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Friday, October 30th, 2009
9:15am (EST)
The market rebounded in strong fashion yesterday as the bulls pushed the Dow higher by 200 points and back near the 10,000 level. The index finished at 9,962 after a better-than-expected 3Q GDP (gross domestic product) number and we have mentioned the current battle taking place over Dow 10,000. GDP surged to an annualized growth rate of 3.5% which was better than the expected increase of 3.2%.
The rally was impressive but the bears still have a slight edge for the week. We have been talking about market volatility and we are clearly seeing evidence of that this week. One bit of negative news that was lost in the shuffle yesterday was the initial jobless claims number which totaled 530,000. This was slightly more than the 525,000 initial claims that were widely expected. The increase may not look like a big deal but it is still a pretty bad number…
We wanted to spend some time picking on Wall Street’s analysts this morning because some of the upgrades/ downgrades they make are puzzling. There were a couple of classic examples of an analyst showing up late to the party or your left wondering and scratching your head on some of these calls.
Let’s start with this one…
One brokerage firm downgraded First Solar (FSLR, $126.47, down $25.11) from Outperform to Neutral yesterday and cut its price target from $170 to $120. They went on to say, “We are downgrading First Solar to Neutral based on declining margin profile.”
As you know, the company missed on its revenue numbers when they reported earnings but we had our subscribers in the trade before the fact. So if it gets to $120 do they come out with a Buy rating and a price target of $170?
We profiled some put options on First Solar on Tuesday and many our subscribers made some incredible returns. The options were at $1.00 when we profiled the trade in our Members Area and zoomed to a high of $3.99 on Thursday. We had a feeling that the company could come in light on revenues and many of you were brave enough to go short by using the puts.
Here is another one…
Piper Jaffray downgraded Activision Blizzard (ATVI, $11.09, down $0.30) to Neutral and lowered its price target from $13 to $12. Geez, the stock has been stuck in a range of $11-$13 for six months!
We wanted to “pick on the Piper” today because they also came out with a Buy rating on Imax (IMAX, $10.78, up $0.99). We were recently stopped out of an Imax trade that we profiled in August and at one point we were up over 75%. A breakdown in the stock had been going on since Monday before yesterday’s upgrade. We were stopped out for a 10% gain but we wish the Piper would have piped before the stock dipped below $10…
We love watching the upgrades and downgrades that hit the tape and they can cause huge price swings in stocks. However, sometimes these analysts crack us up…
We have had an incredible week with our trade picks as we have closed two triple-digit winners for the portfolio. We also have stops in place to protect another 100% return and we are excited as we head into November and the rest of the year. We expect the volatility to remain and hopefully it gets even more volatile. Remember, we aren’t bullish or bearish, we are BOTH.
Current subscribers, please check the Members Area for the updates.
Tags: First Solar, momentum options, MomentumOptionsTrading.com, options help, options mentoring, options track record, options trading, trading options
Posted in Commodities, Entertainment Stocks, Hot Stocks, Market Analysis, Trading Psychology | Comments Off
Tuesday, October 27th, 2009
12:40 pm (EST)
The market is higher today but the Dow isn’t showing a lot of muscle despite some good news out there today. Normally, when IBM (IBM, $121.51, up $1.40) announces that it is doubling the size of its stock buyback program we would get a bigger pop than 57 points on the Dow. At 9,925, the Dow is still holding the 9,900 level we talked about the other day but if you are a bull on the front line you have got to be nervous.
IBM’s board approved an additional $5 billion in stock buybacks, bringing the company’s total to over $9 billion in a reflection of the company’s strong cash coffers. The stock was trading lower for much of the morning until word hit the Street. The stock has come off its 52-week high of $128.61 but the company remains one of the best Tech companies out there.
Wynn Resorts (WYNN, $57.39, down $5.68) is down 9% despite reporting better-than-expected earnings. The company reported earnings of $0.33 a share, versus year ago results of $0.49 a share. Wall Street had penciled in estimates of $0.15/ share. Revenue came in at $773 million, which compares to estimates of $723 million.
Revenue was helped with the opening of the Encore at Wynn Las Vegas casino resort, which debuted in December 2008. The numbers were not included in the company’s results from the last year. Wynn also raised $1.6 billion from an IPO on the Hong Kong Stock Exchange helping their revenue jump by 1% for the quarter.
We mentioned Baidu.com (BIDU, $377.99, down $54.88) this morning before the bell and the stock opened at $355, down $77, and hit a low of $353. We certainly didn’t expect a 13% move in the stock and we normally don’t even look at options on stocks over $200 let alone $432 which is where Baidu closed at yesterday. However, the move was so massive we wanted to see what kind of cash option traders we taking in for the ones who bought put options on Monday.
