April 2012 | 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 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.

1:15pm (EST)

KLA-Tencor (KLAC, $52.07, down $3.04)

June 48 puts (KLAC120616P00048000, $0.80, up $0.30)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  78%
Stop Target:  None

Action:  Continue to hold.   

 

First Solar (FSLR, $18.54, up $0.23)         

May 18 puts (FSLR120519P00018000, $1.50, down $0.10)

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  67%
Stop Target:  $1.30 (HARD STOP)

June 15 puts (FSLR120616P00015000, $1.00, down $0.10) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -10%
Stop Target:  50 cents

Action:  Close HALF of the May put options.  We will roll with the other half into next week along with a full position in the June put.  We just want to take a little more off the table before the weekend.

 

iShares Russell 2000 (IWM, $82.08, up $0.34)

June 75 puts (IWM120616P00075000, $0.80, down $0.10)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -28%
Stop Target:  50 cents

Action:  The June options have 7 weeks before they expire.  There is resistance up to $83 but we are looking for a drop back below $80 next week.

 

Joy Global (JOY, $71.78, down $0.45)

May 65 puts (JOY120519P00065000, $0.60, flat)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -24%
Stop Target:  None

June 60 puts (JOY120616P00060000, $0.90, flat)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -19%
Stop Target:  50 cents

Action:  We would like to see a close below $71 today.

 

Apollo Group (APOL, $35.72, down $0.20)

May 33 puts (APOL120519P00033000, $0.30, flat) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -52%
Stop Target:  None

Action:  Continue to hold.  

 

Potash (POT, $42.48, down $0.39)     

May 40 puts (POT120519P00040000, $0.35, up $0.05)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -213%
Stop Target:  None

Action:  Continue to hold.  

 

Green Mountain Coffee Roasters (GMCR, $48.12, down $0.63)   

May 35 puts (GMCR120519P00035000, $0.45, up $0.05)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -47%
Stop Target:  None

Action:  Continue to hold. 

 

Lululemon Athletica (LULU, $74.73, up $1.31)

May 67.50 puts (LULU120519P00067500, $0.60, down $0.15)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  0%
Stop Target:  $1.00 

Action:  There is risk up to $75 on a continued rebound but there is also a big gap to fill in the $50’s.   

 

Acuity Brands (AYI, $56.56, up $0.84)   

May 50 puts (AYI120519P00050000, $0.30, down $0.05)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -50%
Stop Target:  None

Action:  Continue to hold.  

 

Caterpillar (CAT, $104.62, up $0.23) 

May 92.50 puts (CAT120519P00092500, $0.25, down $0.05)

Entry Price:  $0.85 (4/12/12)
Exit Target: $1.70
Return:  -71%
Stop Target:  None

Action:  Continue to hold.

 

PowerShares QQQ (QQQ, $67.27, up $0.43)

May 65 puts (QQQ120519P00065000, $0.40, down $0.10)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  5%
Stop Target:  None

Action:  Continue to hold.

 

Other 2012 Portfolio OPEN positions (4):  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.

 

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

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

Dendreon May 22 calls (from January 2012)

Tiffany & Company May 62.50 puts (from April 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 have some fresh ideas on Monday for the Watch List.

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

10:00am (EST)

Deckers Outdoor (DECK, $52.27, down $17.19)

May 50 puts (DECK120519P00050000, $1.40, up $1.20)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00
Return:  180%
Stop Target:  None

Action:  Close the trade at current levels. 

We didn’t get quite the bounce we were hoping for at the open but let’s not look a gift horse in the mouth.  These options have been steadily climbing for the past 15 minutes so let’s take advantage of the more before there is a rebound.  We would love to keep this open for possible further downside but we can roll the position out into some June puts once the dust settles.     

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

9:00am (EST)

Special Notice:  I know some of you are nervous because the market has gone up for 3 days now and I’m fielding a lot of emails.  We have done well with our last 13 closed trades which have all been winners but some of our May positions are suffering.  They may or may not come back.  We have also been in a 4-week trading range which hurts both call and put options.

If you look over our track records over the years, when we have a losing streak, it’s because we have come off an incredible hot streak and the market was trending but has turned choppy.  Trading ranges suck but there is nothing we can do except take profits when we can while trying to limit losses. 

We have seen option trades lose 90% of their value and come back to double.  Take a look at Deckers Outdoor.  We are down 60% but we could be closing this trade today for a winner as shares were down over $13 to $56 in after-hours last night.  Shares should open at 52-week lows this morning.

Deckers missed estimates by 5 cents after a warm winter hurt sales of its Ugg boots.  The company also lowered guidance.

We are hoping all of these trades do come back but it is also why we starting closing half positions in case some don’t.

The charts we will show you on Monday will give a better picture of where we are at but try to relax.  I have expected this back test and while the market might get stretched, the trend is still lower.  The May options still have 3 weeks before they expire and the June options have 7 weeks before they expire.

Feel free to email anytime, I usually reply within 24-48 hours to ALL emails, depending on volume – Rick@MomentumOptionsTrading.com           

 

CURRENT TRADES

Deckers Outdoor (DECK, $69.46, up $1.85)

May 50 puts (DECK120519P00050000, $0.20, down $0.05)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00 (EXIT HALF at $1.50, or $1+ at the OPEN)
Return:  -60%
Stop Target:  None

Action:  We moved this trade to the top of the list and out of order because it is the first one we want you to focus on today at the open.

