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 an “Alert” or “Trade Update” 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 but it is rare that we do.
1:30pm (EST)
Dendreon (DNDN, $39.14, up $1.09)
August 50 calls (DNDN110820C00050000, $0.70, down $0.20)
Entry Price: $1.85 (4/14/11)
Exit Target: $3.70
Return: -62%
Stop Target: 90 cents
Action: Continue to hold.
RF MicroDevices (RFMD, $6.16, up $0.12)
August 10 calls (RFMD110820C00010000, $0.10, flat)
Entry Price: $0.30 (2/24/11)
Exit Target: $1.00+
Return: -67%
Stop Target: None
Action: These options also have over 100 days before expirations so continue to hold. These were “cheap” options as the premiums were only 30 cents so we aren’t worried about the percentage loss. RF Micro remains a takeover target and is starting to turn its business around.
Other 2011 Portfolio OPEN positions (8): 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)
Skyworks Solutions May 40 calls (from February 2011)
Rovi May 65 calls (from March 2011)
JPMorgan May 48 calls (from March 2011)
S&P 500 Spiders May 128 puts (from April 2011)
McDonald’s May 75 puts (from April 2011)
Cree May 35 puts (from April 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.
Alpha Natural Resources (ANR, $52.29, up $0.56)
June 45 puts (ANR110618P00045000, $0.45, down $0.20)
Thoughts: Watch for now.
Research In Motion (RIMM, $46.47, down $0.82)
July 40 puts (RIMM110716P00040000, $0.90, up $0.10)
August 40 puts (RIMM110820P00040000, $1.35, up $0.10)
Thoughts: Shares are on the verge of another breakdown and are right at the first wave of long-term support. The second wave of support is in the $38 area which gets these puts options to a least a double. However, there is virtually no support until the low $30’s if the $38 level fails.
TempurPedic International (TPX, $62.40, up $1.50)
September 75 calls (TPX110917C00075000, $1.60, up $0.40)
June 65 calls (TPX110619C00065000, $1.70, up $0.50)
Thoughts: We like this stock a ton and the chart is a thing of beauty.
Trimble Navigation (TRMB, $44.12, up $0.12)
June 50 calls (TRMB110619C00050000, $0.50, flat)
Thoughts: Trimble was a $50 stock in late April but fell to a low of $40.49 on Wednesday. The company reported earnings last week which beat estimates but they lowered guidance going forward just slightly. One brokerage firm came to the stock’s defense yesterday as shares were at support but we wouldn’t feel safe playing this one until a break above $45 occurred which is now short-term resistance.
Illumina (ILMN, $71.61, up $2.18)
September 85 calls (ILMN110917C00085000, $1.20, up $0.30)
Thoughts: Watch for now.
Kraft Foods (KFT, $34.27, up $0.88)
September 35 calls (KFT110917C00035000, $0.80, up$0.20)
Thoughts: This was our favorite trade this week and the options got a nice pop today. We will see where they are at on Monday.
Peet’s Coffee & Tea (PEET, $46.53, up $0.36)
June 50 calls (PEET110618C00050000, $1.30, up $0.15)
Thoughts: We have been watching Peet’s for a few months now because we continue to hear takeover chatter. There is huge open interest in these options and we have a feeling that the rumors we are hearing could come to fruition.
Starbucks (SBUX, $37.39, up $0.89)
June 38 calls (SBUX110618C00038000, $0.90, up $0.30)
Thoughts: These options have made a nice 50% move today.
E-Commerce China Dangdang (DANG, $22.43, up $1.21)
June 25 calls (DANG110618C00025000, $1.00, up $0.35)
Thoughts: Watch for now but we like these options on another pullback.
Seattle Genetics (SGEN, $17.14, up $0.71)
June 17.50 calls (SGEN110618C00017500, $0.85, up $0.25)
September 20 calls (SGEN110917C00020000, $1.50, up $0.30)
Thoughts: Seattle Genetics is a serious take-over target but resistance has been strong in this area. However, it just feels like a breakout is on the horizon.
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9:00am (EST)
Special Notice: We wanted to give everyone a quick overview of our trading strategy since we have a lot of new subscribers. As you will notice, we are winding out some trades as we head towards May expiration which is in a 2 weeks. Since October, we have recommended 49 trades, including our current OPEN recommendations which don’t look good but some are coming back. We have 6 trades that expire in May so the jury is still out them. We have both calls and puts so they could be a wash, balance out, or all end up as losing trades.
