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Tuesday, January 24th, 2012
1:00pm (EST)
Futures were weak throughout the night following a collapse in the Greece debt talks and got progressively worse as the European markets opened for trading. The weak open overseas translated into a lower start here at home as the bears try to stop the bulls recent momentum.
The European Union rejected Greece’s bondholders swap for a 4% interest rate on newer bonds in exchange for the current tab which puts the country at risk for a default, again. We have seen this circus before and Greece is only part of the problem as Portugal and Italy are next in-line.
Despite the worries, the market has bounced off its lows after holding short-term support which was prior resistance.
In earnings news, Coach (COH, $68.65, up $4.41) is trading higher after beating Wall Street’s estimates by 3 cents a share. It was the fifth-straight quarter Coach has beat estimates on average by 3 cents and we were looking for an earnings miss.
We talked about the company’s impressive numbers yesterday for 2011 and how they had come in ahead of the suit-and-ties for the last 4 quarters but we were convinced they would come up short, or lower guidance, and we were wrong.
The other earnings trade we wanted to take was EMC (EMC, $24.81, up $1.37) but we didn’t like yesterday’s action in the market and decided to stay on the sidelines. We have looked at the stock as a covered call trade and yesterday we peaked at the February 25 calls (EMC120218C00025000, $0.46, up $0.23), which are up 100%, but didn’t like the idea of having 2 all-or-nothing trades.
We are 13-1 for closed trades for 2012 and we have locked in half profits on a number of other trades so we haven’t taken any new trades this week. We see a number of new option trades we like, but if we learned anything in 2010 and the first half of 2011, it is choppy markets are hard to trade and its best sometimes to wait until we get a clearer picture.
We said Sunday night in our Weekly Wrap that Greece could weigh on the market all week and how the talking heads and pros were saying this was a done deal by Monday. No agreement has been reached, yet, and here it is Tuesday.
The Fed will also take center stage on Wednesday as it prepares to release the latest minutes along with the Rate Decision during Wall Street’s lunch break. There has been talk of more easing, or starting up the money printing press again, but with tax refunds starting to come out, we think the Fed stands pat. Tomorrow will also be a big day for Housing numbers.
The big news after the bell will be Apple (AAPL, $424.12, down $3.29) which will be reporting their quarterly results. The bulls have done of a great job of brushing-off Europe’s woes once again but this week is packed with earnings as 25% of the S&P companies will be confessing. This will be the most important one.
It’s still possible the bulls can push the July and April highs on an Apple beat-and-raise but we are in a win-win situation, either way, as we have continued to play the ride up while locking in profits along the way. At some point we are expecting a pullback but our Hard Stops will lock in our profits. We also have longer dated call options that should be okay, but, if the market does take a dip we will be ready to play the pullback.
As we head to press, the Dow is down 45 points to 12,663 after kissing a low of 12,613 while the S&P 500 is lower by 4 points to 1,312 after kissing 1,306. The Nasdaq is trying to rally the troops as it is showing a gain of 2 points to 2,786.
Our Aflac (AFL, $48.40, up $0.35) call option trade has just hit a 100% return so today hasn’t been too bad despite the Coach snafu. Dendreon (DNDN, $14.11, up $0.90) is on the move again and we are just watching the action. Subscribers, check the Members Area for the updates.
Tags: AAPL, Apple earnings, COH, dndn, EMC
Posted in Apple, Covered Calls, Earnings, Hot Stocks | Comments Off
Friday, January 20th, 2012
1:10pm (EST)
Everybody’s working for the weekend…
The market is mixed as we head into the second half of trading but it’s been a good day of triple-digit profit taking and we have more to come after the close when the January options officially expire.
For our Weekly Wrap subscribers, it means we could be looking at a bevy of double-digit gains as many of the stocks we told you to load up on in November and December should get called away as they are trading above our option strike price.
We have 10 winning trades that could get “called-away” today on the stocks we cover in our Weekly Wrap. The gains range from 18% on Dendreon (DNDN, $13.49, down $0.27), 27% on Clean Energy Fuels (CLNE, $13.96, up $0.13), 8% on Ford (F, $12.55, down $0.06), 19% on MGM Resorts (MGM, $12.69, down $0.12) and 17% on Vivus (VVUS, $12.13, down $0.23) just to name a few.
We have been money in picking consistent winners which has allowed us to go 16-0 in 2011 and possibly 10-0 to start 2012.
