December 2012 | Member

 

 

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: 153-55, or 73% win rate, including the Weekly Wrap which is 27-0).

12:15pm (EST)

NEW TRADE!!!

Microsoft (MSFT, $27.45, up $0.14)

Buy to OPEN January 28 calls (MSFT130119C00028000, $0.42, up $0.05)

Action:  Use limit orders up to 45-50 cents but do not pay over 55 cents to establish positions.

 

CURRENT TRADES

Bed Bath & Beyond (BBBY, $55.23, down $5.05) 

January 55 puts (BBBY130119P00055000, $1.60, up $0.90)

Entry Price:  $0.65 (12/19/12)
Exit Target:  $1.30 (closed half at $1.65 on 12/20/12)
Return:  150%
Stop Target:  $1.00 (Hard Stop on other half)

Action:  The puts traded up to $1.94 after our Profit Alert and opened the session at 91 cents.  We have a Hard Stop on the other half of the trade of $1 but we are looking for these puts to push $2 or $3 on continued weakness.  We will move it up along the way to maximize our profits.

 

JPMorgan Chase (JPM, $43.98, up $0.45) 

January 45 calls (JPM130119C00045000, $0.70, up $0.10)

Entry Price:  $0.65 (12/18/12)
Exit Target:  $1.30
Return:  8%
Stop Target:  None

Action:  The 52-week high is at $46.49 and we are expecting a push to $48 by mid-January.  Support is at $42.

 

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:  A close above $23.05 could get $25 in play.  Support is strong at $22, then $20.

 

Southern Copper (SCCO, $37.99, down $0.26) 

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 this week.  We are going to have a tight stop for this trade and may close it if shares fail to hold $37.

 

Akamai Technologies (AKAM, $41.48, up $0.07)

January 42 calls (AKAM130119C00042000, $1.25, flat) 

Entry Price:  $0.56 (12/14/12)
Exit Target:  $1.60 (closed 1/3 @ $1.30 on 12/19/2012)
Return:  126%
Stop Target:  85 cents (half), 75 cents (other half) (Hard Stop) 

Action:  Our near-term target is calling for a test to $45 but we will close the rest of the trade if shares fall below $40.

  

MGM Resorts International (MGM, $11.57, up $0.03)

January 11 calls (MGM130119C00011000, $0.80, flat) 

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  57%
Stop Target:  60 cents (Hard Stop)

Action:  We would like to see a close above $11.75 this week.

 

Taser International (TASR, $8.66, up $0.51) 

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, $0.50, up $0.15) 

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  67%
Stop Target:  None 

Action:  Shares are up 6% today and the 52-week high is $9.26.

 

Vivus (VVUS, $13.79, up $0.15)

January 15 calls (VVUS130119C00015000, $0.85, up $0.10) 

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  31%
Stop Target:  50 cents

Action:  There is water-cooler talk that Vivus could be a takeover target.  Johnson & Johnson, Pfizer and AstraZeneca are rumored suitors.  Shares have traded to a peak of $14.71 as the options kissed $1.25.  We believe it will take a bid north of $30 to get Vivus so let’s hold tight.

  

Rosetta Stone (RST, $12.21, flat)

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 this week.  Support has been strong at $12 and we will stick with the trade as long as $11.50 holds.

 

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. 

We will update this section in the morning.

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

10:15am (EST)

Bed Bath & Beyond (BBBY, $54.72, down $5.56)

January 55 puts (BBBY130119P00055000, $1.65, up $0.95)

Entry Price:  $0.65 (12/19/12)
Exit Target:  $1.30
Return:  154%
Stop Target:  $1.00 (Hard Stop on other half)

Action:  Shares have traded to a low of $54.51 as the options have reached a high of $1.80.  Let’s lock-in HALF profits for now as we still believe shares could trade below $52.  We will set a Hard Stop on the other half of the trade at $1.00. 

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

 

9:00am (EST) continued…

The Dow fell 99 points, or 0.7%, to settle at 13,252 on Wednesday.  The blue-chips made a 7-point move higher at the open and reached 13,357 but spent the rest of the day in a spiral after our midday update.  The index went out at its low but held 13,200 into the close.  This level could get tested on the open and a dip below could get 13,000 back in play.  Resistance remains at the top of the current range, or 13,350. 

The S&P 500 slipped 11 points, or 0.8%, to end at 1,435.  The index made a small attempt at clearing our 1,450 target after trading up to 1,447.75 at the open but also went out at it low for the session.  Support is at 1,425 so the bulls have another 1% to play with but will need to hold this level today if there is a continued pullback.

The Nasdaq declined 10 points, or 0.3%, to close at 3,044.  Tech tried to hold the 3,050 level and kissed a high of 3,061 before losing ground.  The index held 3,025 which was a good sign but a break below this level gets 3K back in the mix. 

We talked about Bed Bath & Beyond (BBBY, $60.28, down $0.11) as a possible earning trade yesterday and here is what we were looking at on the chart before we released the trade:

 

We have outlined a test to $64 on a beat-and-raise ahead of Wall Street’s expectations but we did some research and store checking over the weekend and noticed our local shop wasn’t as robust as it normally is.  Here is a 2-year chart for BBBY and why shares could be headed to $50: 

 

Shares are at $57.25 in pre-market action this morning.  As you can see, both charts are pointing towards a test to $57-$56 and we have a downside target of a famous Van Halen album, $51.50, if support fails to hold.

We have a lot more to talk about with our current trades so let’s go check the tape. 

