April 2012 | Members

MEMBERS AREA

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 a “Profit 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.

12:30pm (EST)

NEW TRADES!!!

PowerShares QQQ (QQQ, $66.59, up $0.46)

Buy to OPEN May 65 puts (QQQ120519P00065000, $1.00, down $0.20)

Action:  Use limit orders up to $1.05 but do not pay more than $1.10 to establish positions.  We are doing smaller positions which means trade half the number of contracts you normally would.

 

Deckers Outdoor (DECK, $63.18, up $0.72)

Buy to OPEN May 50 puts (DECK120519P00050000, $0.50, down $0.10)

Action:  Shares are near 52-week lows and could be headed to $50.  Use limit orders up to 55-60 cents but do not pay more than 65 cents to establish positions. 

 

First Solar (FSLR, $23.21, up $1.83)

Buy to OPEN May 18 puts (FSLR120519P00018000, $0.90, down $0.50)  

Action:  Use limit orders up to $1.00.  

 

CURRENT TRADES

 

Tiffany & Company (TIF, $66.49, up $0.67)

May 62.50 puts (TIF0519P00062500, $1.00, down $0.20)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  -5%
Stop Target:  80 cents

Action:  We have a near-term target of $60 for Tiffany.     

 

Lululemon Athletica (LULU, $73.04, up $1.60)

May 67.50 puts (LULU120519P00067500, $1.50, down $0.50)

Entry Price:  $1.05 (4/4/12)
Exit Target: $2.10 (closed half at $1.60 on 4/11/12)
Return:  48%
Stop Target:  $1.20 (Hard Stop)

Action:  Continue to hold the other half for now.

 

C.H. Robinson Worldwide (CHRW, $64.47, up $1.13)

May 60 puts (CHRW120519P00060000, $0.70, down $0.35)

Entry Price:  $0.65 (4/4/12)
Exit Target: $1.30  (closed half at $0.90 on 4/11/12)
Return:  23%
Stop Target:  65 cents

Action:  Continue to hold the other half for now.

 

Potash (POT, $42.99, up $0.14)

April 42.50 puts (POT120421P00042500, $0.75, down $0.45)

Entry Price:  $0.55 (3/29/12)
Exit Target: $1.10 (closed half at $0.95 on 4/10/12)
Return:  55%
Stop Target:  None

Action:  Continue to hold the other half for now.

 

Other 2012 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 2012 Portfolio link in the Members Area to view ALL open/ closed trades.

 

magicJack VocalTec April 30 calls (from March 2012)

E*Trade Financial July 12 calls (from March 2012)

Bank of America January 12.50 calls 2013, July 12 calls (from March 2012)

Acme Packet April 40 calls (from February 2012)

Dendreon May 22 calls (from January 2012)

Silver Wheaton April 42 calls (from March 2012)

U.S. Oil Fund April 45 calls (from February 2012)

Sony April 22 calls (from February 2012)


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.

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

10:30am (EST)

Caterpillar (CAT, $101.10, up $0.67) 

May 90 puts (CAT120519P00090000, $1.05, down $0.35)

Entry Price:  $0.90 (4/9/12)
Exit Target: $1.80 (closed at $1.10 on 4/11/12)
Return:  22%
Stop Target:  $1.10 (HARD STOP)

Action:  Our Hard Stop has been triggered so this trade has been closed.  We will look to establish new positions later today or this week.

 

Acuity Brands (AYI, $53.51, up $0.47)

May 50 puts (AYI120519P00050000, $1.10, down $0.30)

Entry Price:  $0.55 (4/5/12)
Exit Target: $1.10 (closed 1/3 at $1.30 on 4/10/12, closed 2/3 at $1.00 on 4/11/12)
Return:  100%
Stop Target:  $1.05 (HARD STOP)

Action:  We have been stopped out of this trade as well but we will be back to play the move below $50.

 

Lululemon Athletica (LULU, $72.86, up $1.42)

May 67.50 puts (LULU120519P00067500, $1.60, down $0.40)

Entry Price:  $1.05 (4/4/12)
Exit Target: $2.10
Return:  52%
Stop Target:  $1.20 (Hard Stop)

Action:  Close HALF of the trade at current levels.     