As far as yesterday’s Google (GOOG, $587.39, down $52.18) strangle option trade, here is what we said yesterday:
“A 10% move in Google would equate to a 63-point move in the stock and we could see that on an earnings miss to the downside. However, the upside may not be quite as huge if it is not a blowout quarter and could only be 5% or less which is still $30 but is it enough to create a possible strangle option trade?
The Google January 700 calls (GOOG120121C00700000, $1.10, down $0.20) and the January 575 puts (GOOG120121P00575000, $0.70, down $0.90) would cost $2 together and are a possibility but the stock would need to be at $702 or $573 for us to break even. At $704, or $571, the trade would double but again, the options expire tomorrow.
This is NOT an official option trade recommendation but we wanted to show you how strangle option trades work since we have a ton of new subscribers. The risk/ reward on this trade doesn’t look great and it may be better off to SELL these options but that is another strategy altogether and one we certainly don’t recommend on a $600+ stock.” (END)
Shares have traded to a low of $584 so far today and the January 575 puts (GOOG120121P00575000, $0.10, down $0.60) have opened at 79 cents and that was it as they will probably expire worthless. The Google January 700 calls (GOOG120121C00700000, $0.05, down $1.05) will expire worthless.
If we were playing “in-between” or “acey-deucey” we would have taken $2 out of the Google pot if we had sold these options, but again, it was way too much cash to put at risk if shares would have traded above $700 or below $575.
It’s also another reason why we rarely trade options on stocks over $100.
We have a lot to cover in our Members Area and we couldn’t have asked for a better week or month so far to start 2012. We have turned a $10,000 trading account into over $20,000 in 3 weeks and we have said 2012 is going to be a BIG year for us. We are 15-1 on closed trades for the year and you can request our track record by emailing us to see all of the trade details.
As we head to press, the Dow is up double-nickels (55 points) to 12,679 while the S&P is lower by 3 points to 1,311. The Nasdaq is down 7 points to 2,781.
We will be back Sunday night with the Weekly Wrap and more good news. We will also be providing an in-depth look at what this week’s rally has meant and where the market could be going. Until then, have a great weekend everyone!
Tags: CLNE, Dendreon options, dndn, F, GOOG, HGM
Posted in Covered Calls, Market Analysis, Market Commentary | Comments Off
Monday, January 9th, 2012
1:15pm (EST)
The market has traded near the flat line for much of today’s action with sentiment slightly negative. Perhaps, traders are worried over Alcoa’s (AA, $9.34) earnings after the bell which “officially” starts the 4Q earnings season. We don’t expect much from the company as an earnings miss could be in the cards but the Dow component doesn’t carry much weight except for sentiment. Shares do look tasty at current levels and if they slip a bit after earnings, pick some up. At some point, this will be a double-digit stock again.
Elsewhere, a couple of Biotech stocks we have mentioned over the years and last week are getting nice pops. Dendreon (DNDN, $13.70, up $1.35) continues to shoot higher after reporting better-than-expected sales for its prostate cancer drug, Provenge. We sent out a NEWS FLASH last week when shares broke above $10 and said to watch for further upside movement. The chart we showed you talked about the huge gap to fill if shares broke $12.50. The January 12.50 calls (DNDN120121C00012500, $1.65, up $0.80) have nearly doubled today. Giddy up!
Vivus (VVUS, $11.39, up $1.23) is up 12% on news its obesity drug, Qnexa, could get special labeling. The FDA asked the company to remove the “contraindication” for women of childbearing potential contained in the proposed label. The drug would remain contraindicated for women who are pregnant or who can have children. A contraindication typically indicates that a drug should not be taken because of the health risk that clearly outweigh the benefits.
Alcoa, Dendreon and Vivus are all current recommendations for our Weekly Wrap which went 16-0 in 2011. We have up to 6 trades that could be called away in a few weeks for nice double-digit profits if current levels hold.
We also wanted to update the Netflix (NFLX, $92.82, up $6.53) story from last week when we profiled shares at $77 and said a breakout could be coming. We outlined the “trading box” shares had been stuck in and we said if they broke $80, Netflix could be back at triple-digits again, quickly. The break above the 200-day moving average today is further bullishness.
We also profiled some expensive call options for Netflix that have done well since last Thursday but it wasn’t an “official” trade due to the cost. We usually like to trade 10 or 20 contracts on our trade recommendations and usually we won’t pay more than $2 for an option. At 10 contracts, a $2 option will cost you $2,000 which is a lot of money for some people to place on each trade.
The June 100 calls (NFLS120616C00100000, $14.50, up $3.55) were going for $7.50 last Thursday and would have cost $750 for one contract. A 10 contract trade would have cost $7,500. That is a big bet on a stock that has been more volatile than the market but at current prices it would have been nearly a double.
