9:00am (EST)
NEW TRADES!!!
Special Note: Although we are expecting a top in the market, we know how targets can get stretched. We said the bulls are good until the VIX hits 15, maybe 12 but a break over 20 gets us nervous. As such, use “half” positions on these trades. This means if you normally trade 20 contracts, trade 10. In trending markets we play 20, in choppy markets 10. This is why you may see 10 or 20 contracts for our Track Record. We are still bullish and our upside targets are still in play. Let’s go play with some house money.
MGM Resorts (MGM, $13.11, down $0.05)
Buy to OPEN June 15 calls (MGM120616C00015000, $0.70, down $0.05)
Action: Use limit orders up to 80 cents at the open. If we aren’t filled, keep the order open as a day order.
Dendreon (DNDN, $14.72, up $0.75)
Buy to OPEN May 22 calls (DNDN120519C00022000, $0.88, up $0.14)
Action: We said there was a big gap to fill from $12 to $20 on shares of Dendreon and so far shares seem to be making a run. Use limit orders up to $1.05 but do not pay more than $1.10 to establish positions. If we aren’t filled, keep the order open as a day order.
CURRENT TRADES
Aflac (AFL, $49.16, up $0.09)
February 48 calls (AFL120218C00048000, $1.95, up $0.10)
Entry Price: $0.75 (1/19/12)
Exit Target: $1.50 (closed half at $1.35 on 1/20/2012)
Return: 107%
Stop Target: $1.40 (HARD STOP)
Action: This trade is officially closed. We closed half of the trade at $1.35 last Friday and half at $1.75 which gave us an average closing price of $1.55, or 107%, from our entry price of 75 cents. If Aflac breaks $50, we might jump back in for a quick trade so keep the February 50’s (AFL120218C00050000, $1.00, up $0.05) on your Watch List.
Scientific Games (SGMS, $11.42, down $0.03)
February 12.50 calls (SGMS120218C00012500, $0.20, down $0.05)
Entry Price: $0.20 (1/18/12)
Exit Target: $0.40
Return: 0%
Stop Target: None
July 15 calls (SGMS120721C00015000, $0.45, down $0.05)
Entry Price: $0.35 (1/18/12)
Exit Target: $0.70 (closed half at $0.45 on 1/25/2012)
Return: 29%
Stop Target: None
Action: We closed half of the July calls to lock in some profits and to offset some of the risk with owning the February calls in case there is a pullback or shares stay in a range.
Carrizo Oil & Gas (CRZO, $26.12, up $1.24)
April 30 calls (CRZO120421C00030000, $1.25, up $0.30)
Entry Price: $1.20 (1/17/12)
Exit Target: $2.40
Return: 8%
Stop Target: None
Action: We got our close above $26 as shares surged 5% yesterday. The options jumped 37% which put us in the green.
Vivus (VVUS, $12.22, up $0.36)
February 14 calls (VVUS120218C00014000, $0.45, up $0.05)
Entry Price: $0.70 (1/12/12)
Exit Target: $1.40
Return: -36%
Stop Target: None
Action: Vivus expects to hear word from an advisory panel on Qnexa in mid-February which could give us clues on if the FDA’s will approve the obesity drug or not. A decision is expected by mid-April but we are hoping to hear good news before then.
Westport Innovations (WPRT, $38.91, up $0.85)
April 40 calls (WPRT120421C00040000, $2.85, up $0.40)
Entry Price: $1.30 (1/12/12)
Exit Target: $2.60 (closed half at $1.45 on 1/24/2012)
Return: 65%
Stop Target: $1.75, raise to $2.05 (HARD STOP)
Action: Shares continued their quest for $40 yesterday after rising to a high of $39.08. The options added another 16%. We have raise the HARD STOP to $2.05.
Solazyme (SZYM, $11.67, down $0.13)
March 15 calls (SZYM120317C00015000, $0.30, down $0.10)
Entry Price: $0.45 (1/10/12)
Exit Target: $1.00
Return: -11%
Stop Target: None
Action: Continue to hold.
OCZ Technology Group (OCZ, $8.40, up $0.24)
February 9 calls (OCZ120218C00009000, $0.30, up $0.05)
Entry Price: $0.60 (1/9/12)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: We are bringing back coverage of OCZ although the trade is still down 50%. Shares have made a solid move this week after starting Monday at $7.63. We have talked about the huge short-interest in the stock and these options still have 3 weeks before they expire. If shares can reach $9 we should be back to even, at $10 the trade will be a double.
Microsoft (MSFT, $29.56, up $0.22)
July 30 calls (MSFT120721C00030000, $1.35, up $0.10)
Entry Price: $0.75 (1/6/12)
Exit Target: $1.50+ (closed half at $1.35 on 1/24/2012)
Return: 80%
Stop Target: $1.10 (HARD STOP)
Action: Shares reached a high of $29.65 yesterday and if $30 triggers, we may add a few more shorter-term call options. Continue to hold the other half.
MGM Resorts (MGM, $13.11, down $0.05)
June 14 calls (MGM120616C00014000, $1.15, flat)
Entry Price: $0.48 (1/6/12)
Exit Target: $1.00 (closed half at $1.00 on 1/18/2012)
Return: 124%
Stop Target: $1.05 (HARD STOP)
Action: Our HARD STOP of $1.05 was triggered yesterday so the other half of this trade is officially closed. We are looking to get back in this trade with some of the house money we made because we think MGM will trip $20 this year.
