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.

1:05pm (EST)

Cymer (CYMI, $56.94, down $1.71)

September 55 puts (CYMI120922P00055000, $1.60, up $0.40)

Entry Price:  $1.42 (8/23/12)
Exit Target:  $2.25+
Return:  13%
Stop Target:  70 cents

Action:  We were able to open the options at $1.42 and they traded own to $1.39 so everyone should have got good fills.

 

Caterpillar (CAT, $87.26, down $1.46)

September 82.50 puts (CAT120922P00082500, $0.85, up $0.22)

Entry Price:  $0.73 (8/23/12)
Exit Target:  $1.50
Return:  16%
Stop Target:  None

Action:  Use limit orders up to 80 cents but do not pay over 85-90 cents to establish positions.

 

Knight Capital Group (KCG, $2.77, flat)

January (2013) 2.50 call (KCG130119C00002500, $0.55, flat)

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, $58.96, down $0.61)

September 60 calls (WLP120922C00060000, $0.70, down $0.15)

Entry Price:  $0.70 (8/21/12)
Exit Target:  $1.40
Return:  0%
Stop Target:  None

Action:  If current levels hold, we should see a run past $60.  From there a test to $62-$63 could be in play.  We will stick with the trade as long as $55 holds.

 

Amgen (AMGN, $83.56, down $0.31)       

September 85 calls (AMGN120922C00085000, $1.00, down $0.10)

Entry Price:  $0.80 (8/20/12)
Exit Target:  $1.50 (closed half at $1.10 on 8/22/12)
Return:  31%
Stop Target:  80 cents (Hard Stop)

Action:  We have a Hard Stop of 80 cents on the other half to protect profits in case shares slip from here.  The calls opened at $1 and traded down to 89 cents but have pushed $1.16 as well.

 

Pepsico (PEP, $72.63, down $0.26)

October 75 calls (PEP121020C00075000, $0.40, down $0.05)

Entry Price:  $0.50 (8/16/12)
Exit Target:  $1.00
Return:  -20%
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.  Yesterday’s low was $72.46.  

 

Veeco Instruments (VECO, $32.85, down $0.57)

September 30 puts (VECO120922P00030000, $0.75, up $0.10)

Entry Price:  $0.90 (8/2/12)
Exit Target:  $1.35-$1.80
Return:  -17%
Stop Target:  None

Action:  We are looking for a close below $32.50 by Friday 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 in the morning.

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

11:50am (EST)

NEW TRADE!!!

Cymer (CYMI, $57.31, down $1.34)

Buy to OPEN September 55 puts (CYMI120922P00055000, $1.35, up $0.15)

Action:  The bid/ ask is $1.25 by $1.45 so let’s try to split the difference.  Set limit orders at $1.35 but do not pay over $1.45-$1.50 to establish positions.  The open interest is at 1,780 but no contracts have traded yet.  Let’s go shake things up. 

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

10:05am (EST)

NEW TRADE!!!

Caterpillar (CAT, $87.81, down $0.91)

Buy to OPEN September 82.50 puts (CAT120922P00082500, $0.73, up $0.10)

Action:  Use limit orders up to 80 cents but do not pay over 85-90 cents to establish positions.

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

9:00am (continued…)

The Dow declined 31 points, or 0.2%, to settle at 13,172.  The bulls gave up a little support at 13,200 but the next wave has been moving up from 13,000 to 13,100.  Yesterday’s low was 13,120.  Resistance is still at 13,350 if the bulls can keep pushing.

The S&P 500 added a third-of-a-point, or 0.02%, to end at 1,413 again.  The index touched a low of 1,406 but was able to push 1,416 before the close.  The bulls are still looking for a finish above 1,425 this week while the bears would love to crack 1,400. 

The Nasdaq added a half-dozen points, or 0.2%, to finish at 3,073.  Tech traded down to 3,053 shortly after the open but was able to hold the 3,050 support level.  The index flirted with positive territory shortly afterwards and was able to reach a peak of 3,080 before the bell.  The 3,100 level will need to be cleared on the close in order for the bulls to make a serious run at the 52-week high of 3,134 this week.

The Russell 2000 slipped 3 points, or 0.3%, to close at 812.  The small-caps fell below our 810 near-term support target by a smudge after testing 809.60 but recovered.  The 820 level will be a headache to clear but the bulls did push 827 on Tuesday and a close above this level would confirm another leg higher.  A break below 800 will lead to some selling pressure.

