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1:10pm (EST)
We wanted to bring Apollo Group (APOL, $44.29, down $1.68) to your attention again today as shares have hit another 52-week low. We have been bearish on this stock for a couple years, and we had good success in the past playing options on it.
Apollo Group and other Educational stocks are taking a beating today after a “gainful employment probe” continues to hit the industry. The last time out, we took a small loss on an option trade because of the volatility, but it was a sign of things to come.
From May 27th:
“We took a 16% hit on Apollo after the parameters of the trade were broken, but we have been warning our subscribers to stay away from this dog for years. Justice might not have been served on our recommended option trade, but the 52-week low of $52.20 looks like it will fall today.
We didn’t like the volatility when shares shot up to $60 last Thursday on some bogus rumor so we got our subscribers out. However, we should have listened to our gut as the stock looks poised to fall below $50 today.” (END)
From January 8th:
“Apollo actually made a slight gain yesterday and reported their earnings after the bell last night. Although they painted a pretty picture for Wall Street, the stock was down $3.20, to $60.74, in after-hours trading last night.
The company reported earnings that beat estimates by a penny but once again, the way they run their accounting department has raised some concerns. We made 4 trade recommendations on Apollo last year, all put options, and the returns were 100%, -15%, 50%, and -17%.” (END)
The point we are trying to make is that when you follow a terrible company for years you can get a feel for how it trades and we plan on teaching you this. (Our Momentum Options Trading Manual is coming in July, we promise). The same is true for companies that have solid businesses. You buy call options on stocks that you feel are going to go up and put options on stocks that you think are going to sink. It’s that simple. The risks are greater playing options but the returns can be incredible.
We profiled Apollo Group again on our Watch List last week because we knew the fall was coming but sometimes our portfolio is full so we miss out on a few trades. We don’t like to carry over 10 open positions at once and sometimes WE will miss trades because we don’t like to break our own rules. However, our Watch List has been hot and a lot of traders are writing to thank us for adding it.
We wrote a really good story on Apollo Group when the stock was at $73 back in October 2009. We could have bought a LEAP put option but the premiums on going 9-12 months out can be pretty expensive. Here is that article and it provides a more detailed look at the company’s shady business practices (If you like playing poker, you will love our analogies):
http://momentumoptionstrading.com/2009/10/28/apollo-group-has-a-skeleton-or-two/
We have a lot to talk about in our MEMBERS AREA today, and for those of you who are thinking of joining us, you have picked a great time. Not only are we nearly set to launch our trading manual, we also have plans to offer AUTO-TRADING by mid-July!
We are still hammering out the details, but we think we have found a great firm to handle your trades. We know many of you are busy, and the requests for auto-trading have not gone unheard. Both will be available soon so stay tuned!
As we head to press, the Dow is down 31 points t 10,121 while the S&P 500 is down by 2 points and was last seen at 1,071. The Nasdaq is higher by 3 points to 2,220. We will be back Sunday night with the Weekly Wrap. Oh, by the way, BP (BP, $27.31, down $1.43) is at 14-year lows. Next week is setting up to be a doozy, folks…
