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.

12:40pm (EST)

Apollo Group (APOL, $26.30, down $0.25)

October 24 puts (APOL121020P00024000, $1.12, up $0.07)

Entry Price:  $1.16 (8/28/12)
Exit Target:  $2.30
Return:  -3%
Stop Target:  60 cents

 

September 24 puts (APOL120922P00024000, $0.37, up $0.02)

Entry Price:  $1.10 (7/31/12)
Exit Target:  $2.20
Return:  -66%
Stop Target:  None

Action:  The October options opened at $1.16.  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, $55.75, down $1.00)

September 55 puts (CYMI120922P00055000, $1.70, up $0.30)

Entry Price:  $1.42 (8/23/12)
Exit Target:  $2.25+
Return:  20%
Stop Target:  70 cents

Action:  Our near-term target is $50 and we would love to see a close below double-nickels today.

 

Caterpillar (CAT, $84.84, down $1.25)

September 82.50 puts (CAT120922P00082500, $1.30, up $0.30)

Entry Price:  $0.73 (8/23/12)
Exit Target:  $1.50 (closed half at $1.30 on 8/29/12)
Return:  78%
Stop Target:  80 cents, raise to $1.05 (Hard Stop)

Action:  Conservative traders may want to lock-in profits but we are going to leave the other half open for now and we have raised the stop target to $1.05 and have made it a Hard Stop.

 

Knight Capital Group (KCG, $2.75, down $0.05)

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.

 

WellPoint (WLP, $60.84, down $0.96)

September 60 calls (WLP120922C00060000, $1.90, down $0.60  

Entry Price:  $0.70 (8/21/12)
Exit Target:  $3 (closed half at $2.20 on 8/29/12)
Return:  193%
Stop Target:  $1.50, raise to $1.90 (Hard Stop on other half)

Action:  Our Hard Stop of $1.90 has triggered so everyone should be out of the trade.  We were hoping to squeeze a little more juice from the calls but today’s market action is weighing on the stock.  Our average closing price was $2.05 so our overall return was nearly 200% which is not bad for 9 days of work.

 

Pepsico (PEP, $72.13, down $0.66)

October 75 calls (PEP121020C00075000, $0.35, down $0.10)

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 50 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)

 

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 with some breakout or breakdown plays.

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

10:50am (EST)

NEW TRADE!!!

Apollo Group (APOL, $26.12, down $0.43)

Buy to OPEN October 24 puts (APOL121020P00024000, $1.10, up $0.05)

Action:  Use limit orders up to $1.20 but do not pay over $1.25-$1.30 to establish positions.  The company will report earnings in mid-October and our September options won’t get us to this event.  Those options are making a comeback and we will bring back coverage of them as well but we want to add the October put to play a break to new lows.

Since this is a carry-on trade, we are also suggesting “HALF” positions. 

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

9:00am (EST)

Cymer (CYMI, $56.75, down $0.19)

September 55 puts (CYMI120922P00055000, $1.40, flat)

Entry Price:  $1.42 (8/23/12)
Exit Target:  $2.25+
Return:  -1%
Stop Target:  70 cents

Action:  Shares traded to a low of $56.47 yesterday.  Our near-term target is $50.

 

Caterpillar (CAT, $86.09, up $0.08)

September 82.50 puts (CAT120922P00082500, $1.00, flat)

Entry Price:  $0.73 (8/23/12)
Exit Target:  $1.50 (closed half at $1.30 on 8/29/12)
Return:  58%
Stop Target:  80 cents

Action:  We closed half of the trade at $1.30 yesterday after shares fell below $85.  CAT traded down to $84.45 before rebounding as the options reached a peak of $1.43.  We have set a Hard Stop of 80 cents on the other half of the trade in case shares continue higher and yesterday’s low on the option was 92 cents.  

 

Knight Capital Group (KCG, $2.80, up $0.05)

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.

 

WellPoint (WLP, $61.80, up $4.41)

September 60 calls (WLP120922C00060000, $2.50, up $2.05)  

Entry Price:  $0.70 (8/21/12)
Exit Target:  $3 (closed half at $2.20 on 8/29/12)
Return:  236%
Stop Target:  $1.50, raise to $1.90 (Hard Stop on other half)

Action:  We closed half of the trade at $2.20 yesterday.  The options opened at $1.55 and traded to a high of $2.90 as shares kissed a high of $62.47.  We set a Hard Stop of $1.50 on the other half of the trade and this morning we are raising it to $1.90 in case shares slip from here.  However, yesterday’s surge sets up for a possible push to $64.

 

Pepsico (PEP, $72.78, down $0.34)

October 75 calls (PEP121020C00075000, $0.45, down $0.05)

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

Action:  There is risk down to $72.  If shares trade to $76 we will at least double our money.  These are October options so we have plenty of time to play a possible run to $80.  

 

Other 2012 Portfolio OPEN positions (6):  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)

Veeco Instruments September 30 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.

Silver Wheaton (SLW, $33.39, down $0.01)

September 35 calls (SLW120922C00035000, $0.60, flat)

October 35 calls (SLW121020C00035000, $1.20, down $0.05)

Thoughts:  Shares could make a run to $40 over the next few months if silver stays strong.

 

Amgen (AMGN, $83.72, down $0.29)      

September 85 calls (AMGN120922C00085000, $0.85, down $0.15)

October 87.50 calls (AMGN121020C00087500, $0.95, down $0.10)

Thoughts:  There is risk down to $81 which is where we would love to reestablish a position but we might jump on the October 87.50’s if shares close above $85.

 

AOL (AOL, $33.74, up $0.11)

September 33 calls (AOL120922C00033000, $1.30, up $0.10)

September 32 puts (AOL120922P00032000, $0.30, down $0.05)

Thoughts:  Continue to watch.

 

Netflix (NFLX, $63.44, up $0.49)

September 70 calls (NFLX120922C00070000, $0.85, up $0.05)

Thoughts:  Watch for a break above $67 before going long.  A move below $62.50 would be bearish.

 

Fusion-io (FIO, $29.15, down $0.31)

September 30 calls (FIO120922C00030000, $0.95, down $0.30)

Thoughts:  Shares traded to a  high of $29.94 before finishing the session lower.  We are now following the September 30 calls which reached a peak of $1.40 yesterday.

 

Broadcom (BRCM, $35.66, up $0.37)

September 36 calls (BRCM120922C00036000, $0.80, up $0.10)

September 33 puts (BRCM120922P00032000, $0.25, down $0.15)

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, $37.68, up $0.37)

September 38 calls (AKAM120922C00038000, $1.00, up $0.10)

November 45 calls (AKAM121117C00045000, $0.80, up $0.10)

January 45 calls (AKAM130119C00045000, $1.35, up $0.10)

Action:  A close below $37 would be bearish and could get $35 in play while a break above $38-$39 could send shares into blue-sky territory.