Futures are showing a slightly lower open and look like this as we head to press:  Dow (-27); S&P 500 (-4); Nasdaq 100 (-8).  Subscribers, check the Members Area for the updates and be sure to take a look at our Watch List which has a number of new candidates this morning.

 

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.

Knight Capital Group (KCG, $2.77, down $0.05)

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, $58.57, up $1.30)

September 60 calls (WLP120922C00060000, $0.85, up $0.25)

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

Action:  Shares closed at their high for the day after adding 2%.  If current levels hold, we should see a run past $60.  From there a test to $62-$63 could be in play.  We will stick with the trade as long as $55 holds.

 

Amgen (AMGN, $83.87, up $0.76)       

September 85 calls (AMGN120922C00085000, $1.10, up $0.25)

Entry Price:  $0.80 (8/20/12)
Exit Target:  $1.50 (closed half at $1.10 on 8/22/12)
Return:  38%
Stop Target:  60 cents

Action:  We closed half of the trade yesterday to lock-in profits.  Shares traded to a high of $84.19 while the options reached $1.23.  The 52-week high is $84.39 and a break above this level should get $90 in play.  We can still enjoy further gains if shares continue higher but we have set a Hard Stop of 80 cents on the other half to protect profits in case they don’t.

 

Pepsico (PEP, $72.89, down $0.12)

October 75 calls (PEP121020C00075000, $0.45, flat)

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.  Yesterday’s low was $72.46.

        

Veeco Instruments (VECO, $33.42, down $0.80)

September 30 puts (VECO120922P00030000, $0.65, up $0.15)

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

Action:  Shares fell to a low of $32.94 and we are looking for a close below $32.50 by Friday 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.

 

Caterpillar (CAT, $88.72, down $1.57)

September 85 puts (CAT120922P00085000, $1.05, up $0.30)

Thoughts:  Shares could be headed back to $80.

 

AOL (AOL, $32.38, down $0.08)

September 33 calls (AOL120922C00033000, $0.65, down $0.10)

September 32 puts (AOL120922P00032000, $0.85, up $0.10)

Thoughts:  Watch for a move below $31 to possibly play the puts while a break above $33 could be used to play another breakout.  We might also make this as a strangle option trade because it looks good at current prices.

 

Netflix (NFLX, $65.40, down $0.20)

September 72.50 calls (NFLX120922C00072500, $1.05, flat)

Thoughts:  Watch for a break above $67 before going long.

 

Fusion-io (FIO, $29.31, up $0.09)

September 32 calls (FIO120922C00032000, $0.85, up $0.10)

Thoughts:  A break above $30 might get us back in some more call options.

 

Taiwan Semiconductor Manufacturing (TSM, $14.40, down $0.25)

January 15 calls (TSM130119C00015000, $0.70, down $0.10)

Thoughts:  We are waiting for a close above $14.75 before possibly going long.

 

Buffalo Wild Wings (BWLD, $75.89, up $0.93)

September 80 calls (BWLD120922C00075000, $0.75, up $0.15)

September 70 puts (BWLD120922P00070000, $0.65, down $0.25)

Thoughts:  This might also be a good time to play a strangle trade on Buffalo Wild Wings. 

 

Broadcom (BRCM, $35.17, down $0.22)

September 36 calls (BRCM120922C00036000, $0.65, down $0.10)

September 33 puts (BRCM120922P00032000, $0.43, up $0.03)

Thoughts:  The 52-week high is $39.66.  We would wait until shares clear $36 before going long and on a break below $34 we might look to go short.

 

Akamai Technologies (AKAM, $37.96, up $0.53)

September 38 calls (AKAM120922C00038000, $1.25, up $0.25)

November 45 calls (AKAM121117C00045000, $0.85, up $0.20)

January 45 calls (AKAM130119C00045000, $1.45, up $0.15)

Action:  All of these options continue to do well.

 

KLA-Tencor (KLAC, $53.27, down $0.32)

September 55 calls (KLAC120922C00055000, $0.65, down $0.15)

September 50 puts (KLAC120922P00050000, $0.45, up $0.05)

Thoughts:  Shares look headed to double-nickels ($55) and a blue-sky breakout could be in the mix.  A move below $52 would reverse the recent uptrend.