May 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.

12:50pm (EST)

Arena Pharmaceuticals (ARNA, $2.45, up $0.01)

July 3 calls (ARNA120723C00003000, $1.05, up $0.05)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+
Return:  5%
Stop Target:  None

Action:  We should hear some news by next week on the company’s obesity drug, Lorcaserin.  We are looking for a breakout past $3.50 on good news.

 

KLA-Tencor(KLAC, $52.50, up $0.37)

June 48 puts (KLAC120616P00048000, $0.65, down $0.10)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  44%
Stop Target:  None

Action:  The June options have 45 days before they expire and shares look weak in a strong market today.

 

First Solar (FSLR, $18.90, up $0.50)         

June 15 puts (FSLR120616P00015000, $0.90, down $0.15) 

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

Action:  Shares have traded to a high of $19.48 today and we are expecting $20 to hold as resistance.  

 

iShares Russell 2000 (IWM, $82.80, up $1.33)        

June 75 puts (IWM120616P00075000, $0.65, down $0.25)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -42%
Stop Target:  50 cents

Action:  We are looking for $83 to hold as resistance.

 

Joy Global (JOY, $71.28, up $0.51)

May 65 puts (JOY120519P00065000, $0.50, down $0.10)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -41%
Stop Target:  None

June 60 puts (JOY120616P00060000, $0.85, down $0.15)

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -24%
Stop Target:  50 cents

Action:  Joy Global has traded down to $70.16 today despite takeover chatter.

 

Apollo Group (APOL, $35.17, down $0.05)

May 33 puts (APOL120519P00033000, $0.35, flat) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -44%
Stop Target:  None

Action:  Our near-term target is for a test down to $30.

 

Potash (POT, $43.12, up $0.64)   

May 40 puts (POT120519P00040000, $0.25, down $0.10)

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

Action:  We are looking for a close below $41.50 this week which should led to a test down to $38.   

 

Green Mountain Coffee Roasters (GMCR, $49.24, up $0.51)   

May 35 puts (GMCR120519P00035000, $0.30, down $0.10)

Entry Price:  $0.85 (4/17/12)
Exit Target: $1.70
Return:  -65%
Stop Target:  None

Action:  The company announces earnings on Thursday.

 

Lululemon Athletica (LULU, $76.60, up $2.46)

May 67.50 puts (LULU120519P00067500, $0.30, down $0.30)

Entry Price:  $0.90 (4/12/12)
Exit Target: $1.80 (closed half at $1.20 on 4/23/12)
Return:  -17%
Stop Target:  $1.00 

Action:  Continue to hold.   

 

Acuity Brands (AYI, $57.32, up $1.75)           

May 50 puts (AYI120519P00050000, $0.20, down $0.15)

Entry Price:  $0.60 (4/12/12)
Exit Target: $1.20
Return:  -67%
Stop Target:  None

Action:  Shares are recovering yesterday’s losses but we still believe a drop below $50 is coming.

         

PowerShares QQQ (QQQ, $66.76, down $0.48

May 65 puts (QQQ120519P00065000, $0.30, 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 (5):  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)

Caterpillar May 92.50 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 be back in the morning with new updates for the Watch List.

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10:30am (EST)

First Solar (FSLR, $18.94, up $0.54)         

May 18 puts (FSLR120519P00018000, $1.25, down $0.30)

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80 (closed half at $1.50 on 4/27/12, closed half at $1.22 on 5/1/12)
Return:  51%
Stop Target:  $1.30 (HARD STOP)

Action:  Our Hard Stop of $1.30 on the May 18 puts was hit this morning as the options opened at $1.22.  Although we still like this trade, you should be out of it as we still have the June puts in play.          

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9:00am (EST)

Arena Pharmaceuticals (ARNA, $2.44, down $0.19)  

July 3 calls (ARNA120723C00003000, $1.00, down $0.05)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+
Return:  0%
Stop Target:  None

Action:  We should hear some news by next week on the company’s obesity drug, Lorcaserin.  We are looking for a breakout past $3.50 on good news.

 

KLA-Tencor(KLAC, $52.13, down $0.16)

June 48 puts (KLAC120616P00048000, $0.75, up $0.05)

Entry Price:  $0.45 (4/26/12)
Exit Target: $1.00
Return:  67%
Stop Target:  None

Action:  Shares traded down to $51.83 yesterday and we were looking for a close below $51.50.  Maybe today.

