August 2012 | Members

Do not risk more than 5% of your trading account on any one trade but do try to take ALL of the trades.  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.

1:00pm (EST)

Cymer (CYMI, $56.88, up $0.38)

September 55 puts (CYMI120922P00055000, $1.55, down $0.10)

Entry Price:  $1.42 (8/23/12)
Exit Target:  $2.25+
Return:  9%
Stop Target:  70 cents

Action:  Shares are rebounding slightly today but should test $55 next week.  

 

Caterpillar (CAT, $87.33, down $0.30)

September 82.50 puts (CAT120922P00082500, $0.83, up $0.05)

Entry Price:  $0.73 (8/23/12)
Exit Target:  $1.50
Return:  14%
Stop Target:  None

Action:  Shares have traded to a low of $86.40 while the options have reached $1.  We are looking for shares to test $80 again once $85 is taken out.

 

Knight Capital Group (KCG, $2.80, down $0.06)

January (2013) 2.50 call (KCG130119C00002500, $0.55, down $0.05)

Entry Price:  $0.55 (8/21/12)
Exit Target:  $1.10
Return:  0%
Stop Target:  None

Action:  There is risk down to $2 but we have a 6-month target of $4.  The company recently lost $440 million in a trading software snafu which required some of the big boys to take a stake in the company so that it could be saved.  We are hearing trading levels at Knight are back to normal as the firm is first or second in its sector.  This is a possible “lottery” play on shares trading back to $4 or $5 and overall volume picking back up in the market once the suit-and-ties come back from their August vacations.  If shares trade near $4 by mid-January we should get an easy double on our call options.

 

WellPoint (WLP, $58.47, down $0.26)

September 60 calls (WLP120922C00060000, $0.55, down $0.10)

Entry Price:  $0.70 (8/21/12)
Exit Target:  $1.40
Return:  -21%
Stop Target:  None

Action:  We will stick with the trade as long as $55 holds and we are looking for a run past $60 by mid-September.

 

Amgen (AMGN, $84.27, up $0.61)       

September 85 calls (AMGN120922C00085000, $1.30, up $0.25)

Entry Price:  $0.80 (8/20/12)
Exit Target:  $1.50 (closed half at $1.10 on 8/22/12)
Return:  50%
Stop Target:  80 cents (Hard Stop on other half)

Action:  Continue to hold.

 

Pepsico (PEP, $73.21, up $0.55)

October 75 calls (PEP121020C00075000, $0.55, up $0.10)

Entry Price:  $0.50 (8/16/12)
Exit Target:  $1.00
Return:  10%
Stop Target:  None

Action:  We will stick with the October calls as long as $71.50 holds.  We still believe shares will push $75 over the near-term but a break below $72 would be bearish. 

        

Veeco Instruments (VECO, $33.26, up $0.06)

September 30 puts (VECO120922P00030000, $0.65, flat)

Entry Price:  $0.90 (8/2/12)
Exit Target:  $1.35-$1.80
Return:  -28%
Stop Target:  None

Action:  Veeco has traded to a low of $32.95 today.  We are looking for a close below $32.50 which should get $30 and the high $20’s in play for next week.

 

Other 2012 Portfolio OPEN positions (5):  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.

 

Dow Jones Industrial Average Spiders September 119 puts (from July 2012)

S&P 500 Spiders September 123 puts (from July 2012)

Wynn Resorts September 80 puts (from August 2012)  

Apollo Group September 24 puts (from August 2012)

 

Bank of America January 12.50 calls 2013 (from March 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 on Monday with some fresh ideas.