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Monday, July 18th, 2011
1:15pm (EST)
Futures were pointing towards a rough open this morning as continued concerns over Europe and U.S. debt continue to plague the market. Overseas markets have traded lower for much of the morning on a weaker euro while the Financial stocks here at home continue to take a pounding.
Bank of America (BAC, $9.64, down $0.35) is at fresh 52-week lows (and a 2-year low) ahead of its earnings announcement tomorrow, before the bell. The company is expected to report a loss of 90 cents a share on revenue of $12.34 billion. BofA “preannounced” their results in late June after saying they were taking a $14 billion charge to settle their mortgage issues. Otherwise, the company would have earned near $0.30 a share or so.
Goldman Sachs (GS, $127.78, down $2.38) is also at fresh 52-week lows and will report their Q2 earnings on Tuesday, before the market opens. Wall Street is looking for earnings of $2.27 a share on revenue of $8.14 billion, on average. Analysts’ estimates range from a high of $3.36 to a low of $1.80 with revenue ranging from $7 to $10 billion. Given these numbers, there is a chance for an earnings surprise or a big disappointment.
We have covered both companies for years and we said once Goldman broke below $135, it would be a sign to back away from the sector for a few months. In mid-May, here were our thoughts on BofA:
“Bank of America (BAC, $11.99, up $0.06) broke below $12 a share on Friday and is on its way of testing its 52-week low of $10.91. At some point folks, this is a $20 stock but it might take a few years to get there. Most of the financial websites will list the “book value” of Bank of America at $20 which means shares are trading at half their book. However, we like to look at the “tangible” book value which for BofA is $12-$13.
The tangible book value is what shareholders can expect to receive if Bank of America goes bankrupt and its assets are liquidated. The higher the tangible book value, the better, as it provides shareholders with more insurance. At some point, the Financial stocks will bounce back but we are hoping shares of BofA can come down a little more.” (END)
There is still further risk for the Financial stocks and our feeling is in 3 months they will be a buy, if not sooner. At some point, we may use LEAP options to play a rebound as some of these stocks approach their 2009 levels. For those of you that haven’t been with us for long, take a look at our 2009 Portfolio Track Record inside our Members Area. If you are not a member we can email you our results but it is starting to “feel” like we are repeating a process that could payoff big-time in 6-12 months.
For instance, in March 2009, Bank of America was at $5 a share and we suggested buying the May 6 call options which were trading for 75 cents at the time. A month later, shares had rebounded and were at $10 while the call options we recommended were at $5.00. The stock returned 100% in a month while the options returned 567%!
If you would have bought 20 contracts for $1,500, you would have netted $8,500 in 30 days. At the same time, we also suggested the Bank of America July 10 call options at 30 cents which our subscribers closed out at $1.60 which comes out to a return of 433%.
Our point is this quarter will be lousy for some Financial stocks while others will come in with better-than-expected numbers. Now might be a good time to continue shorting or buying put options on some of these names but we are waiting for the right opportunity to go long both Goldman and BofA which may be 3-6 months.
As far as the market, the support levels we covered this morning are being tested to a “T” as the Dow is down 145 points to 12,334 while the S&P is off 17 points to 1,299. The Nasdaq is lower by 40 points to 2,750.
We have a lot to cover in our Members Area so let’s get to it.
Tags: About options trading, bac, GS, option trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
Posted in Earnings, Market Analysis, Strategies | Comments Off
Tuesday, June 28th, 2011
1:20pm (EST)
Greece is the time, is the place, is the motion, Greece is the way we are feeling…
We reached back into our record collection and found the perfect song for the day as all eyes will be on Greece after the close. The situation is dire over in Athens as the country awaits another vote on cost-cutting measures needed to avoid a default. The news should hit Wall Street at 5am (EST) tomorrow morning and it will move the market on Wednesday.
Of course, the bulls don’t seem bothered taking positions ahead of the news as they are having another solid day. Better-than-expected economic news and a huge beat by Nike (NKE, $87.37, up $5.75) on their earnings have helped fuel today’s rally.
The Dow is currently up 113 points to 12,156 and has traded to a high of 12,167. The S&P 500 is higher by 12 points to 1,292 while the Nasdaq is showing a 31 point pop and is at 2,719.
We profiled some call and put options for Nike yesterday as a straddle trade that we said could do well if Nike makes a big move. We also said the options were priced for a 7%-8% move in the stock and that is exactly what we got.
The July 82.50 calls (NKE110716C00082500, $5.50, up $2.50) and the July 82.50 puts (NKE110716P00082500, $0.60, down $2.20) would have cost $5.80 (or $580) to put on the trade. As you can see, the calls have nearly doubled and have traded up to $5.90 while the puts took a major hit.
