9:00am (EST)
PowerShares QQQ (QQQ, $67.26, down $1.09)
November 66 puts (QQQ121117P00066000, $1.05, up $0.40)
Entry Price: $0.95 (10/9/12)
Exit Target: $1.90
Return: 11%
Stop Target: None
Action: The QQQ’s kissed $67.10 yesterday and finished just off their low. We have a near-term target of $65 and a mid-November target of $63. This would make these puts worth $3 for a 200% return if $63 triggers. Resistance is at $70.
Sina (SINA, $60.36, down $0.77)
November 50 puts (SINA121117P00050000, $1.00, up $0.10)
Entry Price: $1.00 (10/9/12)
Exit Target: $2.00
Return: 0%
Stop Target: None
Action: Sina traded down to $59.40 but held $60. There is risk back up to $62 but our near-term target is for a test to $55. If this level fails to hold, shares could tumble to the mid-$40’s.
Citrix Systems (CTXS, $68.14, down $2.46)
November 60 puts (CTXS121117P00060000, $1.30, up $0.25)
Entry Price: $1.05 (10/8/12)
Exit Target: $2.10
Return: 29%
Stop Target: None
Action: We got our close below $69.50 and then some. We would like to see a close below $65 this week and $70 hold if shares rebound.
JC Penney (JCP, $24.39, up $0.46)
November 22 puts (JCP121117P00022000, $0.75, down $0.15)
Entry Price: $0.95 (9/28/12)
Exit Target: $1.90
Return: -21%
Stop Target: None
Action: Resistance is at $24-$25. We are looking for a close below $22 this week which should get $20 and the teens back in play. At $20 the trade is a double and at $19 we would hit a 200% return.
Buffalo Wild Wings (BWLD, $86.98, down $0.70)
November 70 puts (BWLD121117P00070000, $0.95, up $0.05)
Entry Price: $1.25 (9/26/12)
Exit Target: $2.20
Return: -24%
Stop Target: None
Action: There is risk up to $90 and a move above this level could lead to a run to $95-$100. We would like to see shares close below $85 this week which should get $80 back in play. Earnings are due out on October 23.
TiVo (TIVO, $10.10, down $0.16)
November 10 calls (TIVO121117C00010000, $0.50, down $0.10)
Entry Price: $0.70 (9/25/12)
Exit Target: $1.40
Return: -29%
Stop Target: None
Action: Support should hold at $10 on a pullback. We are looking for a close above $10.50 this week which has been short-term resistance. A move above this level should lead to a run at $11-$11.50.
KLA-Tencor (KLAC, $46.47, down $0.37)
October 45 puts (KLAC121020P00045000, $0.35, up $0.05)
Entry Price: $0.55 (9/20/12)
Exit Target: $1.10
Return: -36%
Stop Target: None
Action: Resistance has held at $48 with risk to $50 and a break above this level will crush the premiums left in these puts. We would like to see a close below $46 this week and our breakeven point on the trade is $44.45. A break below $46 should lead to the low $40’s but we are running out of time as these options expire next Friday.
Akamai Technologies (AKAM, $38.36, down $1.24)
October 40 calls (AKAM121020C00040000, $0.35, down $0.40)
Entry Price: $0.90 (9/17/12)
Exit Target: $1.80
Return: -61%
Stop Target: None
Action: Shares continue to tease us following the break above $40 on Monday which gave us a slight profit. There was no follow through yesterday as shares tested a low of $38.16 but it was good to see $38 hold. We are going to stick with the trade as long as $36 holds.
Solazyme (SZYM, $10.30, down $0.22)
December 12.50 calls (SZYM121222C00012500, $0.40, flat)
Entry Price: $0.70 (9/5/12)
Exit Target: $1.40
Return: -43%
Stop Target: None
Action: Support could test $10 this week but we are looking for this level to hold. If not, we may exit the trade as a new trend would be in place.
Knight Capital Group (KCG, $2.49, down $0.06)
January 2.50 calls (2013) (KCG130119C00002500, $0.25, down $0.05)
Entry Price: $0.55 (8/21/12)
Exit Target: $1.40
Return: -55%
Stop Target: None
Action: There is still risk down to $2 and with yesterday’s drop we are moving this trade to the “HOLD” section. These are “cheap” call options on a buyout offer that may or may not come by January. Our breakeven points is just above $3 so we still like the risk/reward which is why we are keeping the trade open.
Shares were near $2.80 when we entered this trade back in August after tumbling from $10 to $2.50 in late July on the company’s trading fiasco. We think a buyout offer north of $5 could be in the cards by yearend.
Other 2012 Portfolio OPEN positions (5): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and 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 if the options expire. Click on the 2012 Portfolio link in the Members Area to view ALL open/ closed trades.
Special Update: We have fielded a few emails on these open positions and here is another quick update. Also, we realize some of our current call options could take a hit if the market continues to break down and not all of them will come back. Our First Solar trade was down 50% before handing us a profit but some trades will get caught if there is a trend change. We have gone 21-out-of-23 since mid-August and we hate having losers, but again, some of these trades may or may not come back.
Apollo GroupOctober 24 puts (from August 2012) – Earnings October 16
Pepsico October 75 calls (from August 2012) – Faces resistance at $73
Bank of America January 12.50 calls (2013) (from March 2012) – a move above $10 would be bullish and have us looking to add to the position.
eBay October 52.50 calls (from September 2012) – We may close by Friday if shares are not above $50.
Tiffany & Co. October 60 puts (from September 2012) – We still feel there is a good chance shares retreat and fall below $60.
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 but these are the trades we are watching as new candidates.
Morgan Stanley (MS, $17.35, down $0.10)
November 18 calls (MS121117C00018000, $0.60, flat)
Thoughts: There are a couple of earnings from the Financial sector that will hit Wall Street on Friday. Instead of playing JPMorgan or Wells, we may play Morgan Stanley for a run to $20 by mid-November.
Valero Energy (VLO, $31.40, down $0.31)
November 34 calls (VLO121117C00034000, $0.55, down $0.10)
November 31 puts (VLO121117P00031000, $1.35, up $0.10)
Thoughts: A move above $34 could lead to a run at $40 while a drop below $31 would be bearish.
LinkedIn (LNKD, $113.07, down $4.90)
November 95 puts (LNKD121117P00095000, $1.75, up $0.55)
Thoughts: Resistance has been tight at $122.50 and a break above $125 would be bullish. We may use these put options on a move below $115.
Taiwan Semiconductor Manufacturing (TSM, $15.36, down $0.17)
January 15 calls (TSM130119C00015000, $1.00, down $0.10)
November 15 calls (TSM121117C00015000, $0.70, down $0.15)
Thoughts: There is risk down to $15 and we would wait for a move back above $16 before considering these options.
First Solar (FSLR, $20.80, up $0.54)
November 18 puts (FSLR121117P00018000, $1.20, down $0.15)
October 20 puts (FSLR121020P00020000, $1.50, up $0.20)
Thoughts: We would like to see shares test $22 which is where we may go short again.
American Express (AXP, $58.24, down $0.58)
November 60 calls (AXP121117C00060000, $0.75, down $0.20)
Thoughts: Shares could make a run past $60 if the Financial stocks show strength.