December 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 “New Trade” 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.  Closed Trades for 2012: 148-54, or 73% win rate, including the Weekly Wrap which is 26-0).

12:10pm (EST)

MGM Resorts International (MGM, $11.27, up $0.34)

January 11 calls (MGM130119C00011000, $0.65, up $0.18)

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  27%
Stop Target:  None

Action:  We are looking for shares to make a near-term run to $12 which would get these calls to at least $1. 

 

American Express (AXP, $57.65, up $0.59)

January 57.50 calls (AXP130119C00057500, $1.40, up $0.20) 

Entry Price:  $1.00 (12/10/12)
Exit Target:  $2.00
Return:  40%
Stop Target:  $1

Action:  We have a near-term target of $60 for the stock which will get these options to $2.50 if reached.  Support is at double-nickels ($55).   

  

TiVo (TIVO, $12.34, down $0.07)   

January 12.50 calls (TIVO130119C00012500, $0.75, flat)

Entry Price:  $0.60 (12/7/12)
Exit Target:  $1.20
Return:  25%
Stop Target:  None

 

May 14 calls (TIVO130518C00014000, $0.85, flat)

Entry Price:  $0.68 (12/7/12)
Exit Target:  $1.30
Return:  25%
Stop Target:  None

Action:  A close above $12.75 would be bullish for a possible run to $16.  Support has been super strong at $10.  We recommended the January calls to play the near-term possible breakout and we went with the May calls for the possibility of a buyout. 

 

Dunkin’ Brands Group (DNKN, $32.28, up $0.17) 

January 32.50 calls (DNKN130119C00032500, $0.90, up $0.10) 

Entry Price:  $0.45 (12/4/12)
Exit Target:  $1.00 (closed half at $0.90 on 12/12/12)
Return:  100%
Stop Target:  70 cents (Hard Stop)

Action:  We wanted to leave the entire trade open but we felt the prudent thing to do was to take a little risk off the table ahead of the Fed announcement.  We have set a Hard Stop of 70 cents on the other half of the position in case shares have peaked.  

  

Taser International (TASR, $8.18, down $0.04) 

January 10 calls (TASR130119C00010000, $0.15, flat)

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  0%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.35, flat)

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  17%
Stop Target:  None

Action:  A close over $8.50 could be bullish for a run to $10.  Support is at $8 followed by $7.50.

  

Vivus (VVUS, $11.90, up $0.45)

January 15 calls (VVUS130119C00015000, $0.45, up $0.05)

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  -31%
Stop Target:  None

Action:  We are looking for a close back above $12 over the near-term.  Support has been strong at $10 but a close below $9.86 and the mid-November low will force us out of the trade.

  

Rosetta Stone (RST, $12.42, up $0.02)

January 15 calls (RST130119C00015000, $0.15, flat) 

Entry Price:  $0.20 (11/19/12)
Exit Target:  $1.00
Return:  -25%
Stop Target:  None

Action:  We will stick with the trade as long as $11.50 holds.  We would like to see a close back above $12.50 this week.

 

HealthCare REIT (HCN, $59.39, down $0.44)

December 60 calls (HCN121222C00060000, $0.50, down $0.10) 

Entry Price:  $1.00 (11/19/12)
Exit Target:  $2.00
Return:  -50%
Stop Target:  None

Action:  We have said a close below $58.50 would force us out but support is holding.  Our breakeven target is technically $61 as these calls are out-of the money. 


Knight Capital Group (KCG, $3.23, up $0.04) 

January 2.50 calls (KCG130119C00002500, $0.75, flat) 

Entry Price:  $0.55 (8/21/12)
Exit Target:  $1.10
Return:  45%
Stop Target:  None

Action:  The current buyout offer is $3.50 but we expect a final price north of $4 by mid-January.  This would make these options worth at least $1.50 minimum for a juicy triple-digit return.  Shares will remain in a tight range until another offer surfaces.


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.

 

Bank of America January 12.50 calls (2013) (from March 2012) – continue to hold

Solazyme December 12.50 calls (from September 2012)– continue to hold

Lufkin Industries December 45 puts (from November 2012) – half position open

LifeLock December 10 calls (from November 2012)– continue to hold

Monster Beverage January 35 puts (from November 2012)– continue to hold

Apollo Group December 18 puts (from October 2012) – continue to hold

 

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. 

Few will update this section in the morning.

 **********************

11:00am (EST)

Dunkin’ Brands Group (DNKN, $32.28, up $0.17)

January 32.50 calls (DNKN130119C00032500, $0.90, up $0.10)

Entry Price:  $0.45 (12/4/12)
Exit Target:  $1.00+
Return:  100%
Stop Target:  None

Action:  Close HALF of the trade at current levels.  We will set Hard Stop of 70 cents on the other half of the trade.

