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Monday, March 30th, 2009
Don’t shoot the messenger but we knew it was going to be ugly and after an hour and half into the trading session the Dow is down 275 points, to 7,502. So much for holding that 7,600 level. There is not much green going on at the present moment although Amazon (AMZN, $70.41, down $0.11) managed to trade higher in the early going.
There are levels that could come into play today and most technicians are watching 775 for the S&P 500. The market may have thrown us a General Motors (GM, $2.72, down $0.90) curveball but we at least we fouled the pitch instead of whiffing.
The Family Dollar (FDO, $33.36, down $0.27) April 32.50 calls (FDODZ, $2.20, down $0.15) have held up well but did hit the $2.00 stop. No sour grapes there as many of you bagged at least a 100% return.
Blackstone (BX, $6.91, down $0.84) took a hit and fell below $7 so we are out. We also checked out of the Chipotle Mexican Grill (CMG, $65.15, down $3.35) and Mosaic (MOS, $42.36, down $4.69) trades but everything else looks good.
I bought some of the PowerShares QQQ (QQQQ, $29.74, down $1.08) April 29 puts (QAVPC, $0.83, up $0.34) this morning at 77 cents as insurance. It’s a play on the Nasdaq going lower. It’s a quick trade to make some cash but I’m not going to fall in love with it. Although I will if we kiss on the first date…
Rick Rouse
Rick@OptionsMentoring.com
Tags: Blackstone, Chipotle Mexican Grill, Mosaic, PowerShares QQQ
Posted in Market Analysis, Option Trades, Rick's Account | No Comments »
Friday, March 27th, 2009
It’s been an exciting week and we have been involved in a bunch of good trades lately. The market has had its ups and downs but the trend for the week has been higher. The Nasdaq proved it wasn’t its first rodeo and is now positive for 2009. Yeap, the 58 point pop put the Nasdaq at 1,587 which is higher than the 1,577 close we got on December 31. The market peaked in the first week of January so the index is still off its highs for the year but the bounce we have been calling for has been powerful.
So far the market has followed the road map we had planned and now that we are here, we have to figure out some moves for next week. In the Weekly Wrap and all this week I have been talking about Dow 7,600-7,800 and that we needed the S&P to hold 800. I also expected Thursday’s uptrend but I’m not sure how we go into the weekend.
It is easy to be bullish right now but so is the rest of world. The current rally has everyone talking which could be good or bad. A lot of what has got this rally started was the institutional buying (mutual fund managers buying stock) and now that they have drove prices higher, we need to be careful of how things shake out from here.
But that’s for me and the Weekend Wrap to figure out…
As far as Friday, it seems like it has been somewhat “safe” to leave positions open but I only like to do that if I have made solid gains or really believe in the trade. Otherwise, we are looking for quick profits and going on to the next trade. Did you notice that as soon as Best Buy (BBY, $37.67, up $4.21) gave us a huge return, I set a stop 15% below the current price?
The Best Buy April 35 calls (BBYDG, $3.60, up $2.05) were at $4.70 when I sent the blog out on Thursday which was right before noon and I said to set stops at $4.00. The calls had hit a high of $5 earlier in the session and by setting the stop at $4.00, you saved $400 if you bought 10 contracts. Yes, they could go higher on Friday and for the next three weeks for that matter but when you make 220% in a day then its hard to argue not to take profits off the table.
Family Dollar (FDO, $33.18, up $1.08) looks strong enough to hold over the weekend and the April 32.50 calls (FDODZ, $2.00, up $0.55) have nearly doubled from entry prices of $1.00-$1.10. Our target was $1.50 then $2.00 so technically this trade should have been closed. In any event, set stops at $1.40 to protect profits in case the market has a bad day Friday.
Since it is Friday, I thought I would share a story with those that are new to the blog.
The reason we trade options is to make money and there are days just like pro poker players where we have to “grind it out”. However, what brings us to the table everyday is the opportunity to win big pots and there are some out there in options trading that can make you an incredible amount of money. Take First Solar (FSLR, $150.39, up $16.41) for instance.
On Thursday, the shares opened at $137 and held steady for the first 90 minutes of trading and then took off. First Solar is on my Watch List but sometimes when stocks get over $100, the near-term “out-of-the-money” calls can be expensive. However, the way out-of-the-money options can be really cheap.
The stock started the week at $130 and traded as low as $122 on Monday and to a low of $109 on St. Patty’s Day. Obviously, the thought of the stock making a run to $200 never crossed my mind because it would have to make a 50% move by April 17th. Not impossible but I was really wasn’t watching the April 190 calls (HJQDR, $1.05, up $0.95) yesterday morning.