 

C.H. Robinson Worldwide (CHRW, $63.81, up $0.47)

May 60 puts (CHRW120519P00060000, $0.90, down $0.15)

Entry Price:  $0.65 (4/4/12)
Exit Target: $1.30
Return:  38%
Stop Target:  65 cents

Action:  Close HALF of the trade at current levels.

 

BroadSoft (BSFT, $38.88, up $1.63)

May 35 puts (BSFT120519P00035000, $1.80, down $0.30)

Entry Price:  $1.35 (4/2/12)
Exit Target: $2.25
Return:  33%
Stop Target:  $1.35

Action:  Close the trade at current levels.

 

Apache (APA, $94.19, up $0.69)

April 92.50 puts (APA120421P00092500, $1.30, down $0.40)

Entry Price:  $0.90 (3/29/12)
Exit Target: $1.80 (closed half at $1.40 on 4/9/12)
Return:  50%
Stop Target:  $1.30 (HARD STOP)

Action:  We have been stopped out on the other half of this trade.

 

First Solar (FSLR, $23.16, up $2.18)

May 19 puts (FSLR120519P00019000, $1.30, down $0.30)  

Entry Price:  $0.75 (3/28/12)
Exit Target: $1.50
Return:  73%
Stop Target:  $1.30 (HARD STOP)

Action:  We knew a bounce was coming but the good news is we will get to play the move below $20 with cheaper options.

       

Arena Pharmaceuticals (ARNA, $2.98, up $0.11) 

May 3.50 calls (ARNA120519C00003500, $0.80, flat)

Entry Price:  $0.85 (3/26/12)
Exit Target: $1.70 (closed half at $1.10 on 3/14/12, closed half at 80 cents on 4/11/12) 
Return:  12%
Stop Target:  70 cents (Hard Stop) 

Action:  These options opened at 83 cents so everyone should be out of the other half of the trade.

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

9:00am (EST)

The Dow fell 214 points, or 1.7%, to close at 12,715.  The blue-chips easily had its worst outing of the year and closed below the 12,800 level which was the next wave of support that needed to hold.  We said we wouldn’t be surprised to see 12,600 come into play and a break below this level could lead to a trip down to 12,350.  We also realize that support can get stretched so a close back above 12,800 and 13,000 would be bullish and would mean the index could be range bound but with more volatility.

The S&P 500 declined 24 points, or 1.7%, to end at 1,358.  The index made a brief trip into positive territory after kissing 1,383 at the open but the move below 1,375 quickly brought our next downside target into play at 1,350.  We said in our Weekly Wrap/ Monday Morning Outlook that a break below this level would get ugly and could lead to 1,325-1,300.

The Nasdaq dropped 56 points, or 1.8%, to settle at 2,991.  We mentioned how crucial the 3,050 level was and Tech folded like a cheap lawn chair once support was broken.  We didn’t expect to see a close below 3,000 yesterday, which was our next downside target, but we did mention 2,950 as backup.  From there 2,850 comes into play if the bulls fail to regain support at 3,000 which is now short-term resistance followed by 3,050. 

The Russell 2000 tanked nearly 20 points, or 2.4%, and was last seen at 784.  The index easily took out our 800 target and came within spitting distance of hitting our next downside target at 780.  Next up is 750 if the bulls can’t clear 800 this week.

The S&P Volatility Index ($VIX, 20.39, up 1.58) surged 8% and reached a high of 21.06.  We told you the break above 17.50 last week would be a strong clue the market could be heading lower and that a move over 20 could be the start of a trend change.

While we can take credit for predicting this move lower, we are slightly surprised how fast it has come which is why we have started locking in profits on some of our put option trades.  We could get a snap-back rally if earnings come in better-than-expected this week and Alcoa (AA, $9.32, down $0.28) got things started with a beat.  Shares were up 50 cents in after-hours trading last night after the company beat Wall Street’s expectations.