Newpark Resources (NR, $9.71, up $0.29)
March 10 calls (NR120317C00010000, $0.70, flat)
Entry Price: $0.95 (1/3/12)
Exit Target: $1.90 (closed half at $1.20 on 1/10/2012)
Return: 0%
Stop Target: 50 cents
Action: We would love to see a close above $10 this week. The 52-week high is $10.62 which was set 2 weeks ago. Since then, it has given us fits but if we can get a close above $10 again we should have a small profit. We still believe shares can make a run at $15 this year.
Chesapeake Energy (CHK, $23.38, up $0.89)
April 25 calls (CHK120421C00025000, $1.05, up $0.25)
Entry Price: $1.25 (12/21/11)
Exit Target: $2.50
Return: -16%
Stop Target: 60 cents
Action: Shares added 4% yesterday and we would be thrilled to see a close above $24 this week.
Other 2012 Portfolio OPEN positions (1): 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 2012 Portfolio link in the Members Area to view ALL open/ closed trades.
Coach February 55 puts (from January 2012) HOLD
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.
Rambus (RMBS, $9.20, up $0.22)
February 10 calls (RMBS120218C00010000, $0.23, up $0.10)
May 10 calls (RMBS120519C00010000, $0.74, up $0.12)
Thoughts: Shares were left for dead following the company’s recent setback in its litigation patent battle but we have told you Rambus has been turning itself around and is starting to put together some solid quarters. The company will announce their quarterly results after the close so there is added risk to this trade.
Petroleo Brasileiro (PBR, $31.86, up $0.26)
February 32 calls (PBR120218C00032000, $0.90, up $0.10)
April 34 calls (PBR120421C00034000, $0.5, up $0.05)
Thoughts: After a brief dip to $30.75, PetroBras rebounded to finish in positive territory. If you are in this trade from Monday, you may want to lock-in half profits. The February 32’s opened at 18 cents on Monday while the April 34’s opened at 30 cents and both are showing phenomenal triple-digit profits.
Abercrombie & Fitch (ANF, $46.84, up $1.17)
February 43 puts (ANF120218P00043000, $1.00, down $0.30)
May 33 puts (ANF120519P00030000, $0.60, down $0.35)
Thoughts: We have covered ANF for years and it appears ready for a breakdown. A drop below $42.50 could spell trouble down to the mid-$30’s so be patient. Earnings are due mid-February. We are now following the February 43’s and the May 33 puts as shares continue to test resistance.
Nucor (NUE, $43.74, up $0.54)
February 44 calls (NUE120218C00044000, $1.05, up $0.40)
April 45 calls (NUE120421C00045000, $1.50, up $0.30)
Thoughts: We may still try to get in a call option trade because Nucor could be headed to $50.
American Capital (ACAS, $8.33, up $0.26)
February 8 calls (ACAS120218C00008000, $0.50, up $0.20)
Thoughts: We told you about the heavy action in these calls on Monday which have doubled since Monday.
Seagate Technology (STX, $19.77, up $0.02)
February 21 calls (STX120218C00021000, $0.55, flat)
March 21 calls (STX120317C00021000, $0.80, flat)
Thoughts: Watch for now. Shares could make a run at $22 if $20 clears again.
Potash (POT, $45.23, up $0.80)
February 47.50 calls (POT120218C00047500, $0.75, up $0.20)
March 50 calls (POT120317C00050000, $0.70, up $0.10)
Thoughts: Potash was hit with a downgrade on Tuesday but we think shares are still headed to $50 on a break above $46.
Pepsico (PEP, $66.70, up $0.50)
February 67.50 calls (PEP120218C00067500, $0.65, up $0.20)
April 70 calls (PEP120421C00070000, $0.40, up $0.05)
April 67.50 calls (PEP120421C00065000, $1.20, up $0.25)
Thoughts: We are warming up to the April 70’s.
Philip Morris (PM, $76.81, up $2.66)
February 75 calls (PM120218C00075000, $2.45, up $1.55)
March 77.50 calls (PM120317C00077500, $1.50, up $1.00)
Thoughts: We said yesterday we could be getting close to a nice entry point for Philip Morris. The February 75’s opened at 72 cents while the March 77.50’s opened at 47 cents. Wow.
FedEx (FDX, $92.59, up $1.80)
February 95 calls (FDX120218C00095000, $0.95, up $0.40)
Thoughts: The options look tempting and would double if shares are at $96 by mid-February.
Tempur Pedic International (TPX, $67.81, up $5.56)
February 65 calls (TPX120218C00065000, $4.30, up $1.75)
Thoughts: This was another earnings trade we were considering but stayed on the sidelines because the premium was a little high. The company reported record results for the quarter. Needless to say, these options have doubled since we profiled them Tuesday morning so start locking up profits if you jumped on board.
Freeport-McMoran Copper & Gold (FCX, $46.08, up $2.11)
February 45 calls (FCX120218C00045000, $2.25, up $1.20)
Thoughts: These calls opened at 87 cents on Wednesday and easily doubled for the day. Incredible.