9:00am (EST)
The bears were able to crack another layer of support following our midday update on Tuesday as they won their fourth-straight session. The final 2 hours of trading were nasty as the downside momentum gathered strength after optimism about a plan to help Spain’s banks diminished while more profit warnings from Tech worried Wall Street.
There was a slight bounce in the final 30 minutes of trading but the damage had been already been done.
Mako Surgical (MAKO, $14.01, down $10.60) was one of the companies that warned and shares paid for it, falling a whopping 43%. The company makes robotic surgical arm systems that help doctors plan and perform procedures but demand for their equipment has been weakening.
The July 20 puts options (MAKO120721P00020000, $6.10, up $5.80) soared an astounding 1,933% on the news and were heavily traded. There were a couple of analyst downgrades after the fact as there could be further weakness ahead.
The company warned Wall Street back in early May that sales may come up short and the stock folded like a cheap lawn chair, dropping from $41 to $26 on the news. We did some quick chart work for Mako following yesterday’s plunge and we wished we would have done it back then. The progressive trend lines show a clear break to $15 was a good possibility.
There could be a bounce from current levels (or not) for shares of Mako. We have listed some possible options plays on our Watch List this morning to keep an eye on inside our Members Area.
As far as the market, the Dow dropped 83 points, or 0.7%, to finish at 12,653. (Read More…)
*******************************
If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we are off to a unprecedented start for 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis. Together, we are 104-21 and we doubt you will find a hotter option trading newsletter.