January 2013 | Members

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 2013: 0-0, or 0% win rate, including the Weekly Wrap that is 0-0).

12:30pm (EST)

MGM Resorts International (MGM, $12.30, up $0.66)

June 15 calls (MGM130622C00015000, $0.40, up $0.11)

Entry Price:  $0.40 (1/2/13)
Exit Target:  $0.80
Return:  0%
Stop Target:  None

Action:  We believe shares will be above $15 and pushing $17 by mid-June.  We will have the chart for you on Monday.

  

TiVo (TIVO, $12.63, up $0.32)  

May 15 calls (TIVO130518C00015000, $0.55, up $0.10) 

Entry Price:  $0.50 (1/2/13)
Exit Target:  $1.00
Return:  10%
Stop Target:  None

Action:  TiVo should trade to $16 by mid-May and we believe Google could make a bid on the company for $20 a share.

 

Taser International (TASR, $8.75, down $0.19)    

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, $0.50, down $0.05)

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

Action:  Shares traded to a high of $9.14 but have slipped below $9.  We would like to see a push past the 52-week high of $9.26 that could lead to short-covering for a run past $10+.

 

Fossil (FOSL, $92.17, down $0.93)

February 70 puts (FOSL130216P00070000, $1.20, flat)

Entry Price:  $1.20 (12/26/12)
Exit Target:  $2.40
Return:  0%
Stop Target:  None

Action:  There is risk up to $100 for the stock that will hit our puts but this is an earnings play.  The company will announce earnings in mid-February and we believe shares could tumble below $70.

 

Other 2013 Portfolio OPEN positions (0):  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 2013 Portfolio link in the Members Area to view ALL open/ closed trades.

 

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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11:05am (EST)

NEW TRADES!!!

MGM Resorts International (MGM, $12.25, up $0.61)

Buy to OPEN June 15 calls (MGM130622C00015000, $0.40, up $0.11)

Action:  Use limit orders up to 45 cents but do not pay over 50-55 cents to establish positions.  The current bid/ask is 39/40 cents.

 

TiVo (TIVO, $12.50, up $0.19)   

Buy to OPEN May 15 calls (TIVO130518C00015000, $0.50, up $0.05)

Action:  Use limit orders up to 55 cents but do not pay over 60-65 cents to establish positions. 

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9:00am (EST)

The Dow gained 166 points, or 1.3%, to finish at 13,104 on Monday.  The blue-chips traded to a low of 12,883 but held support at 12,800 before rebounding and pushing a high of 13,109.  The index closed above its 50-day and 200-day Moving Averages (MA’s) but still faces resistance at 13,200 and the 100-day MA.  If cleared, the bulls still face a brick wall at 13,350 which was the December 18 close and has been longer-term resistance.

The S&P added 23 points, or 1.7%, to settle 1,426.  The index did fall below support at 1,400 on the low of 1,398 before rebounding to clear 1,425.  This level held all December but we have said a close below 1,400 will lead to 1,375-1,350 – or worse.  We have also said a close above 1,450 would be bullish but it still hasn’t happened.  The bulls will need to clear the December 18 close of 1,446.  The high for the session that day was 1,448 and the last close above 1,450 was back on October 18.  The index is above all of the major MA’s with the 100-day at 1,421 and the 200-day at 1,390.

The Nasdaq flew 59 points, or 2%, to end at 3,019.  Tech kissed a low of 2,953 on Monday and had touched 2,951 last Thursday.  We said the bulls needed to hold 2,950 and the 50-day MA (2,979) or they faced further risk down to 2,900-2,850 while a close above 3,025 would be bullish.  The high for the day was 3,021 and the close above 3,000 and the 200-day MA was a small victory but there is further resistance at the 100-day MA of 3,036 and then 3,050.  A close above these levels could lead to 3,100 but Tech earnings will have to come in better-than-expected across the board over the next few weeks. 

As you can see, the support and resistance levels we have mentioned over-and-over since the surge to October highs are still in play as well as the current 4-week trading range.  We will talk more about the technical and fundamental picture over the weekend but the good news is we are flat as we start 2013 with only 2 open option positions for the Daily. 

The zombies missed the Fiscal Cliff deadline but came to an agreement, or some sorts, a couple of hours past midnight on Tuesday.  The House voted on the Senate’s deal that passed 89-8 in its own chambers and eventually, the Republicans got enough of their own votes to pass the bill.  The proposal prevents taxes from going up on the middle-class, raises taxes on individuals making $400,000 (and couples making $450,000), and extends unemployment benefits for long-term jobless people.  The deal does not address spending cuts.

