August 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 tradesor “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: 90-45, including the Weekly Wrap that is 27-3).

 

12:05pm (EST)

Xilinx (XLNX, $47.12, up $0.43)

September 50 calls (XLNX130921C00050000, $0.35, up $0.05)

Entry Price:  $0.35 (8/1/13)
Exit Target:  $0.70
Return:  0%
Stop Target:  None

Action:  We have a near-term target of $50 for Xilinx but there is a chance shares trade to double-nickels.

 

MGM Resorts International (MGM, $16.87, up $0.56)

August 17 calls (MGM130817C00017000, $0.52, up $0.18)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60
Return:  93%
Stop Target:  None

 

September 17 calls (MGM130921C00017000, $0.80, up $0.25)

Entry Price:  $0.52 (7/30/13)
Exit Target:  $1.05
Return:  54%
Stop Target:  None

Action:  With the August options expiring in 2 weeks and Nonfarm Payrolls due out in the morning, let’s close HALF of the August 17 calls to lock-in profits.  We can still enjoy further gains but we feel the prudent thing to do is to take a little money off the table with today’s nice pop.  Earnings are out next week.

 

Walter Energy (WLT, $11.27, up $0.08)

August 9 puts (WLT130817P00009000, $0.15, down $0.04)

Entry Price:  $0.30 (7/25/13)
Exit Target:  $0.60
Return:  -50%
Stop Target:  None

 

September 9 puts (WLT130921P00009000, $0.50, down $0.05)

Entry Price:  $0.70 (7/25/13)
Exit Target:  $1.40
Return:  -29%
Stop Target:  None

Action:  The 52-week low of $9.88 was hit in late June and a test to $10 is likely over the next few weeks.  Our near-term target is $8.  If these levels crack, there is a chance $7 comes into the mix.  We will stick with the trade as long as resistance at $12 holds as there is risk up to $14 on a close above this level.

 

Royal Bank of Scotland (RBS, $10.11, up $0.47)

August 10 calls (RBS130817C00010000, $0.45, up $0.25)

Entry Price:  $0.55 (7/23/13)
Exit Target:  $1.10
Return:  -18%
Stop Target:  None

 

November 12.50 calls (RBS131116C00012500, $0.20, up $0.05)

Entry Price:  $0.20 (7/23/13)
Exit Target:  $0.60
Return:  0%
Stop Target:  None

Action:  Nice rebound today and we would like to see $10 hold into the close.

 

Other 2013 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 2013Portfolio link in the Members Area to view ALL open/ closed trades.

Apollo Group August 16 puts (from June 2013) – We are closing this trade today as $18 has been holding as support.  The current bid/ask is 7-8 cents so let’s save this premium to play another “cheap option”.

Sony August 24 calls, August 26 calls, October 25 calls (from July 2013) – HOLD – A close above $22 would be bullish.

 

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.

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

10:55am (EST)

New Trade!!!

Xilinx (XLNX, $47.07, up $0.38)

Buy to OPEN September 50 calls (XLNX130921C00050000, $0.35, up $0.05)

Action:  With the possibility of new highs for another 2 weeks we have decided to add these call options to play a run past $50.  The August 48 calls have traded over 500 contracts but we want to buy some more time and why we are going with these options.

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

9:00am (EST) cont.

The Dow fell 21 points, or 0.1%, to settle at 15,499.  The blue-chips reached an all-time intraday high of 15,634 but failed to hold the 15,600 level once again.  The close below 15,500 keeps 15,400-15,350 in play.

The S&P 500 slipped less than a point, or 0,01%, to finish at 1,685.  The index traded up to 1,698 shortly before the close but gave it all back after failing resistance at 1,700.  There is still risk down to 1,675 and a close below this level would be bearish.

The Nasdaq added 10 points, or 0.3%, to close at 3,626.  We have been mentioning a close above 3,625 could lead to 3,650-3,700 and yesterday’s peak was 3,649.  Tech traded in positive territory throughout the session and support at 3,600 is getting stronger.

The Russell 2000 gained 2 points, or 0.2%, and went out at 1,045.  The small-caps made a run past 1,050 to 1,053 but failed to hold resistance.  A close above this level keeps 1,075 in play while a finish below 1,040 could spell trouble.

The S&P 500 Volatility Index ($VIX, $13.45, up 0.06) traded to a low of 12.94 on the push to new highs but closed slightly higher on the pullback late in the day.

Futures look like this as we head to press:  Dow (+117); S&P 500 (+13); Nasdaq (+23).

 

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 tradesor “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: 90-45, including the Weekly Wrap that is 27-3).

 

MGM Resorts International (MGM, $16.31, down $0.04)

August 17 calls (MGM130817C00017000, $0.33, up $0.02)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60
Return:  22%
Stop Target:  None

 

September 17 calls (MGM130921C00017000, $0.55, flat)

Entry Price:  $0.27 (7/30/13)
Exit Target:  $0.60
Return:  6%
Stop Target:  None

Action:  Yesterday’s high was $16.52 and a close above $16.50 would be bullish heading into earnings next week. Support is at $16-$15.75.