Funny thing happened though. When the president came out and mentioned the word “solar”, this stock took off like a rocket. The calls options I just mentioned opened at 30 cents Thursday morning and had closed at 10 cents on Wednesday.
Basically that means if you were quick enough to see that action you could have bought 50 call options at 30 cents a contract which would have cost you about $1,500 (50 contracts x .30 x 100). A couple of hours later you could have sold these calls for a high of $2.95. In others words, that $1,500 had the potential to make you $15,000. Wow. Think about that for a minute. If you had bought just 10 contracts for $300, it could have been worth $3,000. That my friends is the pot of gold that lies at the end of the rainbow sometimes.
I didn’t get in on this trade but I was this close to bagging a 3,000% return… Now do you see why options are the most powerful tool ever for making money?
I’m not sure if I’ll post anymore today as I’ve got a full plate but watch Chipotle Mexican Grill (CMG, $70.75, up $5.29). It’s an old favorite of the blog’s and lately this stock has also been lightning out of a bottle. The April 75 calls (CMGDO, $1.10, up $0.80) were up 265% on Thursday and could have more room to run. If they come down to 95 cents, start half positions.
Also, watch Amazon.com (AMZN, $73.69, up $1.29). The April 80 calls (ZQNDP, $1.65, up $0.30) traded as high as $2.10. Amazon could make a run to $80 next week where it might run into resistance but if these calls can trade down to $1.20-$1.30 then you could also think about a half small position in these options as well. I love the Kindle, Amazon’s new wireless reading device. This thing could be a huge success much like the iPod is. It’s $359 a pop which will add serious bucks to Amazon’s bottom line and could be Border’s (BGP, $0.70, up $0.07) final nail in the coffin…
And finally, I have a limit order to buy 15 options on the Mosaic (MOS, $48.20, up $2.73) April 60 calls (MOSDL, $0.55, up $0.35) at 60 cents. I recently profiled a Potash (POT, $89.30, up $5.78) trade on the April 100 calls (PYPDT, $3.00, up $1.75) which were stopped out for a loss. They were profiled at $1.70 and sank below a $1 which forced us out of the trade. The Mosaic trade may be a little of a gamble but we have three weeks for the stock to make a run past $60.
I’ll be back Sunday night and if you haven’t signed up for the Weekly Wrap, scribble your email address in the sign-up box right above my mugshot.
Rick Rouse
Rick@OptionsMentoring.com
Special Notice: I have nearly completed a trading manual/ course that will be giving away all of my secrets (sly grin) and we plan on having it ready soon. I’m not sure of what the price is going to be but I would like to offer my longtime readers a super duper discount. Even for the newbies, I’d like to extend the same offer. The trading manual will cover things like how to open a trading account, how to find trades, understanding charts, and so much more. I am taking reservations now and will keep a list of those who email me. There is no obligation to buy, I just want to give everybody this special deal because the demand for me to write a trading manual has increased weekly since I started the blog 1 year ago. So send me an email if you are interested and also share with me what you like or don’t like about the blog and anything else you feel like downloading on me. Have a good weekend and I’ll see you Sunday night…
Tags: Best Buy, Chipotle Mexican Grill, Mosaic, options blog, Potash
Posted in Company Commentary, Hot Stocks, Market Analysis, Option Trades, Rick's Account, Sectors, Strategies, Uncategorized | No Comments »
Wednesday, October 15th, 2008
The market is down halfway through the session and Bernanke is on deck and should be speaking any minute now.
The Dow is down 324 points to 8,987.
It’s frustrating to see the market down for those who are bullish but be patient. The sledding will be choppy but until the Dow and Nasdaq get on a mini winning streak, it’s going to remain that way.
Google (GOOG, $347.71, down $15.00) will be announcing earnings after the close on Thursday. I’m telling you, this one could get interesting. Google’s 52-week low is $310, its high – $747. For a possible strangle earnings trade on Google look at these options.
The October 400 calls (GOPJT, $5.10, down $2.90) and the October 290 puts (GGDVR, $3.40, up $1.15). Together, they would cost $8.50. A 60 point move in Google could give you an 8%-10% gain for a two-day trade.
Have a Coke and a smile brother. Coca-Cola (KO, $45.73, up $2.00) announced a 15% jump in earnings and is eating PepsiCo’s (PEP, $53.51, down $0.89) lunch.
Bernanke just hit the podium and we have headed lower. The Dow is now down over 400 points. He looks nervous.