No worries, we closed out a triple-digit winner last week and we are looking to close a few more this week and next.
We have a lot to cover with our current trades and the New Trade we released this morning. As we head to press, the Dow is up 13 points, the S&P is up a point, while the Nasdaq is higher by 2 points.
Subscribers, check the Members Area for the updates.
Tags: dndn, Momentum stocks, momentum trading, NFLX, NFLX call options, VVUS
Posted in Hot Stocks, Market Analysis, Market Commentary | Comments Off
Thursday, January 5th, 2012
10:45am (EST)
Shares of Dendreon (DNDN, $11.03, up $3.43) were halted briefly after circuit breakers triggered on pending news. Shares have resumed trading after the company said sales of its prostate cancer drug, Provenge, more than tripled for the fourth quarter to $82 million compared to last year.
The company caught Wall Street off-guard by pre-announcing the results. Sales were up more than 25% from 3Q’s numbers and analysts were “only” expecting $70 million in sales for Provenge.
We wanted to show you a quick chart for Dendreon and the technical picture which just improved dramatically. You will see there is a huge gap to fill if shares clear $12.50. The stock fell from $35 to single-digits in a blink of an eye after Provenge sales missed estimates back in August 2011 which is when we saw a great opportunity to pick up shares for our Covered Call portfolio. We recommended the stock in October.
Here were our recent thoughts on Dendreon in our January 2, 2012 Weekly Wrap (this past Monday):
“Dendeon tested the low $7’s before closing above support at $7.50 mid-week. There is further risk down to $6.50 but we think shares will trend towards $10 in 2012 as the company awaits a buyout offer in the teens.” (END)
We are running a short-term special for our Weekly Wrap where you can get the publication at nearly no cost for 1-year if you sign up for a 1-year subscription to our Daily newsletter. We have also said we would also include our trading course, How to Trade Options on Momentum Stocks, at no charge (an $895 value).
The trading course also comes with videos and our next scheduled market and trade review will be this weekend. With 4Q earnings coming up, we show you how to prepare for possible upcoming trades. The special offer is available on the website through the weekend and then we will be dropping the promotion. Sign up for the 1-year Daily and Weekly for just $995 and you get 2 for the price of 1 which includes the option trading course. Shipping is also on the house.
Folks, 2012 is going to be an even better year to make profits than last year. We can feel it. We were one of the few option newsletters that had an incredible 2011 and we expect nothing less in 2012.
We will be updating the Dendreon story this weekend and we hope to see you there.
We will be back shortly with our midday update but stay locked-and-loaded. We see a couple of new trades we like.
Tags: Dendreon Halted, dndn
Posted in Hot Stocks | Comments Off
Monday, August 22nd, 2011
12:55pm (EST)
The market is getting a lift today as the bulls push resistance following a 4-week losing streak but the major indexes are off their highs. There hasn’t been any major headline news, negative that is, and economic gibberish doesn’t hit the tape until Tuesday which has given the bulls some breathing room. The bears have made their presence known by capping today’s gains and drawing blood but we still have another half of trading so anything can happen.
Before we go over the market’s numbers, we want to spend a few paragraphs talking about Seattle Genetics (SGEN, $14.50, down $0.54) which has been on a wild ride of late. After 14 years and $500 million in reserach, the company won its first approval from the Food and Drug Administration (FDA) on Friday for its innovative cancer drug, Adcetris, which treats two rare forms of cancer that attack the lymph nodes.
The drug will be used to treat Hodgkin’s lymphoma and systemic anaplastic large cell lymphoma. Patients who have already tried treating their disease with a bone marrow transplant or multiple rounds of chemotherapy will now have a new treatment option.
Adcetris was also a drug the FDA checked-off on for their “accelerated approval program”. One of the benefits, and one the FDA found especially appealing, was the fact it targets antibody to deliver the drug directly to cancerous tumor cells which saves the healthy cells.
Seattle Genetics will market Adcetris in the U.S. and Canada, while Takeda Group takes it global.
The stock made a nice pop on Friday and traded to a high of $15.93 before settling at $15.04. Shares were up strong in pre-market action, trading near $16 but have given back their gains after conflicting research reports.
Shares of Seattle Genetics have been under pressure even before Friday’s news as there was chatter the drug would be delayed in gaining approval. The stock hit a 52-week high of $21.41 in late June and we used the strength to close half positions in a trade we recommended back in early May when the stock was at $17. The options made 50% and we are still managing the other half.
We have been following the company for a few years and we told our subscribers we should hear good news before the end of August. We were looking for the stock to make a run up to $25 but we could get caught in the crossfire between a bull and a bear.
