1:00pm (EST)
The bulls are back in the driver’s seat despite any real catalysts to carry them forward. There are still some notable earnings releases due out this week and the economic news will pick up on Thursday and Friday but momentum can’t be denied.
As of now, the Dow is currently enjoying a 45 point gain and is at 10,597. The S&P is up 5 points to 1,143 but the Nasdaq keeps pushing the envelope. The index is showing an 18 point pop and is 2,350.
Our little quote this morning on bull markets was meant as a reminder that we haven’t seen the euphoria yet. There is still plenty of pessimism on Wall Street but we have been in the bulls camp over the past few weeks and have made some nice trades. We still have some headwinds the market is facing but the trend is still up.
With so much going on, we wanted to give a quick update on the CBOE Volatility Index (VIX, 17.76, down 0.03). For our new subscribers, if the VIX is at 30 or more then it means the market is nervous. If the VIX is under 20, the market is confident.
Back in mid-January when the market was at its highs the VIX was at 17. A month later, the index was back near 30 as the market traded back down to the lower end of this current trading range we have been in. The 52-week low is 16.86 and the VIX will drop if the market continues to rally.
It doesn’t mean any rally will stop if the VIX hits these levels, and in fact, we are looking for the VIX to trade below 15 if we can get a market breakout.
And finally, many of you know our thirst for the BioTech and the Drug sector as these can be some of the most explosive option trades on the planet.
This Friday, there is a big FDA announcement that is expected concerning the first ever “once-a-week” diabetes drug Byetta. There will be several stocks that could move on the news but the one we are watching is Alkermes (ALKS, $13.15, up $0.70).
We aren’t sure if there is an option trade here, either a call or a put, but we are watching the developments. Our portfolio is already at its limit but we always keep trades on our Watch Lists. Current subscribers, check for the Members Area for the updates.
Imax Rocks The Box (Office)
Thursday, March 11th, 2010
1:00pm (EST)
The bulls are taking the bears best blows but they ain’t backing down. We have so much to talk about and there are so many moving parts right now that we don’t know where to begin.
First, the market.
The Dow is down 7 points to 10,560 while the S&P 500 is off by 2 and is trading at 1,143. The Nasdaq, which continues to be our hero, is slightly lower by 3 points at 2,355.
Our short-term hurdles are Dow 10,800 and the S&P 500 needs to bust through 1,150. Next week is option expiration and if we stay below these levels the action will be intense as both sides battle over strike prices.
We are still in the bulls camp and anything can happen which is what makes option trading so great. We have been aggressive this week and our trading instincts tell us we are going higher. We also realize that we are facing serious headwinds but nervous money doesn’t make money.
We are seeing the IPO market show signs of life again.
Sensata Technologies (ST, $18.85, flat), a leading global supplier of sensors and controls went public today. The market capitalization for the company is a little over $3 billion, which makes it the largest U.S. company to go public in 2010 to date. There are no listed options on the stock, yet, but we will do some more research to see if there is a trade here when the options do list.
Another story we want to talk about is Imax (IMAX, $16.65, up $0.63) which reported earnings this morning. All we can say is the company is in a groove.
Shares have hit another 52-week high of $17.60 after reporting a profit of $4 million, or $0.06 a share versus a year-earlier net loss of $9 million, or $0.21 a share. Revenue rose nearly 100% to a record $54 million.
The boys on the Street were looking for earnings of $0.07 a share on revenue of $45 million. We had a few emails trickle in today as some of our subscribers choose to keep their March call options open.
We profiled a trade on Imax at the beginning of February that we felt really good about but the market was still finding its way and we were a little early.
If you look at our current 2010 portfolio, you will see we were stopped out for a 50% loss which is one of our trading rules for higher priced options, but man, have they rebounded.
The March 12.50 calls (IMQ100320C00012500, $4.00, up $0.50) were profiled at $1.05 and are showing a 220% return from those levels.
Our target for Imax has been $20 since early October and we told you the momentum was there. Unfortunately, we were just a little early in our portfolio but we are glad it worked out for some of you.
Of course, we have a few trades in our Members Area that we think can replicate those returns. One of our trades that we released Monday just hit a triple-digit return yesterday and we think there may be a little more left in the tank. We also entered two more trades today and we are looking at another as “protection” as we head into Friday and next week.
The action could get intense as the March options expire. Current subscribers, check for the updates.
Tags: Imax, option picks, option signals, options alerts, sensata technologies, st, stock options trading
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