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Thursday, July 30th, 2009
11:15pm (EST)
Ford (F, $7.39, up $0.27)
December 6 calls (FLI, $1.85, up $0.20)
Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 48%
Stop: $1.45
December 7 calls (FLJ, $1.20, up $0.13)
Entry Price: $1.00 (5/18/09)
Exit Price: $1.50-$2.00
Return: 20%
Stop: 75 cents, raise to $1.00
Action: Another new 52-week high for Ford. Nothing else I can add here.
Cisco Systems (CSCO, $21.98, up $0.26)
October 20 calls (CYQJD, $2.55, up $0.10)
Entry Price: $1.50 (6/2/09)
Exit Price: $3.00
Return: 70%
Stop: $2.00
Action: The stock hit a high of $22.40 and the call options traded as high as $2.92 which was a stone’s throw away from our exit target. Tech remains strong and we’ve been in this trade for 2 months now. It is starting to pay dividends and it wouldn’t have been a bad idea to close half the trade up at those levels. That makes it a risk-free trade from here on out.
Bank of America (BAC, $13.97, up $0.45)
November 15 calls (BYOKO, $1.26, up $0.11)
Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: -17%
Stop: If the stock falls below $11, close the position.
Action: Shares broke $14 today and you gotta love the action in BofA this week.
IBM (IBM, $117.86, up $0.60)
August 105 calls (IBMHA, $13.00, up $1.20)
Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 253%
Stop: $11.00, raise to $12
August 115 calls (IBMHC, $4.00, up $0.50)
Entry Price: $1.05 (7/16/09)
Exit Price: $2.00 (7/24/09 1/2 the trade was closed, other half sold at $3.25 yesterday)
Return: 245% together
Stop: CLOSED
Action: We were taken out of the 115’s on Wednesday and we have raised the stop on the 105’s call options. Yeah, the 115’s traded as high as $5.13…
Cerner (CERN, $65.57, up $0.44)
August 70 calls (CQNHN, $0.75, down $0.60)
Entry Price: $1.30 (7/27/09)
Exit Price: $2.20
Return: -42%
Stop: Lifted
Action: The calls opened at 25 cents and I said to “play the rebound” meaning we knew the stop was going to get hit and we knew this was an earnings trade. The options have another 3 weeks before they expire.
Microsoft (MSFT, $23.81, up $0.01)
August 23 calls (MSQHQ, $1.07, down $0.06)
Entry Price: $0.78 (7/27/09)
Exit Price: $1.60
Return: 99%
Stop: CLOSED
Action: I’ve been talking all week about this being a “short-term” trade and how we were going to be out by Friday. The exit price was $1.60 and the calls hit a high of $1.59. If you will notice this was a penny shy of $1.60. Now, if you didn’t close the trade then you were greedy. It is important to remember that once an exit target is reached you follow your game plan. I probably should have listed an exit target of $1.56 which is exactly a 100% return but I rounded up.
Visa (V, $67.21, up $0.23)
August 70 calls (VEHHN, $0.85, down $0.30)
Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -47%
Stop: Lifted
Action: This was the other earnings trade we left open. The calls traded as high as $2.00 today as Visa tried to clear $70 but they faded along with the stock the rest of the day. This was a profitable trade when the calls traded above $1.60. I’ll keep it on the books since I didn’t provide an update at 1:00 pm on the trade but the 80 cent stop was lifted.
Like I said, I don’t do a lot of earnings trades but I couldn’t resist the charts on Visa and Cerner.
Rick@MomentumOptionsTrading.com
Tags: Bank of America, Cisco Systems, Ford, Microsoft, options blog
Posted in Company Commentary, Earnings, Option Trades | No Comments »
Wednesday, July 29th, 2009
11:30pm (EST)
Don’t shoot the messenger…
Green Mountain Coffee Roasters (GMCR, $67.50, down $0.25) reported earnings after the bell and said profits doubled but they missed Wall Street’s expectations on the revenue side. I kept mentioning to get out of this earnings trade before the closing bell and now you know why…in after-hours trading the stock was down $5.
We did keep a couple of trades open going into earnings and we got a mixed bag from as Cerner (CERN, $65.13, up $0.95) missed the Street’s forecast while Visa (V, $66.78, up $0.48) beat expectations. So here is what we are looking at…
Cerner was down $2.63 to $62.50 in extended trading and the August 70 calls (CQNHN, $1.35, up $0.15) will likely take a beating.
Visa was only off by a $1 after the close and almost held even at one point. However, the August 70 calls (VEHHN, $1.15, down $0.15) still lost a little shine.
