June 2012 | Members

12:30 pm EST (continued)…

There are still a lot of traders staying long ahead of this week’s FOMC meeting but we have warned you the Greece news could be short-lived and that it wouldn’t be
long before fundamentals took over again.

The  market knows Greece is going to default and Spain’s bond yields are popping above 7% today.  Wall Street is expecting  the Fed to announce an extension of “Operation Twist” but we have a feeling their statement on Wednesday is going to be a Debbie Downer.

As  far as the action today, the indexes have traded in a tight range.  Although the bulls have recovered from their  opening losses, they are still having trouble clearing resistance. 

The  Dow is down 35 points to 12,732 while the S&P 500 is slipping a point and  is at 1,341.  The Nasdaq is showing a slight gain of 9 points and is at 2,882.

One stock that  is doing well is Arena  Pharmaceuticals  (ARNA, $9.28, up $0.88) which is at its highs for the day.  We have two current options trades on Arena
that continue to perform well as the one for our Daily is now approaching a  400% return.  We recommended a covered  call trade for our Weekly when shares were at $2 back in February and we have  been pounding the table saying the stock could hit double-digits.  We are almost there, folks.

We  have a ton more to talk about with our current trades so we have to roll.  We are close to releasing more new trades  once we get confirmation on the next trend so stay locked-and-loaded.

Subscribers,  check the Members Area for the  updates.    



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  Note:  We will have the charts posted for you later  today.  We apologize for the  inconvenience and they should be ready by 6pm.  We had to resend the files to our webmaster who is working on them.


Facebook (FB, $30.01, up $1.72)

 July 24 puts  (FB120721P00024000, $0.40, down $0.20)

Entry Price:  $0.65 (6/14/12)

Exit Target: $1.05-$1.30

Return:  -62%

Stop Target:  None

Action:  Shares opened lower but have moved higher as  the market came off its lows.  We said  there was risk to $31.50-$32 but we are looking for a drop back below $28 this  week and $25 by mid-July.  


(FDX, $88.00, up $0.37)

July 77.50 puts  (FDX120721P00077500, $0.60, down $0.20)

Entry Price:  $0.92 (6/12/12)

Exit Target: $1.95

Return:  -35%

Stop Target:  45 cents

Action:  There is risk up to $88-$90 and we would like  to see a close below $87.50 today which isn’t asking much.  We are looking for a test down to $80 or  worse by mid-July and the company announces earnings tomorrow.    


Potash (POT, $38.63, up $0.03)       

July 35 puts  (POT120721P00035000, $0.45, down $0.10)

Entry Price:  $0.75 (6/11/12)

Exit Target: $1.50

Return:  -40%

Stop Target:  None

Action:  Shares remain below their 50-day and 200-day  MA’s and we are looking for a drop below $35 by mid-July. 


iShares  Russell 2000 (IWM, $76.96,  down $0.26)

July 70 puts  (IWM120721P00070000, $0.70, down $0.05)

Entry Price:  $1.20  (6/6/12)

Exit Target: $2.40

Return:  -42%

Stop Target:  60 cents

Action:  The small-caps have given us good clues on  market direction so let’s see if 780 holds on the Russell 2000.  If so, we would like to see a move towards  $75 over the next few weeks.


Veeco  Instruments (VECO, $32.80, down $0.48)

July 30 puts (VECO120721P00030000, $1.00, flat)

Entry Price:  $1.00  (6/6/12)

Exit Target: $2.00

Return:  0%

Stop Target:  50 cents

Action:  We are looking for a drop  below $30 over the near-term, $25 by mid-July.  A move above $34, which has been solid as resistance, would be bullish  but we would expect $36 to hold.


Illinois  Tool Works (ITW, $54.44,  down $0.04) 

July 50 puts  (ITW120721P00050000, $0.50, down $0.10)

Entry Price:  $1.05  (6/4/12)

Exit Target: $2.10

Return:  -52%

Stop Target:  None

Action:  There is risk to $56 and the 200-day MA is  just below at $55.75.  We are looking for  a drop below $53 week which should lead to a quick trip to $50 or below.


First Solar (FSLR, $14.72, up $0.77)

July 10 puts  (FSLR120721P00010000, $0.20, down $0.10) 

Entry Price:  $0.62 (5/23/12)

Exit Target: $1.20

Return:  -68%

Stop Target:  None

Action:  Today’s rally are a result of more short  covering.  Shares could trade to $15 on  an upbeat market but a close below $13 would get this trade going again.  These are cheap options on a volatile stock  so try not to get frustrated as we wait for a drop to single-digits by mid-July.


Apollo Group (APOL, $33.08, down $0.04)

August 27 puts  (APOL120818P00027000, $0.70, down $0.10)

Entry Price:  $0.90  (5/10/12)

Exit Target: $1.80

Return:  -22%

Stop Target:  45 cents

Action:  This is a 15-year chart for shares of Apollo  which shows strong resistance at $35.   Shares fell to a low of $32.26 last week and we would like to see a move
below $32 this week.


Arena  Pharmaceuticals  (ARNA, $9.28, up $0.88)  

July 3 calls  (ARNA120723C00003000, $6.40, up $0.90)

Entry Price:  $1.00  (4/30/12)

Exit Target: $2+ (closed half on 6/5/12 at $3.40)

Return:  390%

Stop Target:  $4.50 (HARD STOP on other half)

Action:  This is a 10-year monthly chart for shares of  Arena.  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 (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)

Best Buy July 16 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 in the morning.