Good to see Apple (AAPL, $104.28, up $0.19) above $100 again. The November 120 calls (QAAKD, $6.05, down $0.05) should be bought two-to-one against the Novemebr 80 puts (QAAWP, $3.90, up $0.20) if you bullish. Vice-versa if you are bearish.
Chipotle Mexican Grill (CMG, $41.63, down $3.92) has made another 52-week low. Earnings are due out on October 22. Regular readers of the blog know all about this stock first hand. It’s been our own personal ATM over the past year. Numerous negative analyst reports have popped up this week on the restaurant sector which has pushed Chipotle down to ridiculously cheap levels as some would like to think. That may be so, but if they miss earnings, then we could see Chipotle in the low $30′s.
The October 45 puts (CJYVI, $4.40, up $2.25) are getting some love and have doubled this morning. Sometimes it pays to get out of bed early. They opened at $2.15.
Chipotle could still have some more downside risk but if they do miss earnings, the stock may be too cheap to pass up if it get in the $20′s.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Apple, Ben Bernanke, Chipotle Mexican Grill, Coca-Cola, Google's earnings, PepsiCo
Posted in Company Commentary | No Comments »
Thursday, July 3rd, 2008
After spending the morning in positive territory, the market faded yesterday as oil climbed to a new high of $144 a barrel on supply concerns and the tension brewing in the Middle East. News that Israel or the United States could possibly attack Iran had the market walking on eggshells. Iran is the world’s 4th biggest oil producer and is OPEC’s 2nd largest exporter. Turmoil in the Middle East is always a market mover and yesterday was no different.
Also weighing on the market was General Motors (GM, $9.98, down $1.77). On Monday I said there was a good chance GM falls below $10 and that has now happened. After a brief scare, the July 10 puts (GMSB, $1.10, up $0.72) exploded for a 190% gain yesterday. These puts have nearly doubled so protect your positions accordingly.
Merrill Lynch (MER, $31.15, down $1.10) dropped another 40 cents after yesterday’s blog update and the July 32.50 puts (MERSA, $2.86, up $0.61) are up 33% from an entry price of $2.15.
The FedEx (FDX, $74.70, down $1.67) July 80 puts (FDXSP, $5.60, up $1.00) are up 250% from an entry price of $1.59. Some of you may have set stops in the $4.50 range but raise it up to $5.00-$5.25 if you are still in the position.
Another stock on the verge of a MAJOR breakdown is Chipotle Mexican Grill (CMG, $80.05, down $1.60). The stock is no stranger to the blog as I have covered it numerous times in the past. It’s a stock that I have felt has been way overvalued for quite some time even when the market was doing well. However, Chipotle lost $7 on Monday and hit a low of $79 on Tuesday. From where I sit, it looks like this one could fall to the low $70′s. The company reports earnings on July 23. The July 75 puts (CMGSO, $1.65, up $0.20) have already tripled since Monday but they may have more room to run. If they are still under the $2.00 level after the market opens, they may be good for a quick trade up to $3.00 if Chipotle continues lower. The options expire before Chipotle announces earnings so we shouldn’t get much upside volatility with the stock in a downtrend.
And finally, I mentioned the Nokia (NOK, $23.67, down $0.54) July 20 puts (NAYSD, $0.20, unchanged) which are 15% out-of-the-money based on the stock price. They may still be a reach but the July 22.50 puts (NAYSX, $0.70, up $0.15) were up 27%.
Futures are pointing towards a higher opening this morning despite a weak payroll and unemployment report. The market is closing at 1:00PM EST today and will be closed for July 4.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Chipotle Mexican Grill, GM puts double
Posted in Company Commentary, Market Analysis | No Comments »
Wednesday, April 23rd, 2008
Yahoo (YHOO, $28.54, down$0.01) posted better-than-expected earnings last night but the numbers fell short in what investors were hoping would be a blowout quarter. The company reported 1Q profits of $542 million, or $0.37 a share. The earnings were only a couple of pennies higher than what Wall Street had forecast and put any chance of Microsoft (MSFT, $30.25, down $0.17) raising its bid at slim and none. That was the case anyway as Microsoft had already said before Yahoo’s earnings release, regardless of the numbers, that it would not raise it bid.