 

First Solar (FSLR, $18.40, up $0.05)         

May 18 puts (FSLR120519P00018000, $1.55, up $0.05)

Entry Price:  $0.90 (4/11/12)
Exit Target: $1.80 (closed half at $1.50 on 4/27/12)
Return:  69%
Stop Target:  $1.30 (HARD STOP)

June 15 puts (FSLR120616P00015000, $1.05, flat) 

Entry Price:  $1.15 (4/25/12)
Exit Target: $2.30
Return:  -6%
Stop Target:  50 cents

Action:  Shares traded down to $17.84 yesterday and we have a near-term target of $15 for First Solar.  The company reports earnings on Thursday so we have to be careful of any “snapback” rally on good news.  Of course, we don’t anticipate anything good coming from their conference call and it would take a lot to get shares back above $20.  We do have a HARD STOP of $1.30 on the other half of our May puts which would trigger on a move above $19.  The May puts touched a low of $1.32 yesterday as shares reached a high of $18.94.    

 

iShares Russell 2000 (IWM, $81.47, down $0.95)  

June 75 puts (IWM120616P00075000, $0.90, up $0.15)

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

Action:  The Russell 2000 went our near its low for the day as the iShares fell over 1%.  We would love to see push towards $80 today.

 

Joy Global (JOY, $70.77, down $0.83)

May 65 puts (JOY120519P00065000, $0.60, flat)

Entry Price:  $0.85 (4/25/12)
Exit Target: $1.70
Return:  -29%
Stop Target:  None

June 60 puts (JOY120616P00060000, $1.00, up $0.10)

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

Action:  Joy Global touched a low of $70.38 yesterday and once $70 cracks we will be good to go.

 

Apollo Group (APOL, $35.22, down $0.56)

May 33 puts (APOL120519P00033000, $0.35, up $0.05) 

Entry Price:  $0.62 (4/20/12)
Exit Target: $1.25
Return:  -44%
Stop Target:  None

Action:  The puts traded up to 40 cents when shares dipped below $35 to $34.92 yesterday.  Our near-term target is for a test down to $30.

 

Potash (POT, $42.48, down $0.20)     

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

Entry Price:  $0.40 (4/17/12)
Exit Target: $0.80
Return:  13%
Stop Target:  None

Action:  The puts touched 42 cents yesterday when shares fell to $41.92.  We are looking for a close below $41.50 this week which should led to a test down to $38.   

 

Green Mountain Coffee Roasters (GMCR, $48.73, up $0.83)   

May 35 puts (GMCR120519P00035000, $0.40, down $0.05)

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

Action:  The company announces earnings on Thursday and shares could be above $50 or below $30 by Friday.  Green Mountain has a lot of unanswered questions to put things mildly and we are hoping some old skeletons come out of the closet when they announce.  We saw our Deckers put options rebound from 60% down to return us a triple-digit profit last Friday and we are hoping for the same results.  However, a break above $50 would likely put this trade out of commission.  Conservative traders could add a call option but we are standing pat.  

 

Lululemon Athletica (LULU, $74.14, down $0.57)

May 67.50 puts (LULU120519P00067500, $0.60, flat)

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, $55.57, down $1.88)   

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

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

Action:  Shares fell 3% yesterday and we are expecting a drop below $52.50, hopefully this week.

         

PowerShares QQQ (QQQ, $66.76, down $0.48)

May 65 puts (QQQ120519P00065000, $0.45, up $0.05)

Entry Price:  $1.00 (4/11/12)
Exit Target: $2.00 (closed half at $1.60 on 4/23/12)
Return:  3%
Stop Target:  None

Action:  Continue to hold.

 

Other 2012 Portfolio OPEN positions (5):  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)

Caterpillar May 92.50 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.

 

TiVo (TIVO, $10.79, down $0.19)

August 12 calls (TIVO120818C00012000, $0.65, down $0.05)

August 13 calls (TIVO120818C00013000, $0.40, down $0.05)

Thoughts:  We are hearing takeover chatter, again, in TiVo and it has been a favorite trade of ours for the Weekly Wrap.  Open Interest (OI) stands at 10,000 contracts for the 12’s and for the August 13’s, OI is over 16,000 contracts.

 

Ross Stores (ROST, $61.50, down $0.72)

June 65 calls (ROST120616C00065000, $0.75, down $0.15)

Thoughts:  Shares slipped a little on Monday after setting fresh 52-week highs last week.  Ross is in a STRONG uptrend. 

 

PetSmart (PETM, $58.26, down $0.76)

May 60 calls (PETM120519C00060000, $0.60, down $0.15)

Thoughts:  Same deal with PetSmart which set a 52-week high of $59.36 last week.

 

MGM Resorts (MGM, $13.42, down $0.36)

June 14 calls (MGM120616C00014000, $0.55, down $0.15)

June 13 puts (MGM120616P00013000, $0.60, up $0.10)

Thoughts:  MGM announces earning on Thursday.  We are looking for the company to report a good quarter, but if they miss or lower guidance, shares could test $12 and the 200-day MA.  A better-than-expected earnings report in could get shares back pushing $15.  We love MGM for the possible approval of online poker over the next few months and have a $20 target on the stock but earnings are always tricky to play.  We could use both the calls and puts to create a strangle option trade but we aren’t sure if the post-earnings move up or down will be large enough to offset the costs.