June 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.

12:25pm (EST)

iShares Russell 2000 (IWM, $76.52, up $0.58)

July 70 puts (IWM120721P00070000, $1.05, down $0.10)

Entry Price:  $1.20 (6/6/12)
Exit Target: $2.40
Return:  -13%
Stop Target:  60 cents

Action:  The July options have 6 weeks before they expire and we are expecting a test to $70 or worse by mid-July.


Veeco Instruments (VECO, $34.03, up $0.51)

July 30 puts (VECO120721P00030000, $1.15, down $0.15)

Entry Price:  $1.00 (6/6/12)
Exit Target: $2.00
Return:  15%
Stop Target:  50 cents

Action:  Shares fell to a low of $32.94 at the open.  We are looking for a close below $33 today which should get the $30 level back into play over the next few weeks.   


Illinois Tool Works (ITW, $55.86, flat) 

July 50 puts (ITW120721P00050000, $0.60, down $0.05)

Entry Price:  $1.05 (6/4/12)
Exit Target: $2.10
Return:  -43%
Stop Target:  None

Action:  We would like to see a close below double-nickels before the weekend.


Constant Contact (CTCT, $19.91, down $0.50)

July 17.50 puts (CTCT120721P00017500, $0.65, up $0.10)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10
Return:  18%
Stop Target:  None

Action:  Shares have kissed a low of $19.77 and a close below $20 would be nice.  


First Solar (FSLR, $12.55, down $0.29)         

July 10 puts (FSLR120721P00010000, $0.55, up $0.02) 

Entry Price:  $0.62 (5/23/12)
Exit Target: $1.20
Return:  -11%
Stop Target:  65 cents

Action:  We got our close below $13 yesterday.  If shares can resume their downtrend, a break below $11.50 should get us to single-digits by mid-July.


Best Buy (BBY, $20.00, up $0.46)   

July 16 puts (BBY120721P00016000, $0.25, down $0.05)

Entry Price:  $0.85 (5/21/12)
Exit Target: $1.70
Return:  -71%
Stop Target:  None

Action:  Shares traded down to $18.19 yesterday after Best Buy’s Chairman and co-founder, Richard Schultz, resigned and is looking to unload his 20% ownership stake in a company he started.  Some analysts tried to spin the news by saying the company could go private.  We doubt an acquiring company will pay a premium for a bunch of showroom stores with a broke business model.  If the bears can get a close below $18, which is multi-year support, there will be a freefall to $15, or worse. 


Apollo Group (APOL, $34.78, up $0.48)

August 27 puts (APOL120818P00027000, $0.55, down $0.05)

Entry Price:  $0.90 (5/10/12)
Exit Target: $1.80
Return:  -39%
Stop Target:  45 cents

Action:  Interest rates on student loans are set to DOUBLE on July 1.  On Wednesday, the Vice President said Congress wouldn’t accept the latest proposals on ways to pay for extending low interest rates on student loans.  Our government is likely to drop the ball on a bubble they created by handing out a trillion dollars to people who were out of work and decided online colleges were going to get them the training for a real job.

We are sure you have seen the commercials with TV models lounging in their PJ’s saying how easy it is to get approved for a loan and go to school.  Yeah, a good school is supposed to be hard and many of these “students” used this money to pay rent, buy groceries, or put gas in their cars.  If the rates double, more defaults will occur.    


Arena Pharmaceuticals (ARNA, $6.53, up $0.11)  

July 3 calls (ARNA120723C00003000, $3.70, up $0.10)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+ (closed half on 6/5/12 at $3.40)
Return:  255%
Stop Target:  $3 (Hard Stop on other HALF)

Action:  We have a price target of $10+ if there is no delay with their obesity drug, Lorcaserin, which could go to market by the end of the year if all goes well with their upcoming meeting with the FDA.


Other 2012 Portfolio OPEN positions (3):  These are trades that are still open in the portfolio but are down over 50%.  They have longer expiration dates and 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 if 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)

RealD June 10 puts (from May 2012)



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 but these are the trades we are watching as new candidates.

We will update this section on Monday with some new ideas.