8:40am (EST)
Spiders S&P 500 (SPY, $133.00, up $0.61)
May 133 calls (SPY110527C00133000, $0.45, up $0.10)
Entry Price: $0.60 (5/24/11)
Exit Target: $1.00
Return: -25%
Stop Target: None
Action: These options will be volatile today so we will need to be careful of when to take profits or cut losses. We will be looking to close into strength at 70 cents or better so set limit orders to sell at 70 cents or better.
Vivus (VVUS, $8.77, down $0.12)
September 10 calls (VVUS110917C00010000, $0.60, down $0.05)
Entry Price: $0.65 (5/20/11)
Exit Target: $1.30
Return: -8%
Stop Target: None
Action: These options have nearly 4 months before they expire and we are fairly confident Vivus will be a double-digit stock by the end of summer, if not sooner. Once $9 is cleared, shares will attract momentum traders looking for a push past $10.
MGM Resorts International (MGM, $15.72, up $0.19)
September 17 calls (MGM110917C00017000, $1.10, up $0.05)
Entry Price: $0.70 (5/13/11)
Exit Target: $1.40
Return: 57%
Stop Target: 75 cents
Action: We will probably close half of the trade today before a long weekend to protect profits depending on how shares open. We will send out a TRADE ALERT if and when we do close half but do not place any sell orders. We do not want to tip our hand to the market makers. Although we feel MGM is going to $20, we would rather take some risk off the table if there is a pullback (like there was in our Kraft trade).
Research In Motion (RIMM, $43.57, up $0.43)
June 40 puts (RIMM110618P00040000, $0.80, down $0.15)
Entry Price: $1.00 (5/10/11)
Exit Target: $2.00
Return: -20%
Stop Target: 75 cents
Action: RIMM’s 52-week low is $42.53 and our near-term price target is $38 for the stock which gets these options to $2.
Seattle Genetics (SGEN, $19.30, up $0.36)
September 20 calls (SGEN110917C00020000, $2.35, up $0.20)
Entry Price: $1.50 (5/9/11)
Exit Target: $3.00
Return: 57%
Stop Target: $1.25
Action: Seattle Genetics hit another 52-week high of $19.32 yesterday. This trade has the chance of being a monster once $20 is cleared and our triple-digits profits could come twice or three times over if the stock can run to $22-$23.
Starbucks (SBUX, $36.44, up $0.32)
June 38 calls (SBUX110618C00038000, $0.30, up $0.05)
Entry Price: $0.60 (5/9/11)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: The 52-week high is $38.21 and we are expecting a run to $40 for the stock which gets these options to $2. Shares did not get the pop that Peet’s did (see below) but were up 1% for the day.
Dendreon (DNDN, $41.91, up $1.04)
August 50 calls (DNDN110820C00050000, $0.90, up $0.15)
Entry Price: $1.85 (4/14/11)
Exit Target: $3.70
Return: -51%
Stop Target: None
Action: Dendreon continued its urge past $40 and we are eyeing some short-term trades if shares remain strong. The June 43 calls (DNDN110618C00043000, $0.90, up $0.25) jumped 40% yesterday and can be used if shares show continued strength.
Other 2011 Portfolio OPEN positions (5): These are trades that are still open in the portfolio that have longer expiration dates or 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 the options expire. Click on the 2011 Portfolio link in the Members Area to view ALL open/ closed trades.
Vivus June 14 calls (from January 2011)
eBay July 40 calls (from February 2011)
RF MicroDevices August 10 calls (from February 2011)
KLA-Tencor June 48 calls (from May 2011)
Alpha Natural Resources June 44 puts (from May 2011)
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 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.
Darlington International (DAR, $18.32, up $0.37)
October 20 calls (DAR111022C00020000, $0.95, up $0.10)
Thoughts: This is a stock we have been watching for a few months that is starting to pick up some momentum. The chart is a thing of beauty and we will cover it on Monday.
Polycom (PLCM, $56.72, up $0.76)
June 60 calls (PLCM110618C00060000, $0.65, up $0.10)
Thoughts: The 52-week high for Polycom is $61.70 and shares are capable of strong moves. The stock has been in an uptrend for much of the week which could continue into next.
Kraft Foods (KFT, $34.62, up $0.19)
September 35 calls (KFT110917C00035000, $0.90, up $0.05)
Thoughts: We were able to make 50% on our first Kraft trade and we were hoping we could get these calls for 70-75 cents yesterday. The calls opened at 84 cents and traded down to 81 cents so we will continue to wait to see if we can get these cheaper.
Illumina (ILMN, $72.68, up $0.45)
June 75 calls (ILMN110618C00075000, $1.00, up $0.05)
Thoughts: Watch for now.
Caterpillar (CAT, $104.19, up $0.94)
June 100 puts (CAT110618P00100000, $1.20, down $0.30)
Thoughts: We have dropped the 95’s and are following the June 100 calls as CAT moves up. Shares nearly broke below $100 on Monday and if and when they do, a quick trip to $95 is in the cards.
Freeport-McMoRan (FCX, $50.39, up $0.41)
June 50 calls (FCX110618C00050000, $2.00, up $0.20)
June 45 puts (FCX110618P00045000, $0.30, down $0.10)
Thoughts: The calls and puts were both near $1 when we first profiled this strangle trade and we said to watch for a break back above $50 or a breakdown below $45. The calls have paid for the entire trade and if you closed both the calls and puts today, the trade would make about 15%. You could also wait to see if the calls continue higher today and close them out on strength and leave the puts open. Either way, it’s best to lock in profits on the calls to make it a risk-free trade sometime today.
Peet’s Coffee and Tea (PEET, $51.99, up $2.44)
June 55 calls (PEET110618C00055000, $1.15, up $0.60)
Thoughts: Peet’s hit a fresh 52-week high of $52.70 and these options opened at 50 cents which is where we were targeting to start new positions. We did not have limit orders set at 50 cents so we didn’t get in…