Futures we up for much of the night and have gotten stronger as we head towards the opening bell.  Dow futures are up 80 points to 12,760 while the S&P futures are higher by 10 points to 1,367.  Nasdaq futures are at 2,715 – up 18 points.

We have added some new ideas to our Watch List and we have action to take on one of our current trades at the open.  We may also add a NEW TRADE so stay locked-and-loaded this morning.

 

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 a “Profit 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.

 

Caterpillar (CAT, $100.43, down $3.14) 

May 90 puts (CAT120519P00090000, $1.40, up $0.50)

Entry Price:  $0.90 (4/9/12)
Exit Target: $1.80
Return:  56%
Stop Target:  $1.00, raise to $1.10 (HARD STOP)

Action:  Shares traded to a low of $99.80 while the options reached $1.49.  We were hoping to see a close below a bill and we have raised the Hard Stop to lock-in profits should shares rebound.

 

Tiffany & Company (TIF, $65.82, down $1.38)

May 62.50 puts (TIF0519P00062500, $1.20, up $0.30)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  14%
Stop Target:  80 cents

Action:  We have a near-term target of $60 for Tiffany.     

 

Acuity Brands (AYI, $53.04, down $1.29)

May 50 puts (AYI120519P00050000, $1.40, up $0.45)

Entry Price:  $0.55 (4/5/12)
Exit Target: $1.10 (closed 1/3 at $1.30 on 4/10/12)
Return:  148%
Stop Target:  60 cents, raise to $1.05 (HARD STOP)

Action:  We closed a third of the trade to take a little off the table given the strong gains in under a week.  We have raised the Stop Target to $1.05 and have made it a Hard Stop for the rest of the position.

 

Lululemon Athletica (LULU, $71.44, down $4.53)

May 67.50 puts (LULU120519P00067500, $2.00, up $1.10)

Entry Price:  $1.05 (4/4/12)
Exit Target: $2.10
Return:  90%
Stop Target:  50 cents, raise to $1.20 (Hard Stop)

Action:  We got our close below $72.50 yesterday as shares reached a low of $71.26.  We will likely close half of the trade on a break below $70 but we have entered a Hard Stop at $1.20 to protect profits.   

 

C.H. Robinson Worldwide (CHRW, $63.34, down $0.66)

May 60 puts (CHRW120519P00060000, $1.05, up $0.15)

Entry Price:  $0.65 (4/4/12)
Exit Target: $1.30
Return:  69%
Stop Target:  65 cents

Action:  Shares traded down to $63.09 yesterday and the 52-week low is $62.30.  Our near-term target calls for a test down to $60, possibly $55, which would make these put options worth at least $5.

 

BroadSoft (BSFT, $37.26, down $1.48)

May 35 puts (BSFT120519P00035000, $2.10, up $0.30)

Entry Price:  $1.35 (4/2/12)
Exit Target: $2.25
Return:  56%
Stop Target:  $1.35

Action:  Shares traded down to $37.07 on Tuesday and our near-term target is $35 or worse.  A break below the 200-day at $34 would really put pressure on the stock.

 

Apache (APA, $93.50, down $1.08)

April 92.50 puts (APA120421P00092500, $1.70, up $0.50)

Entry Price:  $0.90 (3/29/12)
Exit Target: $1.80 (closed half at $1.40 on 4/9/12)
Return:  72%
Stop Target:  90 cents, raise to $1.30 (HARD STOP)

Action:  Apache kissed a low of $93.02 while the options traded up to $1.80.  We have raised the Hard Stop to $1.30 to protect profits which will give us a minimum 50% return on the trade.  Of course, we always target triple-digit gains for all of our directional trades but if shares rebound we will be protected.

 

Potash (POT, $42.85, down, $1.11)

April 42.50 puts (POT120421P00042500, $0.85, up $0.35)

Entry Price:  $0.55 (3/29/12)
Exit Target: $1.10 (closed half at $0.95 on 4/10/12)
Return:  64%
Stop Target:  None

Action:  Shares closed below $43 which was exactly what we were looking for and we still believe a test to $40 is in the works.