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

9:00am (EST) continued…

Dow gained 78 points or 0.6%, to close at 13,248.  The blue-chips made a strong move past their 50-day Moving Average (MA) after trading to a high of 13,306.  We have been waiting for 13,200 to trigger for nearly a month and we said a close above this level would get 13,350 back into play.  We didn’t think the bulls had enough gas in the tank to cruise past two layers of resistance in one session but they nearly pulled it off.

The S&P 500 jumped 9 points, or 0.7%, to settle at 1,427.  The close above 1,425 was bullish as the index kissed 1,434 shortly before Wall Street’s lunch break.  We said in yesterday’s midday update a close above 1,434 would have been super nice but the buck stopped there.  A run to 1,450 could be on the horizon if cleared on the close.

The Nasdaq added 35 points, or 1.2%, to finish at 3,022.  We said 3,000 was nearly a given and that we wanted to see 3,025 on the close.  Tech reached a peak of 3,033 but missed our closing target by a field goal.  Still, it was an impressive showing.  The next level of resistance is at 3,050 and a 1% pop gets us there. 

The Russell 2000 advanced 9 points, or 1.1%, to end just a whisker below 835.  The S&P Volatility Index ($VIX, 15.57, down 0.48) fell 3% but held 15.   

The two Head Zombies for each side did talk after the bell and swapped demands.  The red zombies have offered $1.4 trillion in revenue, down from $1.6 trillion, and the cuts include savings from entitlement programs.  The blue zombies sent a counterproposal but they are still against tax increases.

There does appear to be some progress being made but the devil will be in the details and expect more sticking points before a deal is reached.

Futures are up and look like so as we head to press:  Dow (+11); S&P 500 (+1); Nasdaq (+7).  Subscribers, check the Members Area for the updates and stay close to home as we could have a Profit Alert and/ or a New Trade shortly after the open.  

 

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 “New Trade” 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.  Closed Trades for 2012: 148-54, or 73% win rate, including the Weekly Wrap which is 26-0).

 

MGM Resorts International (MGM, $10.93, up $0.02)

January 11 calls (MGM130119C00011000, $0.47, down $0.02)

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  -8%
Stop Target:  None

Action:  Shares traded to a high of $11.15 before fading into the close.  The options reached a high of 58 cents.  We are looking for shares to make a near-term run to $12 which would get these calls to at least $1. 

 

American Express (AXP, $57.06, up $0.31)

January 57.50 calls (AXP130119C00057500, $1.20, up $0.15)

Entry Price:  $1.00 (12/10/12)
Exit Target:  $2.00
Return:  20%
Stop Target:  $1

Action:  Shares reached a peak of $57.59 yesterday while the calls kissed a high of $1.35.  We have a near-term target of $60 for the stock which will get these options to $2.50 if reached.  Support is at double-nickels ($55).  We raised the stop target to $1 when the options hit $1.30 yesterday but it is not a Hard Stop.  As a reminder, Stop Targets are where we evaluate a trade if this level is triggered.  Hard Stops are actual stops.  Same deal with Exit Targets.

 

TiVo (TIVO, $12.40, up $0.28)  

January 12.50 calls (TIVO130119C00012500, $0.75, up $0.15)

Entry Price:  $0.60 (12/7/12)
Exit Target:  $1.20
Return:  25%
Stop Target:  None

 

May 14 calls (TIVO130518C00014000, $0.85, up $0.10) 

Entry Price:  $0.68 (12/7/12)
Exit Target:  $1.30
Return:  25%
Stop Target:  None

Action:  A close above $12.75 would be bullish for a possible run to $16.  Support has been super strong at $10.  We recommended the January calls to play the near-term possible breakout and we went with the May calls for the possibility of a buyout. 

 

Dunkin’ Brands Group (DNKN, $32.11, up $0.68)

January 32.50 calls (DNKN130119C00032500, $0.80, up $0.20)

Entry Price:  $0.45 (12/4/12)
Exit Target:  $1.00+
Return:  78%
Stop Target:  None

Action:  Shares went out at their high for the day.  We are expecting a run to $32.50 this week with a chance of $34 coming into play by yearend.  The stock has a decent short float and a continued move higher could force some of those traders to cover.  There is a chance shares test $38 on a close above these resistance levels.  

 

Taser International (TASR, $8.22, up $0.02)

January 10 calls (TASR130119C00010000, $0.15, flat) 

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  0%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.35, flat)

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  17%
Stop Target:  None

Action:  A close over $8.50 could be bullish for a run to $10.  Support is at $8 followed by $7.50.

  

Vivus (VVUS, $11.54, up $0.60) 

January 15 calls (VVUS130119C00015000, $0.40, up $0.10)

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  -38%
Stop Target:  None

Action:  We are looking for a close back above $12 over the near-term.  Support has been strong at $10 but a close below $9.86 and the mid-November low will force us out of the trade.

