecting a run past its 52-week high of $14 by mid-January.


SanDisk (SNDK, $49.84, down $1.10)

November 52.50 calls (SNDK111119C00052500, $1.05, down $0.40)

Thoughts:  There is still a chance shares can reach new highs if Tech turns around.  We were able to sell the November 50’s yesterday for 88% which netted over $1 in premium.  We could “roll” this trade and at cheaper prices on a break back above $50 and a positive Europe resolution. 


Tempur Pedic International (TPX, $67.40, down $1.91)

November 75 calls (TPX111119C00075000, $0.68, down $0.30)

December 80 calls (TPX111217C00080000, $1.00, down $0.20)

Thoughts:  We did a big write-up in our Weekly Wrap on Sunday on this company and shares look poised to hit new highs if the market continues its uptrend.  We have a $80 price target for the stock but these options are thinly traded.


iRobot (IRBT, $28.30, down $1.43)

November 30 calls (IRBT111119C00030000, $1.30, down $0.55)

Thoughts:  We may add these options at some point if shares do clear resistance at $30 but we may have to track the December calls to buy us more time in case there is a pullback.   


Vivus (VVUS, $8.55, down $0.41)     

March 10 calls (VVUS120317C00010000, $1.90 down $0.25)

December 10 calls (VVUS111217C00010000, $0.35, down $0.10)

Thoughts:  After kissing a high of $8.99 on Monday and testing resistance at $9, shares fell nearly 5% yesterday.   The December 10’s are tempting but the March calls are the safer play.  We have this feeling shares are going to be at double-digits by Christmas.