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.

First Solar (FSLR, $18.10, down $0.54)         

May 18 puts (FSLR120519P00018000, $1.75, up $0.20) 

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  94%
Stop Target:  90 cents

June 15 puts (FSLR120616P00015000, $1.20, up $0.05) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  0%
Stop Target:  50 cents

Action:  We may sell half of the May 18 puts when they hit a double but we don’t want to sell too early.  Our exit target is $1.80 but we may raise it to $2+.

 

iShares Russell 2000 (IWM, $80.84, up $1.14)

June 75 puts (IWM120616P00075000, $1.15, down $0.25)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  0%
Stop Target:  50 cents

Action:  We wanted to give this trade a lot of time to develop as we expect the Russell to test the 750 level by mid-June.

 

Joy Global (JOY, $70.37, down $1.40)

May 65 puts (JOY120519P00065000, $0.90, up $0.20)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  6%
Stop Target:  None

June 60 puts (JOY120616P00060000, $1.15, up $0.10)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  0%
Stop Target:  50 cents

Action:  We are going to be a little aggressive with this trade as we are looking for a quick hit with the May puts and a longer-term return on the June puts.  We would love to see a close below $70 today.

 

Apollo Group (APOL, $34.48, down $0.07)

May 33 puts (APOL120519P00033000, $0.65, flat)  

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  5%
Stop Target:  None

Action:  Our plan is to start exiting the trade when shares dip below $33.

 

Potash (POT, $44.20, up $1.70)     

May 40 puts (POT120519P00040000, $0.25, down $0.30)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  -38%
Stop Target:  None

Action:  Resistance at $45 is holding as shares have topped out at $44.84.

 

Green Mountain Coffee Roasters (GMCR, $45.78, up $1.18)    

May 35 puts (GMCR120519P00035000, $0.60, down $0.20)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -29%
Stop Target:  None

Action:  Continue to hold.    

 

Lululemon Athletica (LULU, $71.17, up $0.99)

May 67.50 puts (LULU120519P00067500, $1.45, down $0.15)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  56%
Stop Target:  $1.00  

Action:  Shares have been volatile and a rising Apple tide lifted all boats this morning.  However, shares all well off their high after peaking at $72.59.

 

Acuity Brands (AYI, $55.17, up $0.48)    

May 50 puts (AYI120519P00050000, $0.45, down $0.15)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -25%
Stop Target:  None

Action:  We would like to see a drop below $52.50 this week but realize shares could pop to over $55 today.  They did and now we are looking for a close below double-nickels.   

 

Caterpillar (CAT, $102.86, down $5.54) 

May 92.50 puts (CAT120519P00092500, $0.45, up $0.10)

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

Action:  We are getting a little love today and the payoff will come once shares fall below $100.

 

PowerShares QQQ (QQQ, $66.22, up $1.49)

May 65 puts (QQQ120519P00065000, $0.75, down $0.75)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  15%
Stop Target:  None

Action:  These options got whacked today but we should be okay.  We are still up on the trade and if the market reverses course the puts will recover.    

 

Deckers Outdoor (DECK, $66.45, up $0.54)

May 50 puts (DECK120519P00050000, $0.30, down $0.05)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00
Return:  -30%
Stop Target:  None

Action:  The company announces earnings on Thursday after the close and we are looking for a miss and lowered guidance.   

       

Tiffany & Company (TIF, $67.77, up $1.84)

May 62.50 puts (TIF0519P00062500, $0.40, down $0.25)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  -62%
Stop Target:  None

Action:  We are expecting a drop to $60 over the next few weeks for Tiffany and Co.

 

Other 2012 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 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)

 

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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11:30pm (EST)

NEW TRADES!!!

First Solar (FSLR, $18.21, down $0.43)         

Buy to OPEN June 15 puts (FSLR120616P00015000, $1.15, up $0.10) 

Action:  Use limit orders up to $1.20 but do not pay over $1.25-$1.30 to establish positions.  We are approaching nearly a 100% return on our current play and we want to take advantage of a continued move lower.