The BIDU November 350 puts (BPJWJ, $6.58, up $4.43) were going for $2.15 before the close yesterday and are up over 200%. Wow. With the stock at $430 on Monday these puts were $80 out-of-the-money. If you wanted to do a strangle trade you could have went out and bought the BIDU November 510 calls (BPJKM, $0.15, down $2.85) for $3.
Of course, the calls are breaking down like a rented mule but you would have made more than enough on the put options to offset the loss on the calls. Together, the calls and puts would have cost $5.15, or $5,150 for 10 contracts of each. If you closed both options right now you would bring in $6.58 for the put options and $0.15 for the call options for a total of $6.73, or $6,730. That comes out to a 30% return but if the shares would not have moved 13% then you were probably looking at a small loss.
One company that we are watching today is First Solar (FSLR, $151.93, down $2.94) which reports earnings on Wednesday. The options are pricing a 15% move in the stock which means after earnings the stock could be at $125-ish or $175-ish. We offer our thoughts on how this one can be played in the Members Area and if we were in Vegas we would lean towards the $125 level after the dust settles. However, we also know the market can push the stock to $175 on any good news.
Current subscribers, check the Members Area for the Current Trade updates and our thoughts on First Solar.
Tags: Baidu.com, earnings option trades, First Solar, IBM, option mentoring, option trading, options blog, options track record
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Market Commentary, Option Trades | Comments Off
Tuesday, September 22nd, 2009
12:40pm (EST)
Dendreon (DNDN, $29.83, up $0.37) popped over $30 again this morning after an analyst initiated coverage of the biotech company with an “Outperform” rating and a $40 price target…
It looks like we left some on the table with First Solar (FSLR, $160.63, up $3.38). The October 165 calls (HJQJM, $7.10, up $1.40) were profiled at $2.00 on 9/10 in the Members Area and we were out at $3.20 on half and $1.95 on the other half by 9/14. We cleared 30% but those of you who went for gold despite the volatility are up a whopping 250%…
Fairchild Semiconductor (FCS, $11.39, up $0.34) has made a huge run since we last visited the stock in July. At the time, shares were going for $8-and-change I was wrong on the August 10 calls at the time. Sometime we are off by thismuch when it comes to finding great option trades and this appears to be the case with this one.
AutoZone (AZO, $152.64, down $0.91) is slightly lower today. The company will report earnings on Wednesday and this is always a fun one to watch after they report.
There are no new trade recommendations today. We are holding what we got…
Rick@MomentumOptionsTrading.com
Tags: AutoZone, Dendreon, Fairchild Semiconductor, First Solar, options picks, options trading strategies
Posted in BioTech, Earnings, Hot Stocks, Market Analysis, Option Trades | Comments Off
Friday, September 11th, 2009
1:20pm (EST)
The market is trending lower today although the bulls were out early. The Dow is currently down 49 points to 9,578 while the Nasdaq is off by 12 to 2,072. The S&P 500 is lower by 5 points and stands at 1,039. Although stocks are struggling, gold is back over $1,000 and has managed to make its way to a fresh high of $1,010/ ounce for the year.
FedEx (FDX, $77.26, up $4.60) is up 6% after raising its earnings forecast. I had mentioned earlier in the week that this is “pre-earnings” announcement season and the company said it now expects to earn of $0.58/ share. FedEx had previously predicted earnings of $0.30-$0.45/ share. Wall Street had been looking for a profit of $0.44/ share. Although international revenues are improving, the company is getting better numbers thru cost cutting.
I’ll be back Sunday night with the Weekly Wrap. Oh, don’t forget to thank a Vet today and take 60 seconds to remember our lost brothers and sisters for 9/11….
Subscribers, please check the Members Area for a 1:20pm trade update!
Rick@MomentumOptionsTrading.com
Tags: Disney, FedEx, First Solar, options blog, options picks, options track record, options trading service
Posted in Gold, Market Analysis, Option Trades | Comments Off
Wednesday, September 2nd, 2009
1:10pm (EST)
First Solar (FSLR, $116.89, up $1.80) has been all over the map today but we took advantage of this morning’s dip to $112.
Here were my thoughts for our subscriber from this morning:
“Well, I put my money where my mouth was. I entered a long position today at $1.25 and I spelled out my plans in the original trade write-up. I’m looking for a run to $1.85 or even $1.75 which would return $500 for every 10 put contracts you own. So here is the game plan.
