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: 150-55, or 73% win rate, including the Weekly Wrap which is 26-0).

3:40pm (EST)

iShares Russell 2000 Index (IWM, $83.86, down $0.68)

Buy to OPEN January 85 calls (IWM130104C00085000, $0.70, down $0.30)

Action:  These are WEEKLY options so may sure you pick the right option.  They expire on January 4 so again, use the weekly options to play a possible move higher.  Use limit orders up to 75 cents but do not pay more than 80-85 cents to establish positions. 

 

Cree (CREE, $34.02, down $0.62)  

Buy to OPEN January 36 calls (CREE130119C00036000, $0.65, down $0.30) 

Action:  Use limit orders up to 70 cents but do not pay more than 75-80 cents to establish positions. 

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1:20pm (EST)

Special Notice:  We didn’t want to throw the baby out with the bath water and why we left a few trades open this morning.  We realize some of you may have gotten different fill prices depending on what brokerage firm you use but the trades that were stopped out should have made everyone money. 

The first 30 minutes can be tricky which is why we never BUY options on the open and we always use limit orders.  When we do use Hard Stops, normally the market is NOT this volatile, and we knew it would be a crazy open this morning.

We remind everyone it is best to take ALL of our trades because it spreads out your risk.  Obviously, if you are in a trade that is down it can be frustrating but it is important to spread your trades out.  We still like all of our open positions because there is a slim chance a deal gets done on the Fiscal Cliff.  Maybe the zombies need to see the Dow lose 1,000 points to get to a quicker agreement but with the pros going on vacation they will not be playing the market.

We talked about this last year and how the “Santa Clause” rally starts AFTER Christmas.  We have also talked about the “January Effect” for small-caps.  However, at some point, we do expect a nasty pullback and next week will be important on which way the next trend could go. 

If we get a deal over the weekend or by Wednesday, there is a good chance we rally into January.  If not, and we go over the cliff, we will start looking at February and March puts options.  In the meantime, we will keep our remaining call options open but we will protect profits on our winners as we wind down the last of our trades.

Be prepared for the next “batch” of trades that we are planning because we could have the opportunity where we say “get the wheelbarrow out”.  When we say this, the next trend will be developing and we usually go on a hot streak.  We have done well all year long and we were 28-5 for the month of January this year.  We were 34-1 from late March until mid-May.

Our point is, this is a great market to trade right now but volatility will pick up before the next trend develops.  We want to keep our portfolio light so we didn’t mind closing a few more trades today.  We also have some older trades expiring today so we will have plenty of room to add new trades. 

We will be stocking up the Watch List with new ideas and charts so make sure you are ready.  Also, we want everyone to get the best deal for our newsletter and we encourage everyone to upgrade to the 1-year deal before January 1, 2013 which is when it expires.  The trading course will ship the first week of Janaury.

 

Microsoft (MSFT, $27.12, down $0.56)

January 28 calls (MSFT130119C00028000, $0.30, down $0.20) 

Entry Price:  $0.42 (12/20/12)
Exit Target:  $0.85
Return:  -29%
Stop Target:  None

Action:  We believe shares will test $28+ with a chance at $30 by mid-January.  Support is at $26.50.

 

Nuance Communications (NUAN, $21.97, down $0.43)  

January 24 calls (NUAN130119C00024000, $0.20, down $0.10)

Entry Price:  $0.35 (12/18/12)
Exit Target:  $0.70
Return:  -43%
Stop Target:  None

Action:  Near-term support is at $22 but there is a chance $20 comes into play on a break below this level.  We have a near-term price of $25 if support holds.  These are “cheap” options we don’t mind holding open.

 

Southern Copper (SCCO, $37.76, down $0.47)

January 40 calls (SCCO130119C00040000, $0.30, down $0.10)

Entry Price:  $0.45 (12/14/12)
Exit Target:  $1.00
Return:  -33%
Stop Target:  None 

Action:  The 52-week high is $39.44 set at the beginning of November and we would like to see a close above $40 today.  We are going to have a tight stop for this trade and may close it if shares fail to hold $37.

  

Taser International (TASR, $8.94, up $0.24) 

January 10 calls (TASR130119C00010000, $0.30, up $0.05)

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  100%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.65, up $0.10)

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  117%
Stop Target:  None

Action:  The recent 52-week high is $9.26 and a move above this level could get Taser to double-digits and our options to triple-digits.  We don’t mind holding this trade open through the volatility. 

 

Vivus (VVUS, $13.725, down $0.45)

January 15 calls (VVUS130119C00015000, $0.60, down $0.20) 

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  -8%
Stop Target:  50 cents

Action:  Shares traded up to $14.71 while the options peaked at $1.25 yesterday before fading.  We were thinking of closing half as the options came within a nickel of hitting our Exit Target but we have said Vivus could be a takeover target down the road.  Our thoughts have been spreading through the grapevine as there are reports several of the Big Pharma companies are looking at the company.  We are expecting a run to $16 but if takeover rumors persist shares could push $20 but we believe it will take a bid north of $30 to get a deal done.  Vivus has a strong pipeline and sales of its obesity drug are picking up.