 

iShares Russell 2000 (IWM, $80.67, up $0.97)

Buy to OPEN June 75 puts (IWM120616P00075000, $1.15, up $0.25)

Action:  Use limit orders up to $1.20 but do not pay over $1.25 to establish positions.

 

Joy Global (JOY, $70.70, down $1.07)

Buy to OPEN May 65 puts (JOY120519P00065000, $0.85, up $0.15)

Buy to OPEN June 60 puts (JOY120616P00060000, $1.15, up $0.10)

Action:  Use limit orders up to 90-95 cents for the May 65’s and $1.20-$1.25 for the June 60’s.

We are going to be a little aggressive with this trade as we are looking for a quick hit with the May puts and a longer-term return on the June puts.

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As far as Apple, shares had fallen from a 52-week peak of $644 on April 10 to a low of $555 yesterday ahead of the news.  Shares were at $603 in after-hours trading last night, up $43, after the company posted another blowout quarter. 

The company reported a profit of $11.6 billion, or $12.30 a share versus $6 billion, or $6.40 a share, from last year’s period.  Sales surged nearly 60% to $39 billion, up from $24.7 billion a year ago.  We mentioned yesterday anything north of $11.80 a share would silence the critics but we were surprised on the $39 billion in revenue.  We were expecting $40+ billion.  Wall Street was expecting $10 a share on revenue of $36.6 billion.

As far as the devices, we said iPhone sales needed to be above 33 million.  Check, as they came in at 35 million.   We were looking for iPad sales of 12 million and Apple sold 11.8 million tablets.  This was still an impressive 150% increase but this was the one number we were worried about.  Obviously, it was good enough for the suit-and-ties. 

Apple does trade WEEKLY options and the April 600 calls (AAPL120427C00600000, $3.35, down $5.10) should get a pop today after losing 60% of their value yesterday.  The premiums will deflate at the open as the options expire this Friday but if shares can trade above $605 these options should double from Tuesday’s close.

As we head to press, the Dow futures are up 55 points to 13,014 while the S&P’s are advancing 10 points to 1,380.  Nasdaq 100 futures are at 2,686, up 53 points before the bell.  Apple is at $613.

We have some more thoughts on today’s surge at the open and there are a few things we are looking for.  Subscribers, check the Members Area for what we are looking for and the updates.  We have also added some possible New Trade setups that are on the Watch List that could be triggered today so stay on your toes.

 

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.

 

Special Notice:  Today’s bullish action is actually good if the bears hold resistance which will be Dow 13,200; S&P 1,400; and Nasdaq 3,050. 

We have talked about the market doing a “back test” to previous levels and we showed you the downward trend developing in this week’s chart work.  Since we have already taken half profits in quite a few trades, we should be okay on today’s pop but remember we still have over 3 weeks before they expire.

If resistance holds, the trend lower could pick up steam in the days and weeks ahead.

The Fed and Ben Bernanke will take center stage this afternoon and they could help or hinder the action into the closing bell and for that matter, the rest of the week.

 

Apollo Group (APOL, $34.55, up $0.13)

May 33 puts (APOL120519P00033000, $0.65, down $0.10)  

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  5%
Stop Target:  None

Action:  Shares traded to a low of $33.71 yesterday while the options reached 86 cents.  Our plan is to start exiting the trade when shares dip below $33.

 

Potash (POT, $42.50, down $0.32)     

May 40 puts (POT120519P00040000, $0.55, up $0.05)

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  38%
Stop Target:  None

Action:  Potash finished near its lows for the day and our near-term target is $38.

 

Green Mountain Coffee Roasters (GMCR, $44.60, up $0.34)    

May 35 puts (GMCR120519P00035000, $0.70, down $0.10)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -18%
Stop Target:  None

Action:  Once $40 falls, the mid $30’s will easily come into play.    

