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.

12:50pm (EST)

Facebook (FB, $27.76, up $0.49)

July 24 puts (FB120721P00024000, $0.65, down $0.15)

Entry Price:  $0.65 (6/14/12)
Exit Target: $1.05-$1.30
Return:  0%
Stop Target:  None

Action:  Resistance has been solid at $28, followed by $30.  The 1-month low for Facebook is $25.52 and we think shares could dip to double-deuces ($22) by mid-July.

 

FedEx (FDX, $87.06, up $1.01)

July 77.50 puts (FDX120721P00077500, $1.00, down $0.20)

Entry Price:  $0.92 (6/12/12)
Exit Target: $1.95
Return:  9%
Stop Target:  45 cents

Action:  We are looking for a test down to $80 or worse by mid-July once shares fall below $85.   

 

Potash (POT, $38.09, up $0.07)       

July 35 puts (POT120721P00035000, $0.80, down $0.05)

Entry Price:  $0.75 (6/11/12)
Exit Target: $1.50
Return:  7%
Stop Target:  None

Action:  We are looking for a drop below $35 by mid-July. 

 

iShares Russell 2000 (IWM, $76.04, up $0.70)

July 70 puts (IWM120721P00070000, $1.05, down $0.25)

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

Action:  We are looking for a close below $75 this week.  

 

Veeco Instruments (VECO, $32.88, down $0.11)

July 30 puts (VECO120721P00030000, $1.25, flat)

Entry Price:  $1.00 (6/6/12)
Exit Target: $2.00
Return:  25%
Stop Target:  50 cents

Action:  A drop below $32.50 gets $30 in play and our mid-July target is for a test to the mid to upper $20’s.

 

Illinois Tool Works (ITW, $54.22, down $0.30) 

July 50 puts (ITW120721P00050000, $0.75, down $0.05)

Entry Price:  $1.05 (6/4/12)
Exit Target: $2.10
Return:  -29%
Stop Target:  None

Action:  We are looking for a drop below $53.50 this week or next which will quickly bring $50 into play.  Shares reached a low of $54.19 on Wednesday.

 

First Solar (FSLR, $13.58, down $0.26)

July 10 puts (FSLR120721P00010000, $0.40, flat) 

Entry Price:  $0.62 (5/23/12)
Exit Target: $1.20
Return:  -35%
Stop Target:  None

Action:  These are cheap options on a volatile stock so try not to get frustrated as we wait for a drop to single-digits.

 

Apollo Group (APOL, $33.28, up $0.46)

August 27 puts (APOL120818P00027000, $0.75, down $0.10)

Entry Price:  $0.90 (5/10/12)
Exit Target: $1.80
Return:  -17%
Stop Target:  45 cents

Action:  Continue to hold.

 

Arena Pharmaceuticals (ARNA, $8.02, down $0.05)  

July 3 calls (ARNA120723C00003000, $5.30, up $0.30)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+ (closed half on 6/5/12 at $3.40)
Return:  340%
Stop Target:  $4.25, raise to $4.50 (HARD STOP on other half)

Action:  The calls have traded down to $4.80 as shares traded below $8 before recovering.  We have moved the Hard Stop up to $4.50. 

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.  For those of you just joining us, the company will meet with the FDA on June 27.

 

Other 2012 Portfolio OPEN positions (4):  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)

Best Buy July 16 puts (from May 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 but these are the trades we are watching as new candidates.

We will update this section in the morning.

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

12:00pm (EST)

Facebook (FB, $27.76, up $0.49)

Buy to OPEN July 24 puts (FB120721P00024000, $0.65, down $0.15)

Action:  Use limit orders up to 70 cents but do not pay more than 75-80 cents to establish positions.

 

CURRENT TRADES

Constant Contact (CTCT, $17.33, up $0.71)

July 17.50 puts (CTCT120721P00017500, $1.25, down $0.40)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10 (closed half on 6/13/12 at $1.35)
Return:  145%
Stop Target:  $1.35 (HARD STOP on other half)

Action:  Our Hard Stop of $1.35 on the other half of this trade has been triggered as shares have rebounded today to trade back above $17.

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

9:00am (EST)

The S&P 500 slipped 9 points, or 0.7%, to settle at 1,314.  The index traded above resistance at 1,325 to 1,327 but faded to kiss a low of 1,310 which has been a key battle ground lately.  A close below this level gets 1,300-1,275 back into the mix.