We said if Nike trades above $88 or below $78 then the trade will make a profit. At current prices, if you sold the call and put right now, the trade would make anywhere from 5%-12% depending on your entry price and when you sell.
This trade is also known as a “chicken” trade but it worked out well if you wanted some action but was unsure of the direction. Of course, you could leave the trade open and play the calls for further gains but we will be dropping coverage of the show-and-tell trade today. Nike has been good to us in the past and unfortunately we didn’t have a good read on this one going into earnings which is why we sat this one out. Our gut was telling us they would beat but the analysts had us spooked on their margins.
We do, however, have some nice pin action on our current trades as one of our picks has hit a triple-digit return while another recommendation is up 80%. June has been hot for us and we hate to see it end but we are hoping July will be even hotter!
Subscribers, check the Members Area for the updates and we will see the rest of you in the morning with our next update.
Tags: About options trading, optin trading, stock and option, stock exchange, stock to buy, stock trading, trade online, trading futures, trading online, trading system, what are stock options, what is a call, what is option trading
Posted in Earnings, Strategies | Comments Off
Wednesday, June 22nd, 2011
12:45pm (EST)
It’s been a flat day on Wall Street as both the bulls and bears seem reluctant to make big bets ahead of Fed Chairman Ben Bernanke’s update on interest rates. The Fed will make its decision on monetary policy in just under a couple of hours and nothing will change except the wording. Traders will look for clues on what is being said about the economic recovery, the labor market, real estate and inflation. And yes, any hints on QE3, QE2.5, etc.
There will likely be some action after the news which could sway direction for the rest of the week. A small rally by the bulls would be enough to push the major indexes past resistance and would bring our next set of targets into play. However, a slight pullback or selloff could lead to frustration and another test to the downside.
The Dow is currently down 10 points to 12,180 while the S&P 500 is lower by a point to 1,295. The Nasdaq is off by 2 points to 2,686.
We mentioned Adobe Systems (ADBE, $30.12, down $1.89) this morning and the company’s earnings but we wanted to take a quick look at the options. We have played the options on Adobe’s earnings in the past and our subscribers did really well with a strangle option trade we profiled in September 2010 when the stock was at $33. At the time, we were telling our subscribers Adobe would be making a huge move because of their product cycle and uncertainty over earnings but we weren’t sure which way which is why we bought protection.
The trade returned over 200% when the stock fell from $33 to $26 after Adobe announced their results. The call options we recommended surged 525% while the puts expired worthless. This time around we didn’t think Adobe would make a 20% move or even a 10% pop or drop because their new software has been selling well so we decided to sit out. However, we did highlight the stock in our Weekly Wrap as an earnings trade and some of our subscribers who have ordered our trading course, How to Trade Options on Momentum Stocks, emailed us and said they went with the puts just because of the current market environment we are in.
There was an opportunity to make a little cash with the Adobe July 30 puts (ADBE110716P00030000, $0.85, up $0.20) which close yesterday at 67 cents. The put options traded up to $1.00 at the open which would have been good for a 50% return and they are still up 30% for a decent gain in less than 24 hours.
Of course, we just closed a monster earnings trade on Research In Motion (RIMM, $28.37, down $0.18) that banked our members 357% on our put option recommendation. We were a little disappointed we were stopped out of the trade on RIMM’s rebound yesterday but the stock could be setting up nicely for another trade.
As far as the overall market, it was just announced there was “no change’ to interest rates. Subscribers, check the Members Area for the updates.
Tags: binary options, call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading, options trading course, stock market options, weekly options, what are options
Posted in Earnings, Economic News, Strategies | Comments Off
Friday, June 17th, 2011
12:20pm (EST)
After 6-staright weeks of losses, the bulls are trying to end that streak which depends on today’s rally holding. Futures were pointing towards a so-so open but
The Dow started the week at 11,951 and is currently up 83 points to 12,044. If the bulls can hold 12,000 and win the week then next week is a toss-up in what has been a down week, historically, over the past two decades. More on this in a minute…
The S&P 500 is higher by 9 points to 1,276 after starting the week at 1,270. The bears will try to keep the index below 1,275 as the bulls look to make a push back to 1,300.
The Nasdaq is showing a 8 point pop and is at 2,631. Tech started the week at 2,643 and has reached a high of 2,648 but if 2,650 is not broken, and held, then it favors the bears next week.
In IPO news, Bankrate (RATE, $14.50, down $0.50) made its debut this morning by ringing the opening bell and offering shares to the public. The company priced its offering at $15 last night which was the mid-point of the expected range but shares are down 3% on their first day of trading.