Ahead of the bell, futures look like this:  Dow (-5); S&P 500 (-2); Nasdaq 100 (-1).

 

MEMBERS AREA

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).

  

Bed Bath & Beyond (BBBY, $60.28, down $0.11) 

January 55 puts (BBBY130119P00055000, $0.70, flat)

Entry Price:  $0.65 (12/19/12)
Exit Target:  $1.30
Return:  8%
Stop Target:  None

Action:  Set limit orders to close HALF of the trade at $1.30 or better this morning.  We aren’t sure if the puts will get this high right off the bat but if there is heavy volume there is a chance.  We will send out a Trade Alert if touched.

Shares fell 5% to $57 in extended trading last night after the company missed Wall Street’s expectations and finished under $58.  Revenues were a little light and guidance was lowered like we expected.  

 

JPMorgan Chase (JPM, $43.53, down $0.34)

January 45 calls (JPM130119C00045000, $0.60, down $0.05)

Entry Price:  $0.65 (12/18/12)
Exit Target:  $1.30
Return:  -8%
Stop Target:  None

Action:  The 52-week high is at $46.49 and we are expecting a push to $48 by mid-January.  Support is at $42.

 

Nuance Communications (NUAN, $22.90, down $0.05)  

January 24 calls (NUAN130119C00024000, $0.40, flat) 

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

Action:  A close above $23.05 could get $25 in play.  Support is strong at $22, then $20.

 

Southern Copper (SCCO, $38.25, down $0.15) 

January 40 calls (SCCO130119C00040000, $0.45, down $0.05)

Entry Price:  $0.45 (12/14/12)
Exit Target:  $1.00
Return:  0%
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 this week.  We are going to have a tight stop for this trade and may close it if shares fail to hold $37.

 

Akamai Technologies (AKAM, $41.41, up $0.47) 

January 42 calls (AKAM130119C00042000, $1.25, up $0.15)

Entry Price:  $0.56 (12/14/12)
Exit Target:  $1.60 (closed 1/3 @ $1.30 on 12/19/2012)
Return:  126%
Stop Target:  85 cents (half), 75 cents (other half) (Hard Stop)

Action:  We closed a third of the trade yesterday to lock-in profits.  Our near-term target is calling for a test to $45 but we will close the rest of the trade if shares fall below $40.

 

MGM Resorts International (MGM, $11.54, down $0.09)

January 11 calls (MGM130119C00011000, $0.80, down $0.05) 

Entry Price:  $0.51 (12/11/12)
Exit Target:  $1.00
Return:  57%
Stop Target:  60 cents (Hard Stop)

Action:  We would like to see a close above $11.75 this week and yesterday’s high was $11.72.

  

Taser International (TASR, $8.15, down $0.31)

January 10 calls (TASR130119C00010000, $0.15, down $0.05)

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

 

March 10 calls (TASR130316C00010000, $0.35, down $0.10) 

Entry Price:  $0.30 (11/29/12)
Exit Target:  $0.50
Return:  10%
Stop Target:  None 

Action:  We would like to see $8 hold if there is further weakness today.  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. 

 

Vivus (VVUS, $13.64, up $0.50)

January 15 calls (VVUS130119C00015000, $0.75, up $0.10)

Entry Price:  $0.65 (11/21/12)
Exit Target:  $1.30
Return:  15%
Stop Target:  50 cents

Action:  The calls traded to a high of $1 when Vivus reached a peak of $14.17 yesterday.  We normally don’t carry Stop Targets on options under $1 but with the trade showing a profit, we are hoping to move it up which is why it is NOT a Hard Stop. 

For new subscribers, the reason we don’t carry stops on options under $1 is due to the volatility.  If a 40 cent options falls to 20 cents, it is a 50% loss, but if the chart is still bullish or bearish and matches our original thesis then we like to stick with the trade.

 

Rosetta Stone (RST, $12.21, down $0.08)

January 15 calls (RST130119C00015000, $0.10, down $0.05)

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 this week.  Support has been strong at $12 and we will stick with the trade as long as $11.50 holds.

 

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.

 

 

Dunkin’ Brands Group (DNKN, $33.00, up $0.18)

 

January 32.50 calls (DNKN130119C00032500, $1.10, up $0.10)

 

Thoughts:  The January 35 calls (DNKN130119C00035000, $0.20, up $0.05) look “cheap” as shares could perk up to $34 over the near-term with a chance at $36 coming into play.

 

 

iShares Russell 2000 Index (IWM, $84.12, up $0.19)

 

January 83 calls (IWM130119C00083000, $2.40, up $0.10)

 

January 84 calls (IWM130119C00084000, $1.80, up $0.10)

 

Thoughts:  We have talked about the small-caps leading the next leg higher and these options have nearly doubled this week.

 

 

TiVo (TIVO, $12.65, down $0.10)  

 

January 12.50 calls (TIVO130119C00012500, $0.70, flat)

 

May 14 calls (TIVO130518C00014000, $1.05, flat)

 

Thoughts:  Watch for now.

 

 

Microsoft (MSFT, $27.31, down $0.25)

 

January 27 calls (MSFT130119C00027000, $0.80, down $0.15)

 

January 28 calls (MSFT130119C00028000, $0.40, down $0.05)

 

Thoughts:  These options look attractive and shares could easily make a run back to $28.50 if current levels hold.  A move below $26.50 would signal a test to new lows and a switch to put options.

 

 

Cree (CREE, $34.66, up $0.21)  

 

January 35 calls (CREE130119C00035000, $1.40, up $0.10)

 

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

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