The Nasdaq declined 24 points, or 0.9%, to close at 2,818.  The bulls pushed a high of 2,853 which was just past resistance at 2,850 but tested 2,810 before the bell.  A close below 2,800 would not be bullish and would open the door for a test down to 2,750-2,700 over the near-term.

The Russell 2000 fell 9 points, or 1.2%, to end at 752.  The small-caps hit a bottom of 749.81 which was just under the 750 level.  If the index falls below 740 there could be a quick test to 720-700.

The S&P Volatility Index ($VIX, 24.27, up 2.18) surged 10% and reached a peak of 24.93.  We have been mentioning all hell could break loose if the VIX traded above 25.

As we head to press, Dow futures are higher by 19 points to 12,448 while the S&P 500 futures are off by 3 points to 1,311.  The Nasdaq 100 futures are down 4 points to 2,527. 

We had a few of our put option trades make some nice gains yesterday and we have updated a couple of charts for our current plays.  We are on the verge of releasing another New Trade this morning.  We want to see how the stock opens and where the options are at but we expect to be in by 10:30am so look for a New Trade Alert if we pull the trigger.

 

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.

 

FedEx (FDX, $86.19, down $1.50)

July 77.50 puts (FDX120721P00077500, $1.20, up $0.35)

Entry Price:  $0.92 (6/12/12)
Exit Target: $1.95
Return:  30%
Stop Target:  45 cents

Action:  FedEx traded down to $85.57 yesterday as the options hit $1.26.  We are looking for a test down to $80 or worse by mid-July once shares fall below $85 as you can see from our chart.  

 

Potash (POT, $38.02, down $0.62)       

July 35 puts (POT120721P00035000, $0.85, up $0.20)

Entry Price:  $0.75 (6/11/12)
Exit Target: $1.50
Return:  13%
Stop Target:  None

Action:  Shares kissed a low of $37.79 yesterday and we are looking for a drop below $35 by mid-July. 

 

iShares Russell 2000 (IWM, $75.34, down $0.88)

July 70 puts (IWM120721P00070000, $1.30, up $0.35)

Entry Price:  $1.20 (6/6/12)
Exit Target: $2.40
Return:  8%
Stop Target:  60 cents

Action:  We are looking for a close below $75 this week and shares traded to a low of $75 even on Wednesday.  

 

Veeco Instruments (VECO, $32.99, down $0.91)

July 30 puts (VECO120721P00030000, $1.25, up $0.20)

Entry Price:  $1.00 (6/6/12)
Exit Target: $2.00
Return:  25%
Stop Target:  50 cents

Action:  Veeco kissed a low of $32.56 and closed under $33 which was our target for the week.  A drop below $32.50 gets $30 in play and our mid-July target is for a test to the mid to upper $20’s.

Illinois Tool Works (ITW, $54.52, down $0.96) 

July 50 puts (ITW120721P00050000, $0.80, up $0.25)

Entry Price:  $1.05 (6/4/12)
Exit Target: $2.10
Return:  -24%
Stop Target:  None

Action:  We are looking for a drop below $53.50 this week or next which will quickly bring $50 into play.  Shares reached a low of $54.19 on Wednesday.

 

Constant Contact (CTCT, $16.62, down $2.90)

July 17.50 puts (CTCT120721P00017500, $1.65, up $0.95)

Entry Price:  $0.55 (5/24/12)
Exit Target: $1.10 (closed half on 6/13/12 at $1.35)
Return:  173%
Stop Target:  $1.35 (HARD STOP on other half)

Action:  Wow!  If we had known shares were going to hit BOTH of our price targets we would have squeezed a little more juice out of this trade.  We closed half of the trade on the drop below $18 but shares spent all session long drifting lower to $15.71 as the options reached a peak of $2.30.  Our mid-July target was $15 so we will place a stop of $1.35 on the other half.  If shares continue lower we will still enjoy further gains but the stop guarantees a profit of at least 145%.   

 

First Solar (FSLR, $13.54, down $1.11)

July 10 puts (FSLR120721P00010000, $0.40, up $0.10) 

Entry Price:  $0.62 (5/23/12)
Exit Target: $1.20
Return:  -35%
Stop Target:  None

Action:  These are cheap options on a volatile stock so try not to get frustrated as we wait for a drop to single-digits.