One brokerage firm believes Wall Street is under-estimating sales and says shares are at attractive entry prices, slapping an “Outperform” rating on the stock. Meanwhile, another brokerage firm reiterated its “sell” rating on the stock with a price target of $10.
We have done a ton of research on Seattle Genetics and we love their drug pipeline, not to mention their business model. Obviously, somebody’s research is flawed and we think the stock has been weak due to the overall market conditions along with the healthcare debate. Either way, we plan on digging into the company’s books a little deeper to see if we can find some clues.
As far as the market, the rally that was strong at the open has faded right at the resistance levels we went over this morning. The overseas markets are closed so the battle between the bulls and bears could get interesting in the final hour.
As we head to press, the Dow is up 47 points to 10,864 and has trade to a high of 11,020. The S&P is higher by 2 points and is at 1,125 following a run up to 1,145. The Nasdaq is advancing 5 points to 2,347 after kissing 2,397 at the open.
We will be back in the morning with a full update but the test at resistance and then the pullback doesn’t look good for the bulls.
Tags: About options trading, dndn, NASDAQ: SGEN, option trading, Seattle Genetics drug approval, SGEN, 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 BioTech, Market Analysis, Market Commentary | Comments Off
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Bulls Looking For Third-Straight Weekly Win
Friday, January 20th, 2012
1:10pm (EST)
Everybody’s working for the weekend…
The market is mixed as we head into the second half of trading but it’s been a good day of triple-digit profit taking and we have more to come after the close when the January options officially expire.
For our Weekly Wrap subscribers, it means we could be looking at a bevy of double-digit gains as many of the stocks we told you to load up on in November and December should get called away as they are trading above our option strike price.
We have 10 winning trades that could get “called-away” today on the stocks we cover in our Weekly Wrap. The gains range from 18% on Dendreon (DNDN, $13.49, down $0.27), 27% on Clean Energy Fuels (CLNE, $13.96, up $0.13), 8% on Ford (F, $12.55, down $0.06), 19% on MGM Resorts (MGM, $12.69, down $0.12) and 17% on Vivus (VVUS, $12.13, down $0.23) just to name a few.
We have been money in picking consistent winners which has allowed us to go 16-0 in 2011 and possibly 10-0 to start 2012.
As far as yesterday’s Google (GOOG, $587.39, down $52.18) strangle option trade, here is what we said yesterday:
“A 10% move in Google would equate to a 63-point move in the stock and we could see that on an earnings miss to the downside. However, the upside may not be quite as huge if it is not a blowout quarter and could only be 5% or less which is still $30 but is it enough to create a possible strangle option trade?
The Google January 700 calls (GOOG120121C00700000, $1.10, down $0.20) and the January 575 puts (GOOG120121P00575000, $0.70, down $0.90) would cost $2 together and are a possibility but the stock would need to be at $702 or $573 for us to break even. At $704, or $571, the trade would double but again, the options expire tomorrow.
This is NOT an official option trade recommendation but we wanted to show you how strangle option trades work since we have a ton of new subscribers. The risk/ reward on this trade doesn’t look great and it may be better off to SELL these options but that is another strategy altogether and one we certainly don’t recommend on a $600+ stock.” (END)
Shares have traded to a low of $584 so far today and the January 575 puts (GOOG120121P00575000, $0.10, down $0.60) have opened at 79 cents and that was it as they will probably expire worthless. The Google January 700 calls (GOOG120121C00700000, $0.05, down $1.05) will expire worthless.
If we were playing “in-between” or “acey-deucey” we would have taken $2 out of the Google pot if we had sold these options, but again, it was way too much cash to put at risk if shares would have traded above $700 or below $575.
It’s also another reason why we rarely trade options on stocks over $100.
We have a lot to cover in our Members Area and we couldn’t have asked for a better week or month so far to start 2012. We have turned a $10,000 trading account into over $20,000 in 3 weeks and we have said 2012 is going to be a BIG year for us. We are 15-1 on closed trades for the year and you can request our track record by emailing us to see all of the trade details.
As we head to press, the Dow is up double-nickels (55 points) to 12,679 while the S&P is lower by 3 points to 1,311. The Nasdaq is down 7 points to 2,781.
We will be back Sunday night with the Weekly Wrap and more good news. We will also be providing an in-depth look at what this week’s rally has meant and where the market could be going. Until then, have a great weekend everyone!
Tags: CLNE, Dendreon options, dndn, F, GOOG, HGM
Posted in Covered Calls, Market Analysis, Market Commentary | Comments Off