Ringing the bell hasn’t been too kind to companies trying to make a big splash this week. Pandora Media (P, $12.87, down $0.39) is still sinking after hitting a high of $26 on Wednesday in its debut. LinkedIn (LNKD, $67.06, down $1.21) is down 45% on its 1-month anniversary after hitting a high of $122.70 on its first trading day.
With all options for the month of June expiring today, we wanted to go over next week’s landscape real quick.
The week after June Quadruple Witching has produced an average loss of over 1%, on average, for the Dow over the past 11 years and 18 of the last 20 years. In other words, there is a 90% chance the market corrects further next week but nothing is a given.
As you can see, Tech is still struggling and the Financial stocks face further downside risk. However, the bulls have been known to climb a wall of worry and we are still in a “trading range” which means anything can happen.
The market is up today on hopes Greece gets a bailout and Monday will be a big day as we should get more news on the embattled country.
On the good news department, Research In Motion (RIMM, $27.42, down $7.91) continues to get spanked behind the woodshed as shares are now down over 20%. The plunge has meant a windfall for our current put option recommendation. Our subscribers are working on a 300% return…
That is all we have for today and we hate to see the week end as we are now holding 4 triple-digit winners in our portfolio. We have been making some sweet calls lately and we have been saying NOW is a great time to be putting some money to work. For those who want to take your trading to the next level, come join us.
Also, our Weekly Wrap which will be closing out another profitable trade today. Folks, this publication is quickly becoming a hit and it is hands down a bargain. If you haven’t given it a try, you should, as it is packed with trading ideas. We profile two stocks a week that could be on the verge of big moves as we do an in-depth technical and fundamental analysis of the companies we profile.
For those of you looking for a deal, if you purchase a 1-year subscription to our Weekly Wrap, we will ship you a copy of our options trading manual, How to Trade Options on Momentum Stocks, at no charge (an $895 value). The course also comes with monthly (bi-monthly videos) which show you how to find you own triple-digit winning option trades.
And one last fun factoid before we go, Krispy Kreme Doughnuts (KKD, $9.39, up $0.60) is at fresh 52-weeks highs. Imagine that. We did.
We will be back Sunday night and until then, relax, get some sun, and have a great weekend! We hope you take advantage of our offer.
Tags: call options, futures options, high beta stocks, Hot stocks, initial public offerings, IPO’s, LNKD, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading course, P, Pandora IPO, RATE, Research In Motion earnings miss, RIMM, stock market options, weekly options, what are options
Posted in IPOs, Market Commentary, Strategies | Comments Off
Friday, June 17th, 2011
8:30am (EST)
We did our Research and we tried to get Wall Street In Motion…
The market went on another wild ride on Thursday as the bulls and bears battled to a draw after the major indexes finished mixed.
The Dow gained 64 points to finish at 11,961 after trading to a high of 11,990. The S&P 500 added 2 points and closed at 1,267 after kissing a high of 1,275. We mentioned resistance yesterday at 12,000 and 1,300, respectively, so those levels will need to be penetrated and held today for the bulls to feel good about the weekend. If not, Monday could a key day for the market.
The Nasdaq, however, finished lower by 8 points to settle at 2,623. The index spent much of the morning session in positive territory and traded up to 2,642 before fading. We have outlined resistance at 2,650 all week and the bulls will at least need to hold 2,600 or next week could get nasty.
We took the drop in Tech as a sign that Research In Motion (RIMM, $35.33, up $0.16) was going to report a lousy quarter although we had already predicted they would. When shares were halted after the bell, we felt good, but still nervous. However, because we recommended closing half of the trade when it was up 80% on Wednesday we knew the worse-case scenario was a small loss and the best-case outcome would be if shares continued to tank.
On May 9, 2011 – RIMM was just above $45 and our weekend chart work was showing a drop from $45 to $40 which is where we said $38 would come into play. Once penetrated, we said a drop to the lows $30’s could be in the cards. Here were our exact comments and a dummied-down chart from that Monday morning before we recommended put options the very next day:
“Thoughts: (RIMM, $45.99, down $1.30) – Shares made a major break below long-term support on Friday (purple circle). The second wave of support is in the $38 area (green line, yellow circles) which gets the July puts to a least a double. However, there is virtually no support until the low $30’s if the $38 level fails (red line). Here is an updated chart:
(END)”
Well, we rolled out the red carpet, or should we say red line, for the company and they were right on cue.
RIMM beat estimates by a penny which was not surprising given how low the bar was, but, we have been saying they would lower guidance and they missed on their revenue numbers. RIMM reported a profit of $1.33 versus $1.32 but revenue came in at $4.91 billion against a forecast for $5.15 billion. They lowered their current quarterly and yearly earnings outlook.