 

Apollo Group (APOL, $32.82, down $0.42)

August 27 puts (APOL120818P00027000, $0.85, up $0.10)

Entry Price:  $0.90 (5/10/12)
Exit Target: $1.80
Return:  -6%
Stop Target:  45 cents

Action:  We said a close below $33 would get $30 in play so let’s see how it plays out.  If this level is taken out shares could fall to the low $20’s.  For those of you who haven’t pulled the trigger on this trade, do so before it’s too late.    

 

Arena Pharmaceuticals (ARNA, $8.07, up $0.19)  

July 3 calls (ARNA120723C00003000, $5.30, up $0.30)

Entry Price:  $1.00 (4/30/12)
Exit Target: $2+ (closed half on 6/5/12 at $3.40)
Return:  340%
Stop Target:  $3.75, raise to $4.25 (HARD STOP on other half)

Action:  Arena zoomed to $8.65 before pulling back and closing above $8.  We still feel like a run past $10 is coming and we may add the January 14 (2013) calls as a “rollover” trade.  These options are near $1 and we might add them if we are stopped out on this trade.   

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.  For those of you just joining us, the company will meet with the FDA on June 27.

 

Other 2012 Portfolio OPEN positions (4):  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)

Best Buy July 16 puts (from May 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 but these are the trades we are watching as new candidates.

 

Salesforce.com (CRM, $127.33, down $3.25)

July 100 puts (CRM120721P00100000, $0.90, up $0.30)

Thoughts:  Shares closed below their 50-day MA yesterday and the 200-day is at $92.  We are expecting a test to $120 over the near-term, $100 if support at this level fails.

 

Facebook (FB, $27.27, down $0.13)

July 24 puts (FB120721P00024000, $0.80, up $0.10)

Thoughts:  If the market is going to hit test fresh lows, Facebook will follow.  Shares made a high of $28.10 yesterday while the options dipped to a low of 55 cents.  We would like to see an opening pop back to $28 which is where we may be able to pick these options up for 60 cents or less.

 

Advanced Auto Parts (AAP, $70.54, down $2.81)

July 65 puts (AAP120721P00065000, $0.95, up $0.40)

Thoughts:  We have been watching the auto-repair stock shoot to the moon but that rude is quickly coming back down to earth along with some of the stocks in the sector.  Shares of AAP are quickly breaking down and we believe a drop below $60 is coming.

 

Freeport-McMoRan Copper & Gold (FCX, $33.35, down $0.21)

July 30 puts (FCX120721P00030000, $0.85, up $0.10)

August 29 puts (FCX120818P00029000, $1.05, up $0.10)

Thoughts:  Shares look like they could test $30 over the near-term and the mid-$20’s by August is a good possibility.  The 52-week low is $28.85 and yesterday’s low was $33.14.

 

Coinstar (CSTR, $63.27, up $0.18)   

July 55 puts (CSTR120721P00055000, $0.70, down $0.15)

July 57.50 puts (CSTR120721P00057500, $1.10, down $0.30)

Thoughts:  We are warming up to the July 55’s.  We would like to see shares test $65 which is where we would look to go short (again).

 

KLA-Tencor (KLAC, $47.44, down $0.21)

July 44 puts (KLAC120721P00044000, $0.60, down $0.10)

September 37 puts (KLAC120922P00037000, $0.60, down $0.05)

Thoughts:  We would like to see a quick pop to $50 which is where we might start half positions.  We may add the September 37 as a speculative trade with the 200-day south of $34.

 

Apache (APA, $82.97, down $0.30)

July 72.50 puts (APA120721P00072500, $1.00, up $0.10)  

Thoughts:  We are still waiting for another break below $80 before possibly going short.   

 

Schlumberger (SLB, $63.95, down $0.98)

July 57.50 (SLB120721P00057500, $1.10, up $0.20)

August 55 puts (SLB120818P00055000, $1.35, up $0.20)

Thoughts:  Shares are right at resistance but could test $67 on fluff.  We like the July 57.50’s if $65 holds over the next day or two. 

 

PowerShares QQQ (QQQ, $62.13, down $0.43)

July 60 puts (QQQ120721P00060000, $1.15, up $0.15)

Thoughts:  Watch for now.