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.

1:50pm (EST)

Apollo Group (APOL, $26.82, up$0.36)

October 24 puts (APOL121020P00024000, $0.95, down $0.12)

Entry Price:  $1.16 (8/28/12)
Exit Target:  $2.30
Return:  -18%
Stop Target:  60 cents

September 24 puts (APOL120922P00024000, $0.25, down $0.05)

Entry Price:  $1.10 (7/31/12)
Exit Target:  $2.20
Return:  -77%
Stop Target:  None

Action:  The 52-week low of $25.77 was hit at the beginning of the month.  The company will announce earnings in mid-October and we are expecting shares to drift below $25 over the next few weeks.  Our near-term target is $20 but our longer-term target remains the low teens.

The September options are from late July and have been inching up over the past couple of weeks but we are still down on the trade.  We had an earlier Apollo trade from this year that was down over 70% going into August that came back to make us nearly 70% so we are hopeful the September options do the same.


Cymer (CYMI, $56.08, up $0.34)

September 55 puts (CYMI120922P00055000, $1.60, down $0.10)

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

Action:  We would like to see a close below $56 today, $55 would be even better.


Caterpillar (CAT, $85.23, up $0.76)

September 82.50 puts (CAT120922P00082500, $1.05, down, $0.35)

Entry Price:  $0.73 (8/23/12)
Exit Target:  $1.50 (closed half at $1.30 on 8/29/12)
Return:  61%
Stop Target:  $1.05 (Hard Stop)

Action:  Our Hard Stop of $1.05 has been triggered so everyone should be out of the trade.  Although we were hoping to squeeze a little more profit out of the puts, we will be back to play CAT.


Knight Capital Group (KCG, $2.75, down $0.04)

January (2013) 2.50 call (KCG130119C00002500, $0.50, flat)

Entry Price:  $0.55 (8/21/12)
Exit Target:  $1.10
Return:  -9%
Stop Target:  None

Action:  We would like to see shares close above $3 over the next few weeks but there is still risk down to $2.  If shares trade near $4 by mid-January we will get an easy double or triple on our call options.


Pepsico (PEP, $72.24, up $0.06)

October 75 calls (PEP121020C00075000, $0.35, flat)

Entry Price:  $0.50 (8/16/12)
Exit Target:  $1.00
Return:  -30%
Stop Target:  None

Action:  There is risk down to $72 and these are cheap out-of-the-money options.  If shares trade to $76 we will at least double our money and we would like to have a few call options open in case there is a rally.  These are October options so we have 49 days to wait for a possible run to $80. 


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)  

Veeco Instruments September 30 puts (from August 2012)


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