12:50pm (EST)
As expected, the market has traded in a tight range today and has pushed red and green as Wall Street continues to wait on word from the Fed and the ECB. It has been a tension filled 48 hours as the debate rages on what they will or won’t do but it is no use in talking about it as the deadlines are almost here. Instead, we will talk stock and options which is what we do best.
RealD (RLD, $9.76, down $2.83) is down 22% today and has touched a low of $9.25. We have said this stock was going to single-digits and in late May we got aggressive with the June 10 puts when shares were near $12 which burned us.
We should have went with the August 10 puts (RLD120818P00010000, $0.60, up $0.40) which are up 200% and have traded to a high of 80 cents or the August 12.50 puts (RLD12081800012500, $2.60, up $1.75) which are also up 200% and have traded to $3.10.
The company reported earnings of $3 million, or 5 cents a share, versus $9.5 million, or $0.17 a share, in the year ago quarter. Revenue came in at just over $68 million. Wall Street was looking for profits of $0.15 a share on sales north of $70 million.
Dendreon (DNDN, $4.96, down $1.23) is getting dumped after reporting a wider-than-expected loss of 61 cents a share versus the suit-and-ties forecast for a loss of 59 cents a share. Revenue came in at $80 million versus estimates for $86 million as sales of Provenge continue to slip. The prostate cancer drug is facing increased competition and Dendreon said it would shutdown one of its Provenge manufacturing plants in an effort to cut costs. Shares of Dendreon are at their lowest levels since 2009 and are at pre-level prices before Provenge was even approved. This was one of our favorite stocks from a few years ago and it made our subscribers a lot of money after soaring from $4 to over $50. We said back in 2011 when shares fell below $40 to stay away from Dendreon because shares would get a lot cheaper.
Although they look “attractive” at these levels, the stock could fall to $3 or $2 which is maybe when you want to take a flyer. Shares would basically be a long-term call option with the chance of a takeover somewhere down the road. Dendreon needs a new CEO and a better sales team because the drug is worth something but someone is looking at this company as its market cap continues to shrink.
As we head to press, the market has trading lower with Tech turning negative along with the rest of the indexes. The Dow is down 35 points to 13,038 while the S&P 500 is off 4 points to 1,381. The Nasdaq is lower by a point to 2,944.
FaceBook (FB, $21.77, down $1.38) has made another fresh low of $21.61 and appears headed to $18. The S&P Volatility Index ($VIX, 18.62, up 0.59) is up 3% and is creeping its way to 20…
We do have a NEW TRADE for you today and it is a carry-over trade on a current position that is showing a nice double-digit return. We are still holding out for triple-digits but we may have to go out to the September option chain to get our gains.
Subscribers, check the Members Area for the updates and please use limit prices to get the best fills.