Shares should open below $60 this morning.  Set limit prices to exit HALF of the trade at $1.50 although we may not get that big of a jump.  Shares will be active and so will the options.  The rookie traders might use market orders to buy these puts and there is a huge short interest in the stock.  These means traders will be covering and we can expect some wild price swings.

If we are not filled at $1.50, try to exit HALF of the trade at $1 or better on the open.  Keep a limit price of $1 to close the other HALF of the trade if they do open above a buck.  If we take action we will send out a Trade Alert either way.         

      

KLA-Tencor (KLAC, $55.11, up $1.91)

June 48 puts (KLAC120616P00048000, $0.50, down $0.60)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  11%
Stop Target:  None

Action:  Shares hit fresh 52-week highs yesterday and we are trying to time a top which is never easy.  The company reported earnings after the close which beat Wall Street’s estimates but margins were down and they lowered guidance going forward.  Shares traded lower in after-hours on the news so let’s see how it plays out.

 

First Solar (FSLR, $18.31, up $0.01)         

May 18 puts (FSLR120519P00018000, $1.60, flat)

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  78%
Stop Target:  $1.30 (HARD STOP)

June 15 puts (FSLR120616P00015000, $1.10, down $0.05) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -1%
Stop Target:  50 cents

Action:  The May 18 puts traded down to $1.35 yesterday when shares reached a high of $18.84.  We set a HARD STOP of $1.30 on the May puts and the trade will close automatically if triggered.  We will continue to roll with the June puts as long as $20 holds as resistance.

 

iShares Russell 2000 (IWM, $81.74, up $0.80)

June 75 puts (IWM120616P00075000, $0.90, down $0.20)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -19%
Stop Target:  50 cents

Action:  The June options have 7 weeks before they expire.  There is resistance up to $83 but we are looking for a drop back below $80.

 

Joy Global (JOY, $72.23, up $1.47)

May 65 puts (JOY120519P00065000, $0.60, down $0.25)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -24%
Stop Target:  None

June 60 puts (JOY120616P00060000, $0.90, down $0.25)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -19%
Stop Target:  50 cents

Action:  We would like to see a move towards $0 today and $74 will serve as resistance.

 

Apollo Group (APOL, $36.19, up $1.26)

May 33 puts (APOL120519P00033000, $0.30, down $0.20) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -52%
Stop Target:  None

Action:  Shares reached a 52-week low of $33.71 on TUESDAY so we figured there might be a back test to resistance.  The $33 level represents decade long support and we are expecting a trip to the $20’s if the bears can get the stock under $33.  

 

Potash (POT, $42.87, down $1.41)     

May 40 puts (POT120519P00040000, $0.30, up $0.10)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -25%
Stop Target:  None

Action:  Potash touched a low of $42.60 and we were looking for a close below $42.50 yesterday.  The company missed Wall Street’s profit expectations by 8 cents a share and lowered guidance going forward.  We should see a continued move lower today.

 

Green Mountain Coffee Roasters (GMCR, $48.75, up $2.55)   

May 35 puts (GMCR120519P00035000, $0.40, down $0.10)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -53%
Stop Target:  None

Action:  The company reports earnings next week and we would love to see them pull a Deckers.  Green Mountain’s earnings have been “questioned” in the past as they try to create clever ways to hide inventory so this should be an interesting report. 

 

Lululemon Athletica (LULU, $73.42, up $1.49)

May 67.50 puts (LULU120519P00067500, $0.75, down $0.35)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  8%
Stop Target:  $1.00 

Action:  There is risk up to $75 on a continued rebound but there is also a big gap to fill in the $50’s.   

 

Acuity Brands (AYI, $55.72, up $0.14)   

May 50 puts (AYI120519P00050000, $0.35, down $0.10)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -42%
Stop Target:  None

Action:  Continue to hold.  

 

Caterpillar (CAT, $104.39, up $0.95) 

May 92.50 puts (CAT120519P00092500, $0.30, down $0.15)

Entry Price:  $0.85 (4/12/12)
Exit Target: $1.70
Return:  -65%
Stop Target:  None

Action:  Continue to hold.

 

PowerShares QQQ (QQQ, $66.84, up $0.39)

May 65 puts (QQQ120519P00065000, $0.50, down $0.15)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  5%
Stop Target:  None

Action:  Continue to hold.

 

Other 2012 Portfolio OPEN positions (4):  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.

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

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

Dendreon May 22 calls (from January 2012)

Tiffany & Company May 62.50 puts (from April 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.

 

O’Reilly Automotive (ORLY, $102.64, up $6.02)

June 95 puts (ORLY120616P00085000, $0.85, up $0.20)

Thoughts:  We are trying to time a top in this stock as well as it hit fresh 52-week highs yesterday.  We are now following the June 95 puts as a possible entry point.  However, shares are in blue-sky territory so the surge higher could continue. 

 

S&P 500 Spiders (SPY, $140.16, up $0.97)     

May 134 puts (SPY120519P00134000, $0.50, down $0.20)

June 130 puts (SPY120616P00130000, $0.90, down $0.20)

Thoughts:  Watch for now.

 

Fossil (FOSL, $132.17, up $3.12)

May 110 puts (FSLR120519P00110000, $0.90, down $0.50)

Thoughts:  Watch for now.

 

Sears Holdings (SHLD, $52.47, up $0.22)

May 45 puts (SHLD120519P00045000, $1.30, down $0.10)

Thoughts:  We like these puts a lot and we may make a move on a drop below $50 with these options or cheaper ones.