 

Walter Energy (WLT, $11.1942, up $0.17)

August 9 puts (WLT130817P00009000, $0.19, down $0.05)

Entry Price:  $0.30 (7/25/13)
Exit Target:  $0.60
Return:  -37%
Stop Target:  None

 

September 9 puts (WLT130921P00009000, $0.55, down $0.05)

Entry Price:  $0.70 (7/25/13)
Exit Target:  $1.40
Return:  -21%
Stop Target:  None

Action:  Takeover chatter has been around this name since the drop fron the $20’s but it’s hard to imagine someone buying this company given all the recent setbacks.  Yesterday’s run to $11.77 was on speculation a bidder may emerge.

The 52-week low of $9.88 was hit in late June and a test to $10 is likely over the next few weeks.  Our near-term target is $8.  If these levels crack, there is a chance $7 comes into the mix.  We will stick with the trade as long as resistance at $12 holds as there is risk up to $14 on a close above this level.

 

Royal Bank of Scotland (RBS, $9.64, down $0.07)

August 10 calls (RBS130817C00010000, $0.20, flat)

Entry Price:  $0.55 (7/23/13)
Exit Target:  $1.10
Return:  -64%
Stop Target:  None

 

November 12.50 calls (RBS131116C00012500, $0.15, flat)

Entry Price:  $0.20 (7/23/13)
Exit Target:  $0.60
Return:  -25%
Stop Target:  None

Action:  We are giving the trade wiggle room down to $9.50.  We believe shares can trade up to $15 over the next 3-6 months but the August calls could be in trouble if there isn’t a rebound back above $10 this week.

 

Other 2013 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 2013Portfolio link in the Members Area to view ALL open/ closed trades.

Apollo Group August 16 puts (from June 2013) – HOLD – We still like this trade and will bring back coverage once shares fall below $18.  We will close the trade if the stock clears $20, and if we do, we will send out a Trade Alert.

Sony August 24 calls, August 26 calls, October 25 calls (from July 2013) – HOLD – A close above $22 would be bullish.

 

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.

 

Conns (CONN, $64.67, up $0.94)

August 70 calls (CONN130817C00070000, $0.30, up $0.10)

September 70 calls (CONN130921C00070000, $2.20, up $0.30)

Thoughts:  Shares are making fresh 52-week highs.

 

iShares Dow Jones Transportation Average (IYT, $115.45, up $0.82)

August 110 puts (IYT130817P00110000, $0.45, down $0.20)

September 105 puts (IYT130921P00105000, $0.70, down $0.15)

Thoughts:  We could add puts on a drop below $113

 

Gigamon (GIMO, $35.76, up $0.84)

September 40 calls (GIMO130921C00040000, $1.20, up $0.40)

October 37.50 calls (GIMO131019C00037500, $1.75, up $0.35)

Thoughts:  The company reported great earnings and is showing a lot of momentum.
United Parcel Service (UPS, $86.80, up $0.39)

August 85 puts (UPS130817P00085000, $0.50, down $0.20)

September 82.50 puts (UPS130921P00082500, $0.60, down $0.10)

Thoughts:  UPS looks like a good short on a close below $85 if there is further weakness in the stock.

 

Spider Gold Shares (GLD, $127.96, down $0.16)

August 123 puts (GLD130817P00122000, $0.90, flat)

September 118 puts (GLD130921P00118000, $1.20, flat)

Thoughts:  We would like to see a failed test to $130 and we could go short thisweek if it looks like resistance will hold.

 

Skyworks Solutions (SWKS, $24.04, up $0.26)

September 26 calls (SWKS130921C00026000, $0.50, up $0.05)

Thoughts:  If shares clear $25, we will likely get back into this trade.  Support is at $23.50 and a close below this level would have us looking at short-term puts.

 

Aruba Networks (ARUN, $17.78, down $0.05)

August 18 calls (ARUN130817C00018000, $0.65, flat)

October 22 calls (ARUN131019C00022000, $0.45, flat)

Thoughts:  Shares are in a tight range with a breakout to $20 possible.  A drop an close under$17.50 would be bearish.

 

SolarCity(SCTY, $41.35, down $0.12)

August 50 calls (weekly) (SCTY130809C00050000, $0.40, down $0.05)

Thoughts:  Earnings are out August 7.  Support is at $40 with risk down to $37.50 on a close below this level.  A break above $42.50 could lead to $50 if losses come in ahead of expectations.  The company is not profitable and has missed Wall Street’s estimates in its first 2 quarters as a publicly traded company by 9 and 10 cents.  The current estimate is for a loss of 38 cents, on average, for the recently ended quarter.

If revenues can come in north of $30 million, earnings may not matter as Wall Street will be looking ahead at what potential sales the company may have.  Current guesses are for sales of $27 million and a 10% upside surprise could send shares soaring.  A wider-than-expected loss or a miss in sales could push shares below $35.

 

TearLab (TEAR, $14.14, down $0.40)

August 12.50 calls (TEAR130817C00012500, $1.90, down $0.50)

September 15 calls (TEAR130921C00015000, $0.90, down $0.30)

Thoughts:  There August 12.50 call options were at $0.80 and the September 15’s at 40 cents last Monday.  Earnings are due out in early August.

 

Salesforce.com (CRM, $43.75, down $0.24)

August 45 calls (CRM130817C00045000, $0.770, down $0.05)

August 40 puts (CRM130817P00040000, $0.20, flat)

Thoughts:  We could be at a perfect price point to make this a strangle option trade.  There could be a back test to $42 and where we may establish a position if support holds.  We would consider puts on a drop back below $41.50.