Yahoo said it was still talking with both News Corp (NWS, $18.50, down $0.44) and Time Warner (TWX, $14.64, down $0.31) but Microsoft is their best deal going and the deadline is Saturday for Yahoo to accept. This should get interesting but I seriously doubt Microsoft raises its offer. In after-hours trading last night, Yahoo was down 15 cents while Microsoft was up 21 cents. No matter what happens, the big winner here is Google (GOOG, $550.00, up $17.21). Even if Microsoft is successful in acquiring Yahoo it will take 12-18 months for both companies to integrate and by then Google will have only gotten stronger. BTW, the May 500 calls (GOPEO, $60.80, up $16.40) were at $7.00 last Thursday.
Chipotle Mexican Grill (CMG, $113.15, down $5.13) fell another two bucks after I talked about what McDonald’s (MCD, $58.35, down $0.32) earnings could mean for Chipotle. The May 105 puts (CMGQA, $4.50, up $1.30) were active yesterday.
Intrepid Potash (IPI, $50.40, up $18.40) zoomed nearly 58% in its first day of trading. The stock opened at $65.00. This brings me to a point about IPO’s. Even though our focus is on options, if you`re try to buy an IPO on its first day of trading…Don`t place a pre-opening “market order”. Some people probably did yesterday morning and were filled at the open at $65. They are looking at nearly a 25% loss. Intrepid seems too “hot” right now not to trade higher and yesterday’s call of a 50% gain was on point. The stock is not “optionable” right now meaning you can’t buy calls or puts. Probably in 30 days options will begin to trade. Of course, all of this did indeed mean good news for Potash (POT, $214.83, up $6.04). The stock is on F-I-R-E!!! The May 200 calls (PYPEX, $24.70, up $3.80) were profiled a little over a week ago at $6.40 and are now up three-fold. Nice.
Oh yeah. Airline stocks got hit hard…again. You can’t say I didn’t warn you: AMR Corp (AMR, $7.02, down $1.18), Delta (DAL,$6.80, down $1.40) and Northwest (NWA, $7.47, down $1.59) all fell 15%-17%. In less than two weeks AMR has dropped from $9.48 to $7.02, Delta was at $10.01 and now sits at $6.80 and Northwest from $10.96 to $7.47. Folks, that’s a 30% fall from grace and the scary thing for the Airline sector is it may not be over.
As you can see, some stocks are doing rather well despite economic pressures while others are folding like a cheap lawn-chair. Our option mentoring program will show you how you don’t care if a stock goes up or down – it’s a Non-Directional trade! In fact, you’ll still make money if the stock moves up 20% or down 20% from where you entered. If you would like to learn more about these strategies then take advantage of our free Monthly Cash Flow Video DVD Seminar by clicking here.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Chipotle Mexican Grill, CMG, market order, YHOO
Posted in Earnings | No Comments »
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Why I Love Trading Options
Friday, March 27th, 2009
It’s been an exciting week and we have been involved in a bunch of good trades lately. The market has had its ups and downs but the trend for the week has been higher. The Nasdaq proved it wasn’t its first rodeo and is now positive for 2009. Yeap, the 58 point pop put the Nasdaq at 1,587 which is higher than the 1,577 close we got on December 31. The market peaked in the first week of January so the index is still off its highs for the year but the bounce we have been calling for has been powerful.
So far the market has followed the road map we had planned and now that we are here, we have to figure out some moves for next week. In the Weekly Wrap and all this week I have been talking about Dow 7,600-7,800 and that we needed the S&P to hold 800. I also expected Thursday’s uptrend but I’m not sure how we go into the weekend.
It is easy to be bullish right now but so is the rest of world. The current rally has everyone talking which could be good or bad. A lot of what has got this rally started was the institutional buying (mutual fund managers buying stock) and now that they have drove prices higher, we need to be careful of how things shake out from here.
But that’s for me and the Weekend Wrap to figure out…
As far as Friday, it seems like it has been somewhat “safe” to leave positions open but I only like to do that if I have made solid gains or really believe in the trade. Otherwise, we are looking for quick profits and going on to the next trade. Did you notice that as soon as Best Buy (BBY, $37.67, up $4.21) gave us a huge return, I set a stop 15% below the current price?
The Best Buy April 35 calls (BBYDG, $3.60, up $2.05) were at $4.70 when I sent the blog out on Thursday which was right before noon and I said to set stops at $4.00. The calls had hit a high of $5 earlier in the session and by setting the stop at $4.00, you saved $400 if you bought 10 contracts. Yes, they could go higher on Friday and for the next three weeks for that matter but when you make 220% in a day then its hard to argue not to take profits off the table.