 

Rosetta Stone (RST, $12.26, down $0.11) 

January 15 calls (RST130119C00015000, $0.10, flat) 

Entry Price:  $0.20 (11/19/12)
Exit Target:  $1.00
Return:  -50%
Stop Target:  None

Action:  We would like to see a close above $12.50 today.  Support has been strong at $12 and we will stick with the trade as long as $11.50 holds.

 

Other 2012 Portfolio OPEN positions (2):  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

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

 

Solazyme December 12.50 calls (from September 2012) – expire today

Lufkin Industries December 45 puts (from November 2012) – half position open, close the other half if shares start to sink today

LifeLock December 10 calls (from November 2012) – expire today

Apollo Group December 18 puts (from October 2012) – expire today but watch to see if they catch a bid

 

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.

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19:20am (EST)

JPMorgan Chase (JPM, $43.86, down $0.57)

January 45 calls (JPM130119C00045000, $0.75, down $0.15)

Entry Price:  $0.65 (12/18/12)
Exit Target:  $1.30
Return:  8%
Stop Target:  70 cents (Hard Stop)

Action:  Our Hard Stop was hit this morning so this trade is now closed.

 

Akamai Technologies (AKAM, $41.22, down $0.64)

January 42 calls (AKAM130119C00042000, $1.15, down $0.25)

Entry Price:  $0.56 (12/14/12)
Exit Target:  $1.60 (closed 1/3 @ $1.30 on 12/19/2012)
Return:  96%
Stop Target:  $1.10 (Hard Stop)

Action:  Our Stop was hit on this trade as well.  We closed a third at $1.30 and two-thirds at $1 which gave us an average closing price of $1.10.

 

MGM Resorts International (MGM, $11.51, down $0.15)

January 11 calls (MGM130119C00011000, $0.75, down $0.10)

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  18%
Stop Target:  60 cents (Hard Stop)

Action:  Our Hard Stop on MGM was also hit this morning. 

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9:00am (EST)

Microsoft (MSFT, $27.68, up $0.37) 

January 28 calls (MSFT130119C00028000, $0.50, up $0.12) 

Entry Price:  $0.42 (12/20/12)
Exit Target:  $0.85
Return:  19%
Stop Target:  None 

Action:  We believe shares will test $28+ with a chance at $30 by mid-January.  Support is at $26.50.

  

Bed Bath & Beyond (BBBY, $56.36, down $3.92) 

January 55 puts (BBBY130119P00055000, $1.00, up $0.30) 

Entry Price:  $0.65 (12/19/12) 

Exit Target:  $1.30 (closed half at $1.65 on 12/20/12, half at $1 on 12/20/12) 

Return:  104% 

Stop Target:  $1.00 (Hard Stop on other half) 

Action:  We were stopped out on the other half of our trade late in the day as our Hard Stop of $1 was hit.  We were stopped-out by a penny just before the closing bell.  The average closing price was $1.325 and we still made a nice triple-digit profit in one day.  There could be a back test to $60 and is where we would look to go short again but if the market is weak today shares could close below double-nickels.

 

JPMorgan Chase (JPM, $44.53, up $1.00)

January 45 calls (JPM130119C00045000, $0.90, up $0.30) 

Entry Price:  $0.65 (12/18/12)
Exit Target:  $1.30
Return:  38%
Stop Target:  70 cents (Hard Stop) 

Action:  The 52-week high is at $46.49 and we are expecting a push to $48 by mid-January.  Support is at $42 and we have a Hard Stop of 70 cents on our position in case there is a major pullback this morning.

  

Nuance Communications (NUAN, $22.40, down $0.50)  

January 24 calls (NUAN130119C00024000, $0.30, down $0.10) 

Entry Price:  $0.35 (12/18/12)
Exit Target:  $0.70
Return:  -14%
Stop Target:  None

Action:  Near-term support is at $22 but there is a chance $20 comes into play on a break below this level.  We have a near-term price of $25 if support holds.  These are “cheap” options we don’t mind holding open.

  

Southern Copper (SCCO, $38.23, down $0.02) 

January 40 calls (SCCO130119C00040000, $0.40, down $0.05)

Entry Price:  $0.45 (12/14/12)

Exit Target:  $1.00
Return:  -11%
Stop Target:  None  

Action:  The 52-week high is $39.44 set at the beginning of November and we would like to see a close above $40 today.  We are going to have a tight stop for this trade and may close it if shares fail to hold $37.