Now, this is important. There were stops listed for these two positions and they weren’t hit today but the Cerner’s call options will probably fall below the 65 cents stop. In other words, these call options still have three weeks before they expire so you can cut your losses or hope for a rebound. Go for the rebound.
With Visa, I don’t think the 80 cent stop will be hit but it could.
This is a tough call, no doubt. The thing to remember is that most of my trades DO NOT evolve around earnings announcements but every now and then I shoot the ball. It’s hard to tell people how much risk they should take on or how much money should go into a trade but if you look at the spreadsheet for all of my trades they are usually 10 or 20 lot contracts. In other words, I risk anywhere between $1,000 and $2,000 a trade. If an option is under 50 cents, I might buy 50 contracts. Or, if it is a risky trade I might only do 10 contracts which is $500.
So it depends on what level you want to take your trading to.
Trading around an earnings announcement is always tricky.
Now that I got that off my chest… Ford (F, $7.12, down $0.02) and Microsoft (MSFT, $23.80, up $0.33) have given us some nice returns while Bank of America (BAC, $13.52, up $0.18) wants to keep going higher. And let’s not forget what good fortunes IBM (IBM, $117.02) and Cisco (CSCO, $21.72, down $0.21) have brought to our pockets.
One last thought…Most of you know my “dislike” for Barron’s magazine. We had a few sweet Imax (IMAX, $8.78, down $0.22) trades that were making us some great returns before Barron’s ruined the momentum in the stock.
On June 25th, we went long the July 7.50 calls (IMQGU) at 35 cents and we played the trade like a fiddle. We had set an exit to be out by the July 4th weekend and we were for a profit of 143%. We were out at 85 cents.
Then came the Barron’s weekend article as Imax was setting 52-week highs and the height of the summer movie releases were about to hit.
The September 7.50 calls (IMQIU, $1.55, down $0.20) were at 85 cents in June and were stopped out at $1.00 on July 6th that Monday. As you can see, they have doubled. The December 7.50 calls (IMQLU, $1.90, down $0.05) were at $1.25.
Imax lost more than 10% after that Barron’s article but has since rebounded. I haven’t lost site of Imax and some of you may have kept the December calls open. Congrats.
Keep these on your Watch List but I wouldn’t pull the trigger again right now. Let’s see where they are next week.
Rick Rouse
Tags: Cerner, Cisco, Ford, Green Mountain Coffee Roasters, IBM, Microsoft
Posted in Company Commentary, Earnings, Market Analysis, Option Trades, Strategies, Trading Tips | No Comments »
Wednesday, July 29th, 2009
1:00pm (EST)
The bulls seem to be on vacation this week and the ones left behind are trying to hold Dow 9,000. The market is holding up well despite the lack of momentum which is a good sign. There are still political and economic risks to this market and I mentioned this morning the bulls are searching for the next catalyst.
The Dow is currently down 40 points to 9,057 and has been in the red all day. We have seen some buying in the late afternoon and hopefully we get that going into the close. There are, however, some pockets of strength in the market and we happen to be enjoying those gains in some of the stocks that are trading higher.
Ford (F, $7.21, up $0.07), Bank of America (BAC, $13.69, up $0.35) and Microsoft (MSFT, $23.57, up $0.10) continue to roll…
The fireworks are coming after the bell as Cerner (CERN, $64.69, up $0.51), Green Mountain Coffee Roasters (GMCR, $66.53, down $0.97) and Visa (V, $66.08, down $0.22) report earnings…
We were stopped out of the other half of the IBM (IBM, $116.37, down $0.91) August 115 calls (IBMHC, $3.00, down $0.70) and the August 105 calls (IBMHA, $11.69, down $1.17) are nearing the $11.00 stop. We were also stopped out of the DryShips (DRYS, $6.57, down $0.22) September 7.50 calls (OOCIU, $0.50, down $0.10) at 50 cents. The entry price was 35 cents which gave us about a 50% return.
That is all I have for now and I will be back tonight (by 11pm EST) to give the update.
Rick@MomentumOptionsTrading.com
Tags: $64.69, Bank of America, Cerner (CERN, DryShips, Ford, Green Mountain Coffee Roasters, IBM, Microsoft, up $0.51), Visa
Posted in Company Commentary, Earnings, Option Trades | No Comments »
Wednesday, July 29th, 2009
9:00am (EST)
Futures are pointing towards a negative open after Durable Goods orders came in lower than expected. Dow futures are down 38, S&P 500 index futures were down 6, while Nasdaq futures were down 7.
I mentioned the bulls were trying to hold Dow 9,000 and with earnings season nearing a close the bulls are looking for the next catalyst.
Bank of America (BAC, $13.34, up $0.25)
November 15 calls (BYOKO, $1.00, up $0.05)
Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: -33%
Stop: If BAC falls below $11, close the position.
