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9:20am (EST)
Note: We get the ISM number at 10am. Also, I’ll be back in a couple of hours with an update for the blog. I will be doing an 11am post and maybe a 1pm post.
Ford (F, $8.30, down $0.03)
December 6 calls (FLI, $2.60, down $0.08)
Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 108%
Stop: $2.00, raise to $2.50
December 7 calls (FLJ, $1.90, down $0.10)
Entry Price: $1.00 (5/18/09)
Exit Price: $2.00
Return: 90%
Stop: $1.60
August 7 calls (FHJ, $1.40, down $0.02)
Entry Price: $0.77 (7/31/09)
Exit Price: $1.55
Return: 82%
Stop: $1.25
Action: This trade may be getting long in the tooth but news that the “cash for clunkers” program would be extended another month. The extension would give car buyers until Labor Day to cash in on rebates up to $4,500. Early word is the votes are there to pass another $2 billion on top of the $1 billion program. In any event, keep your stops in place.
Cisco Systems (CSCO, $22.44, down $0.13)
October 20 calls (CYQJD, $2.92, down $0.05)
Entry Price: $1.50 (6/2/09)
Exit Price: $3.00 (8/4/09 1/2 the trade was closed)
Return: 100%
Stop: $2.25
Action: I suggested closing half of your positions yesterday. Cisco could give the bulls even more ammo and they seem to always beat estimates by a penny but are “cautious” on guidance. If they can say some really good things going foward then Cisco has a chance of making that run to $25 that I’ve been calling for for 2 months.
Bank of America (BAC, $15.64, up $0.32)
November 15 calls (BYOKO, $2.09, up $0.19)
Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: 40%
Stop: $1.60
August 15 calls (BYOHO, $1.00, up $0.19)
Entry Price: $0.32 (7/31/09)
Exit Price: $0.94
Return: 194%
Stop: CLOSED
Action: We got out of the August calls on Monday after the SEC fine was revealed and I had said in the blog that there was breaking news as I typed. It’s hard to complain when you make a 200% return but the August 15’s traded as high as $1.25 on Tuesday as BofA made a run at $16. That made it a 300%-er…
IBM (IBM, $119.60, down $0.76)
August 105 calls (IBMHA, $14.68, down $0.12)
Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 330%
Stop: $14.00
Action: Close the other half today. IBM cannot break $120 but if it does we can start new positions if we see another trade and the call options will be much cheaper than these.
Cerner (CERN, $65.64, down $0.63)
August 70 calls (CQNHN, $0.50, down $0.15)
Entry Price: $1.30 (7/27/09)
Exit Price: 50 cents (8/4/09)
Return: -62%
Stop: 50 cents
Action: Ding-dong the witch is dead. Cerner can’t seem to get out of first gear while the market continues to pass it. The trade went a little past the 50% stop because we were giving it another day or two. However, we pulled the plug yesterday on this one.
Visa (V, $69.10, down $0.01)
August 70 calls (VEHHN, $1.35, down $0.05)
Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -16%
Stop: 80 cents
Action: Just like IBM is having trouble at $120, Visa is having the same issue at $70.
Imax (IMAX, $9.28, up $0.08)
September 7.50 calls (IMQIU, $2.00, up $0.25)
Entry Price: $1.90 (8/5/09)
Exit Price: $3.00
Return: 5%
Stop: $1.00
Action: I mentioned the higher strike prices for Imax yesterday and the 10’s were the riskier play. I took some of that risk out by using in-the-money options which will retain more of their value in case Imax trades lower from here…noticed how we used the September chain instead of the August 7.50 call options. It also buys us more time. The thing to remember is with the August options expiring in a little under three weeks it makes trading out-of-the-money options that much riskier.
Rick@MomentumOptionsTrading.com
Futures Higher After Jobs Report
Friday, August 7th, 2009
8:35am (EST)
I posted a little early this morning as I was anxious to get the morning outlook as soon as the jobs report was released. Heading into the announcement this morning, market futures were lower. Ahead of the report, Dow futures were coming off their lows and were down 7. As soon as the numbers were released, they soared. Up 30 and then 50 to 60 within a minute.
The Labor Department’s report was expected to show job losses were improving and it did. Wall Street had expected a number of around 320,000. We got 240,000. Pretty good. The surprising number helped the futures, no doubt, as it was the best monthly number since August of 2008.
The slowdown in job cuts comes as companies are likely done with their largest cost-cutting initiatives that have helped offset sagging sales and slipping revenues. Should be an interesting open…
Sometimes the best trades are the ones you talk yourself out of. Earnings season is tricky and we have done well with a number of trades recently and have avoided the traps that most novice option traders make when earnings season rolls around. Each option trade is unique in itself and one of my first thoughts with Nvidia (NVDA, $13.12, down $0.28) was their upcoming earnings announcement.
It is hard to get “excited” about a company that is expected to report a loss which is what Nvidia reported after yesterday’s close but there was an opportunity for a trade before the announcement which is what we did. The August 13 calls (UVAHM, $0.75, down $0.30) were profiled at 80 cents and most of you got out around $1.00. See how the options fell going into yesterday’s close?
In after-hours last night, the stock was up $1.18 to $14.30. This morning, the stock is trading at $14.10. The calls should open around $1.25 if that price holds. Don’t open new positions, I was just teaching the newbies how options and earnings work. It is an unpredictable game which is why we do a lot of in-and-out trades. We are winding down our positions and it looks like we are headed higher at the open.
Rick Rouse
Rick@MomentumOptionsTrading.com
Tags: Jobs Report, Nvidia
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