  

Akamai Technologies (AKAM, $41.86, up $0.45) 

January 42 calls (AKAM130119C00042000, $1.40, up $0.15)  

Entry Price:  $0.56 (12/14/12)
Exit Target:  $1.60 (closed 1/3 @ $1.30 on 12/19/2012)
Return:  144%
Stop Target:  $1.10 (Hard Stop)  

Action:  Shares traded to a high of $41.88 and we have a near-term target of $45 .  However, we will close the trade if shares start to fade as have raised the Hard Stops to $1.10 for the rest of the position.

  

MGM Resorts International (MGM, $11.66, up $0.12) 

January 11 calls (MGM130119C00011000, $0.85, up $0.05) 

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  67%
Stop Target:  60 cents (Hard Stop) 

Action:  We would like to see a close above $11.75 today but shares could test $11 on a pullback.

  

Taser International (TASR, $8.75, up $0.60) 

January 10 calls (TASR130119C00010000, $0.25, up $0.10) 

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  67%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.55, up $0.20) 

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  83%
Stop Target:  None 

Action:  The recent 52-week high is $9.26 and a move above this level could get Taser to double-digits and our options to triple-digits.  We don’t mind holding this trade open through the volatility. 

  

Vivus (VVUS, $13.70, up $0.06) 

January 15 calls (VVUS130119C00015000, $0.80, up $0.05) 

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  23%
Stop Target:  50 cents 

Action:  Shares traded up to $14.71 while the options peaked at $1.25 yesterday before fading.  We were thinking of closing half as the options came within a nickel of hitting our Exit Target but we have said Vivus could be a takeover target down the road.  Our thoughts have been spreading through the grapevine as there are reports several of the Big Pharma companies are looking at the company.  We are expecting a run to $16 but if takeover rumors persist shares could push $20 but we believe it will take a bid north of $30 to get a deal done.  Vivus has a strong pipeline and sales of its obesity drug are picking up.

   

Rosetta Stone (RST, $12.37, up $0.16) 

January 15 calls (RST130119C00015000, $0.10, flat)  

Entry Price:  $0.20 (11/19/12)
Exit Target:  $1.00
Return:  -50%
Stop Target:  None 

Action:  We would like to see a close above $12.50 today.  Support has been strong at $12 and we will stick with the trade as long as $11.50 holds. 

  

Other 2012 Portfolio OPEN positions (2):  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 

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

Solazyme December 12.50 calls (from September 2012) – expire today 

Lufkin Industries December 45 puts (from November 2012) – half position open, close the other half if shares start to sink today 

LifeLock December 10 calls (from November 2012) – expire today 

Apollo Group December 18 puts (from October 2012) – expire today but watch to see if they catch a bid

 

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.

  

Fossil (FOSL, $93.98, down $0.12) 

January 75 puts (FOSL130119P00075000, $0.45, up $0.05) 

March 65 puts (FOSL130316P00065000, $0.90, flat)

 Thoughts:  We may do a video on this trade over the weekend for those of you who are already course members and for those of you who have taken advantage of our 1-year deal.  Earnings are due out in mid-February but we are watching the put options now.  We would like to see shares run to $100 which is where we may start positions.

  

Caterpillar (CAT, $89.50, down $0.77)

January 85 puts (CAT130119P00085000, $0.90, up $0.10)  

Thoughts:  Wait for a break below $85 to play a drop to $80 or worse.

 

Mellanox Technologies (MLNX, $58.61, down $4.79) 

January 40 puts (MLNX130119P00040000, $1.15, up $0.55) 

Thoughts:  These options are super expensive which will likely keep us on the sideline but there may be an opportunity here.

 

Taiwan Semiconductor (TSM, $17.10, up $0.01)  

January 17.50 calls (TSM130119C00017500, $0.20, flat) 

April 17.50 calls (TSM1304C00017500, $0.80, flat) 

Thoughts:  If the bulls can hold support, shares could push $18-$19 by mid-January.  We have played this name with great results in the past and we like it at current levels.

 

Dunkin’ Brands Group (DNKN, $33.04, up $0.04)

January 32.50 calls (DNKN130119C00032500, $1.10, flat)  

Thoughts:  Watch for now.

  

iShares Russell 2000 Index (IWM, $84.54, up $0.42)  

January 83 calls (IWM130119C00083000, $2.85, up $0.45) 

January 84 calls (IWM130119C00084000, $2.15 up $0.45)  

Thoughts:  We will keep these calls on the list because there could abe a small chance a deal gets done over the weekend – if the zombies really care.

   

TiVo (TIVO, $12.39, down $0.26)   

January 12.50 calls (TIVO130119C00012500, $0.50, down $0.20) 

May 14 calls (TIVO130518C00014000, $0.90, down $0.15) 

Thoughts:  Watch for now.

 

 

Cree (CREE, $34.64, down $0.02)   

January 35 calls (CREE130119C00035000, $1.40, flat) 

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