We knew in February and through the trading ranges it would be difficult to navigate the market which is why we have longer-term trades but we knew we would be a new highs when April ended. We have 2 open positons for June from earlier months, 1 for July and 2 for August. All of these trades were “batches” from the bull run from October 2010.
If we take the current May trades and pencil in a loss, then our track record over that time frame is 69%, or 34-out-of-49 winning trades. We say this because we like to trade trends and sometimes trends can give you better winning percentages. We also missed quite a few triple-digit winners that were on our Watch List.
Our point is that over 6 months, we are right near our historical average as far as win and losses which is what we want to remind everyone about. Trading is for the long haul. As we wind down these trades, it also gives us a chance to plot our moves for the next 6 months.
Many of you who have been with us for years know we have an uncanny ability to call the market right on target which is why we go over support and resistance a lot. Trading ranges and natural disasters will have an effect on option trades. Options are time sensitive which means flat or sideways movements will eat away at the premiums which is why we always try to keep our positions even. This means either trade the same number of contracts or the same dollar amount for every trade. This helps keep your emotions in check and it eliminates loading up on any one position no matter how good it looks.
Again, we will have new trades, soon, but we would rather wait then to rush things. Nobody ever lost money sitting out of the market so let’s be patient. Some of the trades we still have open are rebounding and still hand us triple-digit profits.
As we head into Spring, we are getting the pullback but we wouldn’t be surprised to see a bounce next week although the trend is lower over the near-term. The points is, even if the market doesn’t go down, we plan on opening our next batch of NEW TRADES over the next week or two. The good news is that we still see a higher market by the end of 2011. We also have some gems we are watching for a possible breakout as Technology and Biotech (and maybe the Financial stocks) lead the way into the back half of 2011.
We have included a few charts for the trades on our Watch List which could become official recommendations if the price is right.
CURRENT TRADES
Dendreon (DNDN, $38.05, down $1.39)
August 50 calls (DNDN110820C00050000, $0.70, down $0.20)
Entry Price: $1.85 (4/14/11)
Exit Target: $3.70
Return: -62%
Stop Target: 90 cents
Action: Shares held the $38 level but dipped to a low of $37.78 yesterday. If this level does not hold then we could see a print of $34 over the next few weeks but we still love the Dendreon story.
These options have 105 days before they expire (which is a long time) and investors are throwing the baby out with the bath water as they overreact to Dendreon’s earnings. The company missed expectations, slightly, but April sales were strong and the company has 3 more manufacturing plants coming on board. Additionally, Dendreon remains a strong takeover candidate as its prostate cancer drug, Provenge, could be a $5-$10 billion business over the next few years. Continue to hold.
RF MicroDevices (RFMD, $6.04, down $0.05)
August 10 calls (RFMD110820C00010000, $0.10, flat)
Entry Price: $0.30 (2/24/11)
Exit Target: $1.00+
Return: -67%
Stop Target: None
Action: These options also have over 100 days before expirations so continue to hold. These were “cheap” options as the premiums were only 30 cents so we aren’t worried about the percentage loss. RF Micro remains a takeover target and is starting to turn its business around.
Other 2011 Portfolio OPEN positions (8): 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) – these options are likely to expire worthless but we love the stock (currently at $7.76) at these levels and may add it to our covered call portfolio. Of the big 3 companies vying to get their diet drug to market, Vivus has the best shot in our opinion.
eBay July 40 calls (from February 2011) – Wall Street just can’t see the hidden value in this company, yet, and these options have until July before they expire.
Skyworks Solutions May 40 calls (from February 2011) – Skyworks is a long-term buy and we will trade this name again down the road but we timed this time around on a run up to $40.
Rovi May 65 calls (from March 2011) – reports earnings next week.
JPMorgan May 48 calls (from March 2011) – we took a chance on the financials to carry the bulls through their April rally but got burned. The financial stocks are a GREAT buy at these levels but they could suffer for another quarter before a rebound starts to take shape. JPMorgan is best of breed but these options will likely run out of time.