Action: This position has gained over 30% since Sunday night’s Weekly Wrap but is still down from an entry price of $1.50. Open Interest continues to build in the November options as the 15’s have an OI of over 100,000 contracts. That means there are a lot of bets being placed at the $15 strike and they are very liquid. This is great if you are trading 50 or 100 lot contracts. I still like current positions at these levels.
For our new subscribers, BofA was below $5 on March 11th when I recommended a couple of call options, May 6’s and July 10’s. They returned 400% and 500% as BofA stood at $10 a month later. If you do the math and the stock doubles from here it puts BofA at $26. These calls would be worth $11 and you would have a 1,000% return on you hands. Anything is possible, right? However, all we are looking for is a run past $15 so we can double or triple or money. (PS, if you haven’t gotten my track record for 2009 or 2008, email us by going to the website and sending us a request)
Cisco Systems (CSCO, $21.93, up $0.09)
October 20 calls (CYQJD, $2.50, up $0.05)
Entry Price: $1.50 (6/2/09)
Exit Price: $3.00
Return: 67%
Stop: $2.00
Action: Tech held up well on Tuesday and Cisco traded up to $21.99. The 52-week high is $25.25 which is my target for the stock. The options traded as low as $2.16 so we will keep the $2.00 stop in place.
Green Mountain Coffee Roasters (GMCR, $67.50, down $0.25)
August 80 calls (QGMHP, $1.50, down $0.10)
Entry Price: $1.40 (7/27/09)
Exit Price: $2.10+
Return: 7%
Stop: $0.70
Action: The goal is to be out of this trade by the closing bell. We will be watching this one all day as the company reports earnings after the bell today. These options are inflated meaning the premiums are rich so be careful with this one. If you can escape with a gain, even if it’s 10%, it may be better than leaving this one open.
Buffalo Wild Wings (BWLD, $39.32, up $2.21)
August 40 calls (BQUHH, $1.25, up $0.01)
Entry Price: $1.10 (7/27/09)
Exit Price: $1.50 (7/28/09)
Return: 36%
Stop: CLOSED
Action: I told you the best time to sell is at the open and these calls traded as high as $1.60. The first 20 minutes are when the sharks are in the water and we all know sharks usually win these battles. I can’t stress this point enough to the beginners we have on board. If a stock is hot, the best time to sell is shortly after the bell because all of the rookie options traders were in there BUYING these call options on Buffalo reporting and beating Wall Street’s estimates. Each earnings trade is different as you will see and it’s best to have a plan going in and an exit on when to close the trade.
This trading tip is invaluable.
Cerner (CERN, $64.18, down $0.81)
August 70 calls (CQNHN, $1.20, down $0.15)
Entry Price: $1.30 (7/27/09)
Exit Price: $2.20
Return: -8%
Stop: $0.65
Action: Cerner got a 50 cent pop at the open and these call options trades as high as $1.50. The company reports after the bell on Wednesday.
Another point I want to make is how some option traders will only look for a 20 or 30 cent move in an option and then sell it. If you buy 20 contracts and an option goes up 30 cents in price you have made $600. Do it twice a week and you are making $50,000 a year. Hard but not impossible.
I’m throwing all of this information and tips at everybody this morning because I’m trying to teach you how to use options and the many different ways people trade them. What kind of profits you want to make is up to each trader. And each trader’s strategy is different. Some people like straddles and strangles, some investors write covered calls while others get naked. “Naked” option trading is not my game but all it means is that you are taking on a ton of risk.
Microsoft (MSFT, $23.47, up $0.36)
August 23 calls (MSQHQ, $0.98, up $0.23)
Entry Price: $0.78 (7/27/09)
Exit Price: $1.60
Return: 26%
Stop: $0.30
Action: Well, well, well…Yesterday I said “these calls options are technically in-the-money and we only need the stock to recover by 5% to make a decent return off of the trade.” Microsoft was in the red all morning but made a comeback along with the Nasdaq. The stock only made a 1.5% gain but the options gained 30%. Again, it was a short-term trade and I wanted to be out Friday. Hopefully we can ride this one a little higher but 25% is 25%.
IBM (IBM, $117.28, down $0.35)
August 105 calls (IBMHA, $11.69, down $1.17)
Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 253%
Stop: $11.00
August 115 calls (IBMHC, $3.70, down $0.40)
Entry Price: $1.05 (7/16/09)
Exit Price: $2.00 (7/24/09 1/2 the trade was closed)
Return: 281%
Stop: $2.00-$2.25, raise to $3.25
Action: We closed half of each side of these call options to make it a risk free trade from here on out. Our stops are in place and you’ll notice I raised the stop on the August 115’s. IBM has made a nice run but $118 is the new hurdle. The stock was down 60 cents in after-hours so we may be close to getting stopped out on the other half of the trade.
