1:30pm (EST)
Berkshire Hathaway Class B (BRK/B, $70.37, up $2.37)
February 74 calls (BVQBX, $0.90, up $0.50)
Entry Price: $1.50 (1/21/10)
Exit Target: $3.00
Return: -40%
Stop Target: None
Action: The calls have traded to a high of $1.86 which represented a 350% gain from yesterday’s close. It brought the position back to positive but we had a feeling shares would trend lower after the open.
We probably should have mentioned this but we are still holding out hope for an end of week rally. Perhaps once the Fed policy news comes out the market will start to turnaround and the stock gets a run back to its highs for the day.
EMC (EMC, $17.43, down $0.18)
April 19 calls (EMCDS, $0.32, down $0.05)
Entry Price: $0.55 (1/19/10)
Exit Target: $1.00+
Return: -42%
Stop Target: None
Action: Continue to hold.
Shuffle Master (SHFL, $8.82, down $0.06)
May 10 calls (SFQEB, $0.60, down $0.05)
Entry Price: $0.85 (1/19/10)
Exit Target: $1.70+
Return: -29%
Stop Target: 40 cents
Action: Continue to hold.
OSI Systems (OSIS, $28.05, down $0.88)
February 35 calls (UOJBG, $0.10, down $0.10)
Entry Price: $1.40 (1/11/10)
Exit Target: $2.80
Return: -93%
Stop Target: None
Action: We are going to drop coverage of this trade until the stock can get back to over $30. The position will remain open in our portfolio and will go down as a loss if the calls expire worthless. It makes no sense to close the trade now so we will have to wait this one out.
Vivus (VVUS, $8.55, down $0.15)
March 10 calls (QJSCB, $0.50, down $0.05)
Entry Price: $1.35 (1/7/10)
Exit Target: $2.70
Return: -63%
Stop Target: 65 cents
Action: We are officially closing this trade to free up some capital and to possibly add a new trade. We went slightly past our stop but Vivus will be a story we follow all year long.
Research In Motion (RIMM, $61.32, down $0.30)
Feb 60 puts (RFYNL, $1.70, up $0.10)
Entry Price: $1.50 (1/6/10)
Exit Target: $2.20 (sell half it hit)
Return: 13%
Stop Target: 75 cents
Action: Continue to hold
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9:05am (EST)
Berkshire Hathaway Class B (BRK/B, $68.00, down $0.84)
February 74 calls (BVQBX, $0.40, down $0.15)
Entry Price: $1.50 (1/21/10)
Exit Target: $3.00
Return: -73%
Stop Target: None
Action: We aren’t sure if we get enough of a bounce this morning to bring our call options back in the green but we should make up a lot of ground. Now you can see why we have been struggling with our 50% normal stop target. Folks, sometimes as an option trader your “gut” can be invaluable and at other times it can get in your way.
We had a strong feeling when shares first split and our instinct has paid off. Again, it may not be enough to get us back to even and we will have to manage the trade carefully so that we can maximize or gains or limit or losses.
EMC (EMC, $17.61, up $0.67)
April 19 calls (EMCDS, $0.37, up $0.12)
Entry Price: $0.55 (1/19/10)
Exit Target: $1.00+
Return: -33%
Stop Target: None
Action: Shares of EMC hit a high of $17.79 yesterday and our options jumped 48%. The calls have 79 days before they expire and if the stock can get to $20 by mid-April then the trade is a double (or more) depending on how fast we get there or if we pull back again before reaching our target.
Shuffle Master (SHFL, $8.88, up $0.12)
May 10 calls (SFQEB, $0.65, flat)
Entry Price: $0.85 (1/19/10)
Exit Target: $1.70+
Return: -24%
Stop Target: 40 cents
Action: After seeing the BRK/B and EMC trades now some of you see why we are giving this trade some wiggle room as well. The broken record says we have 114 days before these Shuffle Master options expire so remember this if we get down a little bit more.
We fully expect this stock to be at double-digits by Spring time.
OSI Systems (OSIS, $28.93, up $1.04)
February 35 calls (UOJBG, $0.20, flat)
Entry Price: $1.40 (1/11/10)
Exit Target: $2.80
Return: -86%
Stop Target: None
Action: The stock went up a buck but the only news to report is that the “bid” is now 25 cents.
Vivus (VVUS, $8.70, up $0.02)
March 10 calls (QJSCB, $0.55, up $0.05)
Entry Price: $1.35 (1/7/10)
Exit Target: $2.70
Return: -59%
Stop Target: 65 cents
Action: Shares made a run to $8.94 yesterday and this is yet another trade that could explode at any minute or we run the risk of losing a little bit more.
Research In Motion (RIMM, $61.62, up $0.21)
Feb 60 puts (RFYNL, $1.60, down $0.13)
Entry Price: $1.50 (1/6/10)
Exit Target: $2.25, lower to $2.20
Return: 7%
Stop Target: 75 cents
Action: We are trying not to get too cute with this trade as we have an exit target of $2.25. This was lowered after RIMM ran up on us as we normally target a 100% return. However, we still need to realize our target has been lowered and we may have to close this trade if we get near those levels again.
Important! If the puts reach $2.20 then close HALF of the position. We will not send out an alert so go ahead and enter a “good ’til cancel” (GTC) order to do this in case you can’t watch the market.
Special Note: We have a slew of new subscribers and a lot of beginning traders that have joined us since the first of the year. I want to thank you personally and to those of you who continue to renew with us, thank you as well.
For the new subscribers, please read our Welcome Guide and take some time to research some of our trades before jumping in. As you can see the price swings have been pretty volatile in some of our positions but this is an unusual market as far as a breakout or breakdown.
Normally, trades run smoother and if this kind of action scares you or is too risky for you then watch from the sidelines until you feel comfortable trading.
There is always a trade and there are a slew of interesting charts at the moment. We are seeing the potential to add put options but we are not ready to give up on buying or holding call options either.
We want to get through some of these trades first before recommending any new positions so be patient until the market’s direction becomes clearer.
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