 

Lululemon Athletica (LULU, $70.18, down $3.64)

May 67.50 puts (LULU120519P00067500, $1.60, up $0.55)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  56%
Stop Target:  $1.00  

Action:  We have set a stop of $1 for the other half of the position but it is not a Hard Stop.  Shares fell below $70 to a low of $69.64 yesterday and our near-term target is $65.  The options reached a peak of $1.77.  We would like to get $2 for the other half of the trade but we may protect profits if shares rebound from yesterday’s losses.

 

Acuity Brands (AYI, $54.69, up $1.05)    

May 50 puts (AYI120519P00050000, $0.60, down $0.20)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  0%
Stop Target:  None

Action:  We would like to see a drop below $52.50 this week but realize shares could pop to over $55 today.   

 

Caterpillar (CAT, $108.40, up $1.50) 

May 92.50 puts (CAT120519P00092500, $0.35, down $0.15)

Entry Price:  $0.85 (4/12/12)
Exit Target: $1.70
Return:  -59%
Stop Target:  None

Action:  Caterpillar is trading lower in pre-market action.

 

PowerShares QQQ (QQQ, $64.73, down $0.35)

May 65 puts (QQQ120519P00065000, $1.50, up $0.20)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  55%
Stop Target:  None

Action:  We seriously thought about closing the other half of the trade because we weren’t sure if Apple would satisfy Wall Street’s forecast.  We would’ve loved to have seen Apple miss (and they actually did guide lower) but we have already locked in gains on half the trade so we should be okay.    

 

Deckers Outdoor (DECK, $65.91, down $2.49)

May 50 puts (DECK120519P00050000, $0.35, up $0.10)

Entry Price:  $0.50 (4/11/12)
Exit Target: $1.00
Return:  -30%
Stop Target:  None

Action:  The company announces earnings on Thursday and we are looking for a miss and lowered guidance.        

 

First Solar (FSLR, $18.64, down $0.61)         

May 18 puts (FSLR120519P00018000, $1.55, up $0.20) 

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80
Return:  72%
Stop Target:  90 cents

Action:  Shares hit a fresh low of $18.57 yesterday as the options reached a peak of $1.59.  We may close half of the trade today if shares trade above $19.  We are also looking at adding the June 15 puts which are at $1.10 on a continued move lower.  We have a strong feeling shares are going to be in the single-digits by the end of summer. 

 

Tiffany & Company (TIF, $65.93, down $1.07)

May 62.50 puts (TIF0519P00062500, $0.65, up $0.10)

Entry Price:  $1.05 (4/9/12)
Exit Target: $2.10
Return:  -38%
Stop Target:  None

Action:  We are expecting a drop to $60 over the next few weeks for Tiffany and Co.

 

Other 2012 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 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)

 

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.

 

iShares Russell 2000 (IWM, $79.70, up $0.60)

May 77 puts (IWM120519P00077000, $0.95, down $0.30)

June 75 puts (IWM120616P00075000, $1.40, down $0.25)

Thoughts:  If resistance holds at $81-$82 we may start small positions today.  We are now favoring June options for our next “batch” of trades and we would love to see the June 75’s come down to a buck or less.

 

S&P 500 Spiders (SPY, $137.31, up $0.52)     

May 133 puts (SPY120519P00133000, $0.95, down $0.30)

Thoughts:  We may go with these options or the May 134 puts again if resistance at $139-$140 holds.  

 

Joy Global (JOY, $71.77, down $0.19)

May 65 puts (JOY120519P00065000, $0.70, down $0.10)

June 60 puts (JOY120616P00060000, $1.05, down $0.05)

Thoughts:  We are looking for a breakdown below $70.

 

Fossil (FOSL, $126.08, up $0.53)

May 105 puts (FSLR120519P00105000, $1.25, down $0.10)

Thoughts:  Watch for now.

 

Sears Holdings (SHLD, $50.59, down $1.41)

May 45 puts (SHLD120519P00045000, $1.60, up $0.20)

Thoughts:  We like these puts a lot and we will make a move on a drop below $50 with these options or cheaper ones.  Sears traded to  low of $50.15 yesterday.