Shares traded below $30 last night and finished at $30.26, down $5.07, and are at $29.25, down $6.08, in pre-market action this morning.
We have been telling our subscribers this horse was dead and it was not getting back up. After checking the charts and banking 60% on our first RIMM trade, we went back to the well for more. Our current put option trade should hit a triple-digit return today.
We will be back at midday with our next update but look for a Trade Alert AND a possible NEW TRADE before then if we see something we like or we take profits on some of our current trades this morning. We mentioned yesterday the market is setting up for some nice pin action over the next few weeks and into July. We expect to take full advantage of the current volatility.
Futures are pointing towards a slightly higher open…Dow futures are higher by 86 points to 11,985 while the S&P futures are up 11 points to 1,275. The Nasdaq futures are advancing 15 points to 2,210.
We have a lot to cover inside our Members Area so let’s get on it. Subscribers, check for the updates.
Tags: call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, NASDAQ: RIMM, option market, option tips, options, options mentoring, options trading course, Research In Motion downgrades, RIMM's earnings miss, stock market options, weekly options, what are options
Posted in Earnings, Market Commentary, Strategies | Comments Off
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Bulls Looking for Weekly Win
Friday, June 17th, 2011
12:20pm (EST)
After 6-staright weeks of losses, the bulls are trying to end that streak which depends on today’s rally holding. Futures were pointing towards a so-so open but
The Dow started the week at 11,951 and is currently up 83 points to 12,044. If the bulls can hold 12,000 and win the week then next week is a toss-up in what has been a down week, historically, over the past two decades. More on this in a minute…
The S&P 500 is higher by 9 points to 1,276 after starting the week at 1,270. The bears will try to keep the index below 1,275 as the bulls look to make a push back to 1,300.
The Nasdaq is showing a 8 point pop and is at 2,631. Tech started the week at 2,643 and has reached a high of 2,648 but if 2,650 is not broken, and held, then it favors the bears next week.
In IPO news, Bankrate (RATE, $14.50, down $0.50) made its debut this morning by ringing the opening bell and offering shares to the public. The company priced its offering at $15 last night which was the mid-point of the expected range but shares are down 3% on their first day of trading.
Ringing the bell hasn’t been too kind to companies trying to make a big splash this week. Pandora Media (P, $12.87, down $0.39) is still sinking after hitting a high of $26 on Wednesday in its debut. LinkedIn (LNKD, $67.06, down $1.21) is down 45% on its 1-month anniversary after hitting a high of $122.70 on its first trading day.
With all options for the month of June expiring today, we wanted to go over next week’s landscape real quick.
The week after June Quadruple Witching has produced an average loss of over 1%, on average, for the Dow over the past 11 years and 18 of the last 20 years. In other words, there is a 90% chance the market corrects further next week but nothing is a given.
As you can see, Tech is still struggling and the Financial stocks face further downside risk. However, the bulls have been known to climb a wall of worry and we are still in a “trading range” which means anything can happen.
The market is up today on hopes Greece gets a bailout and Monday will be a big day as we should get more news on the embattled country.
On the good news department, Research In Motion (RIMM, $27.42, down $7.91) continues to get spanked behind the woodshed as shares are now down over 20%. The plunge has meant a windfall for our current put option recommendation. Our subscribers are working on a 300% return…
That is all we have for today and we hate to see the week end as we are now holding 4 triple-digit winners in our portfolio. We have been making some sweet calls lately and we have been saying NOW is a great time to be putting some money to work. For those who want to take your trading to the next level, come join us.
Also, our Weekly Wrap which will be closing out another profitable trade today. Folks, this publication is quickly becoming a hit and it is hands down a bargain. If you haven’t given it a try, you should, as it is packed with trading ideas. We profile two stocks a week that could be on the verge of big moves as we do an in-depth technical and fundamental analysis of the companies we profile.
For those of you looking for a deal, if you purchase a 1-year subscription to our Weekly Wrap, we will ship you a copy of our options trading manual, How to Trade Options on Momentum Stocks, at no charge (an $895 value). The course also comes with monthly (bi-monthly videos) which show you how to find you own triple-digit winning option trades.
And one last fun factoid before we go, Krispy Kreme Doughnuts (KKD, $9.39, up $0.60) is at fresh 52-weeks highs. Imagine that. We did.
We will be back Sunday night and until then, relax, get some sun, and have a great weekend! We hope you take advantage of our offer.
Tags: call options, futures options, high beta stocks, Hot stocks, initial public offerings, IPO’s, LNKD, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading course, P, Pandora IPO, RATE, Research In Motion earnings miss, RIMM, stock market options, weekly options, what are options
Posted in IPOs, Market Commentary, Strategies | Comments Off