The stock was down another 50 cents in after-hours trading and touched a low of $114. If the stock OPENS lower on Wednesday when the opening bell rings, close the position. I normally don’t buy options right after the market opens because the sharks can really eat you alive and premiums can get inflated. However, sometimes it is okay to SELL (or close) a position into strength. In this case, we are hoping for more downside for First Solar.
If we can get below $114 then these options should easily hit our target.” (END)
The September 100 puts (QHBUT, $1.20, down $0.30) traded to a high of $1.89 this morning which was right where our target was. Out entry price was $1.25 so if you got out at $1.85 your return was 48%. It was a good omen to the start of our trading service which went live yesterday. Remember, to get any new trade recommendations and an in-depth look as to why we like an option trade you must be a subscriber.
I still like these put options but the trade is over. I had mentioned this was going to be a quick trade and our subscribers were in and out in less than 24 hours. If you have a game plan going in it takes all of the emotion out of trading.
With the market trying to find its way we are still in a trader’s market…and that means tighter stops and quick entry and exit points. Once we develop a trend we should be able to get better returns with longer time frames. For now, we have to take what the market gives us.
Friday will be a BIG day as we get the unemployment numbers. I’m not sure which way the market will go after the figures are released but I have penciled in a huge move before the holiday weekend. The bulls will be back from summer vacations next week so we will see if they are buying or selling. The bears are trying to hold this week’s momentum and will pounce on an awful unemployment number.
Rick@MomentumOptionsTrading.com
Tags: First Solar, fslr, option picks
Posted in Option Trades | Comments Off
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Market Still Looks Tired
Tuesday, October 27th, 2009
12:40 pm (EST)
The market is higher today but the Dow isn’t showing a lot of muscle despite some good news out there today. Normally, when IBM (IBM, $121.51, up $1.40) announces that it is doubling the size of its stock buyback program we would get a bigger pop than 57 points on the Dow. At 9,925, the Dow is still holding the 9,900 level we talked about the other day but if you are a bull on the front line you have got to be nervous.
IBM’s board approved an additional $5 billion in stock buybacks, bringing the company’s total to over $9 billion in a reflection of the company’s strong cash coffers. The stock was trading lower for much of the morning until word hit the Street. The stock has come off its 52-week high of $128.61 but the company remains one of the best Tech companies out there.
Wynn Resorts (WYNN, $57.39, down $5.68) is down 9% despite reporting better-than-expected earnings. The company reported earnings of $0.33 a share, versus year ago results of $0.49 a share. Wall Street had penciled in estimates of $0.15/ share. Revenue came in at $773 million, which compares to estimates of $723 million.
Revenue was helped with the opening of the Encore at Wynn Las Vegas casino resort, which debuted in December 2008. The numbers were not included in the company’s results from the last year. Wynn also raised $1.6 billion from an IPO on the Hong Kong Stock Exchange helping their revenue jump by 1% for the quarter.
We mentioned Baidu.com (BIDU, $377.99, down $54.88) this morning before the bell and the stock opened at $355, down $77, and hit a low of $353. We certainly didn’t expect a 13% move in the stock and we normally don’t even look at options on stocks over $200 let alone $432 which is where Baidu closed at yesterday. However, the move was so massive we wanted to see what kind of cash option traders we taking in for the ones who bought put options on Monday.
The BIDU November 350 puts (BPJWJ, $6.58, up $4.43) were going for $2.15 before the close yesterday and are up over 200%. Wow. With the stock at $430 on Monday these puts were $80 out-of-the-money. If you wanted to do a strangle trade you could have went out and bought the BIDU November 510 calls (BPJKM, $0.15, down $2.85) for $3.
Of course, the calls are breaking down like a rented mule but you would have made more than enough on the put options to offset the loss on the calls. Together, the calls and puts would have cost $5.15, or $5,150 for 10 contracts of each. If you closed both options right now you would bring in $6.58 for the put options and $0.15 for the call options for a total of $6.73, or $6,730. That comes out to a 30% return but if the shares would not have moved 13% then you were probably looking at a small loss.
One company that we are watching today is First Solar (FSLR, $151.93, down $2.94) which reports earnings on Wednesday. The options are pricing a 15% move in the stock which means after earnings the stock could be at $125-ish or $175-ish. We offer our thoughts on how this one can be played in the Members Area and if we were in Vegas we would lean towards the $125 level after the dust settles. However, we also know the market can push the stock to $175 on any good news.
Current subscribers, check the Members Area for the Current Trade updates and our thoughts on First Solar.
Tags: Baidu.com, earnings option trades, First Solar, IBM, option mentoring, option trading, options blog, options track record
Posted in Company Commentary, Earnings, Hot Stocks, Market Analysis, Market Commentary, Option Trades | Comments Off