It is important to note that Americans will still see a lower paycheck as the holiday payroll tax cuts expired which will cost you between $10-$20 a paycheck.  The deal also doesn’t address the debt ceiling that the zombies will surely fight over in February or March and has been “technically” triggered.  The market will also have to deal with 1Q earnings that start next week. 

Futures are showing a strong open this morning and look like this:  Dow (+209); S&P 500 (+26); Nasdaq 100 (+55). 

Special Notice:  We will announce the winner of the new iPad this Friday in our midday update as we have the entries double-checked and triple-checked.  We will also be releasing a new video this weekend for those of you who purchased our option trading course, How to Trade Options on Momentum Stocks, with the new edition shipping in the next few weeks.  If you recently purchased a 1-year deal, or upgraded, please make sure we have the correct address on where to ship your course and if you have any changes, let us know now.  The new video will cover an outlook for 2013 and some possible earnings trades. 

We finished 2012 with an overall Track Record of 159-69 for a 70% win rate with over 30 triple-digit winners.  Our 5-year Track Record is now a blistering 621-272 for a 70% win rate and we haven’t had a losing year since we have been in the business.  Thanks to everyone for making us one of the fastest-growing option newsletters in the industry and we look forward to your continued success with us!

 

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 2013: 0-0, or 0% win rate, including the Weekly Wrap that is 0-0).

  

Taser International (TASR, $8.94, up $0.31)   

January 10 calls (TASR130119C00010000, $0.20, up $0.05)

Entry Price:  $0.15 (11/29/12)
Exit Target:  $0.45
Return:  33%
Stop Target:  None

 

March 10 calls (TASR130316C00010000, $0.55, up $0.05)

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

Action:  Shares traded to a high of $9.02 on Monday and we just missed our wish for a close above $9.  We would like to see a push past the 52-week high of $9.26 that could lead to short-covering for a run past $10+.

 

Fossil (FOSL, $93.10, up $3.79)

February 70 puts (FOSL130216P00070000, $1.20, down $0.20)

Entry Price:  $1.20 (12/26/12)
Exit Target:  $2.40
Return:  0%
Stop Target:  None

Action:  There is risk up to $100 for the stock that will hit our puts but this is an earnings play and why we don’t have a stop target listed.  We had one at 60 cents but we are going to ride this trade into expiration looking for a big payday.  The company will announce earnings in mid-February and we believe shares could tumble below $70.

 

Other 2013 Portfolio OPEN positions (0):  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 2013 Portfolio link in the Members Area to view ALL open/ closed trades.

 

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.

  

Akamai Technologies (AKAM, $40.91, up $0.51)

May 55 calls (AKAM130518C00055000, $0.55, flat)

Thoughts:  A close above $42 would be another opportunity to go long.  A finish below $40 would be time to use puts.  We believe Akamai will be a takeover target in 2013 which is why we listed the May call options.

 

Cogent Communications (CCOI, $22.64, up $0.09) 

April 25 calls (CCOI130420C00025000, $0.60, flat) 

Thoughts:  Another possible takeover target we like.

 

Vivus (VVUS, $13.42, up $0.21)

January 15 calls (VVUS130119C00015000, $0.45, flat)

June 20 calls (VVUS130622C00020000, $1.00, flat)

Thoughts:  We would like to see a test down to $12 but we may not get the chance.  If shares can trip $14 again, we may go long the June call options.

 

MGM Resorts International (MGM, $11.64, up $0.21)

March 13 calls (MGM130316C00013000, $0.33, up $0.03)

June 15 calls (MGM130622C00015000, $0.29, up $0.02)

Thoughts:  We really like both of these options and it is one of our top trades if there is a close above $12.

 

JPMorgan Chase (JPM, $43.97, up $0.73)

January 46 calls (JPM130119C00046000, $0.40, up $0.10) 

Thoughts:  The 52-week high is at $46.49 and if shares make a run this level will likely trip with fluff up to $48.  If the Fiscal Cliff is averted, the Financial stocks should continue gathering momentum.  A close below $42 would be bearish.

 

Caterpillar (CAT, $89.61, up $2.80)

January 85 puts (CAT130119P00085000, $0.70, down $0.70)

February 80 puts (CAT130216P00080000, $0.85, down $0.45)

Thoughts:  Shares could be headed for another trip below $85 after a failed test at $91 again.   

 

Taiwan Semiconductor (TSM, $17.16, up $0.03) 

January 17.50 calls (TSM130119C00017500, $0.25, 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 the April call options.

 

TiVo (TIVO, $12.31, up $0.05)  

May 14 calls (TIVO130518C00014000, $0.80, flat)

Thoughts:  We have mentioned Google could acquire TiVo down the road due to litigation issues.  We see Google eventually moving to cable and TiVo would be a perfect fit.  There is risk down to $11.50 if $12 doesn’t hold but we are looking for new highs by mid-May.