Family Dollar (FDO, $33.18, up $1.08) looks strong enough to hold over the weekend and the April 32.50 calls (FDODZ, $2.00, up $0.55) have nearly doubled from entry prices of $1.00-$1.10. Our target was $1.50 then $2.00 so technically this trade should have been closed. In any event, set stops at $1.40 to protect profits in case the market has a bad day Friday.
Since it is Friday, I thought I would share a story with those that are new to the blog.
The reason we trade options is to make money and there are days just like pro poker players where we have to “grind it out”. However, what brings us to the table everyday is the opportunity to win big pots and there are some out there in options trading that can make you an incredible amount of money. Take First Solar (FSLR, $150.39, up $16.41) for instance.
On Thursday, the shares opened at $137 and held steady for the first 90 minutes of trading and then took off. First Solar is on my Watch List but sometimes when stocks get over $100, the near-term “out-of-the-money” calls can be expensive. However, the way out-of-the-money options can be really cheap.
The stock started the week at $130 and traded as low as $122 on Monday and to a low of $109 on St. Patty’s Day. Obviously, the thought of the stock making a run to $200 never crossed my mind because it would have to make a 50% move by April 17th. Not impossible but I was really wasn’t watching the April 190 calls (HJQDR, $1.05, up $0.95) yesterday morning.
Funny thing happened though. When the president came out and mentioned the word “solar”, this stock took off like a rocket. The calls options I just mentioned opened at 30 cents Thursday morning and had closed at 10 cents on Wednesday.
Basically that means if you were quick enough to see that action you could have bought 50 call options at 30 cents a contract which would have cost you about $1,500 (50 contracts x .30 x 100). A couple of hours later you could have sold these calls for a high of $2.95. In others words, that $1,500 had the potential to make you $15,000. Wow. Think about that for a minute. If you had bought just 10 contracts for $300, it could have been worth $3,000. That my friends is the pot of gold that lies at the end of the rainbow sometimes.
I didn’t get in on this trade but I was this close to bagging a 3,000% return… Now do you see why options are the most powerful tool ever for making money?
I’m not sure if I’ll post anymore today as I’ve got a full plate but watch Chipotle Mexican Grill (CMG, $70.75, up $5.29). It’s an old favorite of the blog’s and lately this stock has also been lightning out of a bottle. The April 75 calls (CMGDO, $1.10, up $0.80) were up 265% on Thursday and could have more room to run. If they come down to 95 cents, start half positions.
Also, watch Amazon.com (AMZN, $73.69, up $1.29). The April 80 calls (ZQNDP, $1.65, up $0.30) traded as high as $2.10. Amazon could make a run to $80 next week where it might run into resistance but if these calls can trade down to $1.20-$1.30 then you could also think about a half small position in these options as well. I love the Kindle, Amazon’s new wireless reading device. This thing could be a huge success much like the iPod is. It’s $359 a pop which will add serious bucks to Amazon’s bottom line and could be Border’s (BGP, $0.70, up $0.07) final nail in the coffin…
And finally, I have a limit order to buy 15 options on the Mosaic (MOS, $48.20, up $2.73) April 60 calls (MOSDL, $0.55, up $0.35) at 60 cents. I recently profiled a Potash (POT, $89.30, up $5.78) trade on the April 100 calls (PYPDT, $3.00, up $1.75) which were stopped out for a loss. They were profiled at $1.70 and sank below a $1 which forced us out of the trade. The Mosaic trade may be a little of a gamble but we have three weeks for the stock to make a run past $60.
I’ll be back Sunday night and if you haven’t signed up for the Weekly Wrap, scribble your email address in the sign-up box right above my mugshot.
Rick Rouse
Rick@OptionsMentoring.com
Special Notice: I have nearly completed a trading manual/ course that will be giving away all of my secrets (sly grin) and we plan on having it ready soon. I’m not sure of what the price is going to be but I would like to offer my longtime readers a super duper discount. Even for the newbies, I’d like to extend the same offer. The trading manual will cover things like how to open a trading account, how to find trades, understanding charts, and so much more. I am taking reservations now and will keep a list of those who email me. There is no obligation to buy, I just want to give everybody this special deal because the demand for me to write a trading manual has increased weekly since I started the blog 1 year ago. So send me an email if you are interested and also share with me what you like or don’t like about the blog and anything else you feel like downloading on me. Have a good weekend and I’ll see you Sunday night…
Tags: Best Buy, Chipotle Mexican Grill, Mosaic, options blog, Potash
Posted in Company Commentary, Hot Stocks, Market Analysis, Option Trades, Rick's Account, Sectors, Strategies, Uncategorized | No Comments »