 

First Solar (FSLR, $21.38, up $1.19)

May 19 puts (FSLR120519P00019000, $1.60, down $0.25)  

Entry Price:  $0.75 (3/28/12)
Exit Target: $1.50
Return:  113%
Stop Target:  $1.30 (HARD STOP)

Action:  First Solar traded to a low of $20.02 yesterday before surging more than 6% by the closing bell.  The options reached a low of $1.51 so our Hard Stop was never really in play.  We warned the $20 level would be hard to crack as it represent multi-year support and the stock’s IPO price when shares made their debut 6 years ago.  We still believe a trip to the teens is coming but if our Hard Stop is hit, we will be out of the trade. 

       

Arena Pharmaceuticals (ARNA, $2.87, down $0.25)

May 3.50 calls (ARNA120519C00003500, $0.80, down $0.20)

Entry Price:  $0.85 (3/26/12)
Exit Target: $1.70 (closed half at $1.10 on 3/14/12) 
Return:  12%
Stop Target:  70 cents (Hard Stop) 

Action:  Exit the trade at the open but try to get at least 75-80 cents for the calls.

The FDA delayed a decision on Vivus’ obesity drug, Qnexa, until mid-July which pushed a decision on Arena’s drug, Lorcaserin, back to late June instead of May.  Vivus did an additional study which is now being reviewed which caused the delay.  The end result should be good news for Vivus because the FDA could have just rejected Qnexa next week.  The delay was a short-term negative for Arena as shares dropped 8% and back below $3.  Let’s close the trade at current levels and we will revisit the story in a few months.

 

Other 2012 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 2012 Portfolio link in the Members Area to view ALL open/ closed trades.

 

magicJack VocalTec April 30 calls (from March 2012)

E*Trade Financial July 12 calls (from March 2012)

Bank of America January 12.50 calls 2013, July 12 calls (from March 2012)

Acme Packet April 40 calls (from February 2012)

Dendreon May 22 calls (from January 2012)

Silver Wheaton April 42 calls (from March 2012)

U.S. Oil Fund April 45 calls (from February 2012)

Sony April 22 calls (from February 2012)

 

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.

 

Green Mountain Coffee Roasters (GMCR, $41.47, down $1.73)

April 39 puts (GMCR120421P00039000, $0.95, up $0.47)

May 35 puts (GMCR120519P00035000, $1.70, up $0.40)

Thoughts:  The drop below $45 last week got our attention and we should have added a put option on this name when we opened new trades on Monday.  A drop below $40 would be a break of multi-year support which could lead to $35 quickly.

 

Deckers Outdoor (DECK, $62.46, down $1.55)

May 50 puts (DECK120519P00050000, $0.60, up $0.15)

Thoughts:  We like this trade a lot and it could be the next official recommendation.  Shares are at 52-week lows and could be headed to $50. 

 

LinkedIn (LNKD, $97.99, down $1.01)

April 90 puts (LNKD120419P00090000, $0.60, up $0.20)

May 75 puts (LNKD120519P00075000, $0.75, up $0.05)

Thoughts:  Shares of LinkedIn can be very volatile and could test $90 and then $80 on a continued breakdown.

 

Sears Holdings (SHLD, $59.23, down $2.14)

May 45 puts (SHLD120519P00045000, $1.10, up $0.15)

Thoughts:  Watch for now.   

 

Apollo Group (APOL, $35.48, down $0.80)

May 36 puts (APOL120519P00036000, $1.80, up $0.45)

August 30 puts (APOL120818P00030000, $1.10, up $0.20)

Thoughts:  Watch for now.     

 

MGM Resorts (MGM, $13.07, down $0.44)    

January 17.50 calls 2013 (MGM130119C00017500, $0.70, down $0.10)

Thoughts:  We would love to see these options drop to 50 cents or less which is where we will start small positions.

 

Scientific Games (SGMS, $11.15, down $0.46)     

July 12.50 calls (SGMS120721C00012500, $0.55, down $0.15)

Thoughts:  Shares could be headed to $10 which is where we may look to establish a longer-term play.