S&P 500 Spiders May 128 puts (from April 2011) – these options are at 50 cents and our entry price was $1.26. If the come back to under a 50% loss today, we will bring back daily coverage
McDonald’s May 75 puts (from April 2011) – got a downgrade and traded below $78.50 which was prior resistance. We still think shares could trade below $75 but we only have 2 weeks before these options expire.
Cree May 35 puts (from April 2011) – these options are at 15 cents and CREE is back below $40 and showed weakness yesterday. The low was $39.26 while the 52-week low is $38.53 which was set on April 21. There is still a chance we can get out of this trade for a profit.
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.
Alpha Natural Resources (ANR, $51.73, down $1.18)
June 45 puts (ANR110618P00045000, $0.66, up $0.18)
Thoughts: We think a quick trip back down to $44 is easily in the cards for shares of Alpha Natural. The stock is getting ready to fall through its first wave of support (green line) and is on its way towards the second wave of support (black line) at $44-$43. At this level, these options are worth $1-$2, or 50%-200% higher from current levels.
The red line is where shares could be headed as they establish a trading range between $39-$44. If shares do touch a low of $40 by mid-June, then these options would be worth $5, for a 670% return from current levels. Open interest is at 3,600 contracts so we have the liquidity we are looking for. If we can get these options for 70 cents or better shortly after the market opens then we may pull the trigger. If we do, we will send out a Trade Alert.
Research In Motion (RIMM, $47.29, up $0.08)
July 40 puts (RIMM110716P00040000, $0.80, up $0.05)
August 40 puts (RIMM110820P00040000, $1.25, up $0.10)
Thoughts: We wanted to play a strangle trade when shares were at double nickels ($55) but we missed the huge drop into the $40’s but we knew it was coming. We continue to talk about how RIMM was oh so late to the mobile revolution that Apple and Google are dominating by taking market share away. We think it gets worse for RIMM and the chart is looking like there will be another gap down.
Shares are on the verge of another breakdown and are right at the first wave of long-term support. The second wave of support lies at under $40 is in the $38 area which gets these puts options to a least a double. However, there is virtually no support until the low $30’s if the $38 level fails.
TempurPedic International (TPX, $60.90, up $1.71)
September 75 calls (TPX110917C00075000, $1.20, up $0.20)
June 65 calls (TPX110619C00065000, $1.20, up $0.15)
Thoughts: We like this stock a ton and the chart is a thing of beauty.
Trimble Navigation (TRMB, $44.00, up $3.51)
June 50 calls (TRMB110619C00050000, $0.50, up $0.35)
Thoughts: Trimble was a $50 stock in late April but fell to a low of $40.49 on Wednesday. The company reported earnings last week which beat estimates but they lowered guidance going forward just slightly. One brokerage firm came to the stock’s defense yesterday as shares were at support but we wouldn’t feel safe playing this one until a break above $45 occurred which is now short-term resistance.
Illumina (ILMN, $69.43, down $1.05)
September 85 calls (ILMN110917C00085000, $0.90, down $0.20)
Thoughts: Watch for now.
Kraft Foods (KFT, $33.39, down $0.46)
September 35 calls (KFT110917C00035000, $0.60, down $0.10)
Thoughts: Kraft reported a nice quarter and shares were up in after-hours last night.
Peet’s Coffee & Tea (PEET, $46.17, up $0.48)
June 50 calls (PEET110618C00050000, $1.15, up $0.15)
Thoughts: We have been watching Peet’s for a few months now because we continue to hear takeover chatter. There is huge open interest in these options and we have a feeling that the rumors we are hearing could come to fruition.
Starbucks (SBUX, $36.50, down $0.07)
June 38 calls (SBUX110618C00038000, $0.60, down $0.05)
Thoughts: Watch for now.
E-Commerce China Dangdang (DANG, $21.22, down $0.60)
June 25 calls (DANG110618C00025000, $0.65, down $0.10)
Thoughts: Watch for now but we like these options on another pullback.
Seattle Genetics (SGEN, $16.43, down $0.28)
June 17.50 calls (SGEN110618C00017500, $0.60, flat)
September 20 calls (SGEN110917C00020000, $1.20, flat)
Thoughts: Seattle Genetics is a serious take-over target but resistance has been strong in this area. However, it just feels like a breakout is on the horizon.
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