  

Rosetta Stone (RST, $12.40, up $0.20)

January 15 calls (RST130119C00015000, $0.15, flat)

Entry Price:  $0.20 (11/19/12)
Exit Target:  $1.00
Return:  -25%
Stop Target:  None

Action:  We will stick with the trade as long as $11.50 holds.  We would like to see a close back above $12.50 this week.

 

HealthCare REIT (HCN, $59.83, up $0.13)

December 60 calls (HCN121222C00060000, $0.60, flat)

Entry Price:  $1.00 (11/19/12)
Exit Target:  $2.00
Return:  -40%
Stop Target:  None

Action:  We have said a close below $58.50 would force us out but support is holding.  Our breakeven target is technically $61 as these calls are out-of the money. 

 

Knight Capital Group (KCG, $3.19, down $0.05)

January 2.50 calls (KCG130119C00002500, $0.75, flat)

Entry Price:  $0.55 (8/21/12)
Exit Target:  $1.10
Return:  45%
Stop Target:  None

Action:  The current buyout offer is $3.50 but we expect a final price north of $4 by mid-January.  This would make these options worth at least $1.50 minimum for a juicy triple-digit return.  Shares will remain in a tight range until another offer surfaces.

 

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.

 

Bank of America January 12.50 calls (2013) (from March 2012) – continue to hold

Solazyme December 12.50 calls (from September 2012)– continue to hold

Lufkin Industries December 45 puts (from November 2012) – half position open

LifeLock December 10 calls (from November 2012)– continue to hold

Monster Beverage January 35 puts (from November 2012)– continue to hold

Apollo Group December 18 puts (from October 2012) – continue to hold

 

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. 

Freeport-McMoRan Copper & Gold (FCX, $31.99, down $0.05)

January 34 calls (FCX130119C00034000, $0.60, flat)

Thoughts:  Shares could be headed to $36 over the near-term.

 

Southern Copper (SCCO, $38.44, up $0.05)

January 39 calls (SCCO130119C00039000, $0.90, flat)

Thoughts:  We like this trade if we don’t take the FCX trade. 

 

Akamai Technologies (AKAM, $39.60, up $0.40) 

January 41 calls (AKAM130119C00041000, $1.10, up $0.25) 

Thoughts:  A move past $40 could be coming.

 

LinkedIn (LNKD, $113.45, up $1.71)

January 120 calls (LNKD130119C00120000, $2.20, up $0.25) 

December 115 calls (LNKD121222C00115000, $1.85, up $0.25) 

Thoughts:  Shares have made a strong move above the 50-day MA and could be headed to $135 over the near-term.

 

iShares Russell 2000 Index (IWM, $83.41, up $0.87)

January 83 calls (IWM130119C00083000, $1.80, up $0.45)

January 84 calls  (IWM130119C00084000, $1.30, up $0.35)

Thoughts:  We have talked about the small-caps leading the next leg higher and we like these calls to play the move. 

 

Microsoft (MSFT, $27.32, up $0.38)

January 27 calls (MSFT130119C00027000, $0.90, up $0.20) 

January 28 calls (MSFT130119C00028000, $0.40, up $0.10) 

Thoughts:  Shares could easily make a run back to $30 if Tech can breakout.

 

Sarepta Therapeutics (SRPT, $25.92, down $0.33) 

January 30 calls (SRPT130119C00030000, $1.60, down $0.40)

January 20 puts (SRPT130119P00020000, $0.75, flat)

Thoughts:  This is a very volatile stock but we believe a run past $30 is coming.  There is risk down to $21.  These options are expensive and the bid/ask is wide making this a hard trade to pin.  We likely won’t take action because of this but we will watch the stock for clues.

 

JPMorgan Chase (JPM, $42.64, up $0.33)

January 44 calls (JPM130119C00044000, $0.65, up $0.05) 

Thoughts:  The 52-week peak is at $46.49.  Support is at $40.

 

Nuance Communications (NUAN, $22.42, up $0.54)

December 22 calls (NUAN121222C00022000, $0.70, up $0.25)

January 23 calls (NUAN130119C00023000, $0.65, up $0.20)

Thoughts:  There is a good chance shares trade to $25 once $22.50 and the 50-day and 100-day MA’s are cleared.  Short-term support is at $21.50 followed by $20.

 

Intel (INTC, $20.65, up $0.57)

January 20 calls (INTC130119C00020000, $1.10, up $0.35) 

March 20 calls (INTC130316C00020000, $1.35, up $0.35)

Thoughts:  We are hearing good things about Intel’s new mobile chip which is being ramped up 2013 to compete with Qualcomm.  A run to $21 could be in the mix over the near-term if $19.50 holds.

 

Cree (CREE, $34.69, up $1.17) 

December 33 calls (CREE121222C00033000, $2.00, up $1.10) 

January 34 calls (CREE130119C00034000, $2.15, up $0.70)

Thoughts:  Shares are near 52-week highs and there could be a push to $40 if momentum sticks.