Visa (V, $66.30, down $1.89)
August 70 calls (VEHHN, $1.30, down $0.50)
Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -19%
Stop: $0.80
Action: Visa will no doubt be the crown jewel of announcements on Wednesday. On Monday, the company said it would “continue to meet or exceed” Wall Street’s expectations. The numbers we want to watch for after the close is 64 (cents a share) and $1.63 billion on the revenue side. Warning: If Visa misses or doesn’t impress the Street then these options will drop like a rock if the stock heads south.
DryShips (DRYS, $6.79, down $0.29)
August 7 calls (OOCHJ, $0.50, down $0.15)
Entry Price: $0.25 (7/21/09)
Exit Price: $0.65 (7/27/09)
Return: 160%
Stop: CLOSED
September 7.50 calls (OOCIU, $0.60, down $0.13)
Entry Price: $0.35 (7/21/09)
Exit Price: $0.70
Return: 71%
Stop: $0.40, raise to 50 cents
Action: I don’t like giving gains back which is why we closed the August calls on Monday for a 160% return. The September call options had given us over a 100% gain and our stops were set just above our entry point to protect profits. I didn’t like the action in DryShips yesterday which is why I raised the stop. These calls hit a low of 45 cents on Tuesday so if DryShips doesn’t rebound we will let the market take us out with a small profit. This is exactly why we sold the August options. DryShips is a very liquid stock capable of making huge moves but let’s take what the market gives us.
Ford (F, $7.14, down $0.13)
December 6 calls (FLI, $1.63, down $0.07)
Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 30%
Stop: $1.00, raise to $1.45
December 7 calls (FLJ, $1.06, down $0.01)
Entry Price: $1.00 (5/18/09)
Exit Price: $1.50-$2.00
Return: 6%
Stop: 50 cents, raise to 75 cents
Action: It is looking as though Ford is trying to build a solid base at the $7 level which would be perfect for this longer-term play. If we can build a base at $7 then move towards $8-9 then were are golden.
Check back after lunch for an update on today’s action.
Rick Rouse
Tags: Bank of America, Buffalo Wild Wings, Cerner, Cisco Systems, DryShips, Ford, Green Mountain Coffee Roasters, IBM, Microsoft, Visa
Posted in Earnings, Option Trades, Stock Earnings, Strategies, Trading Tips, Yahoo / Microsoft | No Comments »
Monday, July 20th, 2009
10:30am (EST)
We have a tiger by the tail…
The Dow is currently up 75 points to 8819 while the Nasdaq is up 17 to 1903. The S&P 500 is over 947…yes, the bulls are back in town and they are having a party. The Tech sector is getting a lift from Cisco Systems (CSCO, $21.06, up $0.55) so let’s take a look at all of our open positions and go over them.
Ford (F, $6.25, up $0.11) was a trade I profiled BEFORE the blog went private and on May 18th I recommended a couple of trades. The December 6 calls (FLI, $1.17, up $0.059) were profiled at $1.25 while the December 7 calls (FLJ, $0.73, up $0.06) were profiled at $1.00. I still like BOTH options at current levels and believe Ford has a chance to hit $10 by year-end. Ford will announce earnings on Thursday and the December call options have 151 days before they expire.
Bank of America (BAC, $12.47, down $0.42) was profiled on June 12th and the November 15 calls (BYOKO, $0.73, down $0.17) were profiled at $1.50. I’m keeping this one open becasue these call options will be worth at least $3 if the stock can make it to $18 in 123 days which is when the November options expire. I know I keep 50% firm stops but this position is different. The calls were right back at even before BofA announced earnings and I knew the risks going in. Now, if BofA falls below $10 then I will close the position but if CIT Group (CIT, $1.28, down $0.57) goes away, BofA will be there to pick up their business.
Cisco Systems (CSCO, $21.06, up $0.55) got an upgrade this morning and the October 20 calls (CYQJD, $1.91, up $0.32) were profiled at $1.50 on June 2nd. They were going for $1.30 on Friday at 11am. I echoed that if Cisco can get to $25 then these options are worth $5. For those of you who have just signed on, I like these calls up to $2.00 as an entry price so you still have time to get in.
IBM (IBM, $116.04, up $0.62) continues to impress. The July 105 (IBMGA) calls could have been picked up for $1.65 last Wednesday with IBM trading at $104. We took profits along the way and you would have been able to close any remaining contracts for $10+ on Friday. From $1.65 to $10.00 is a 500% gain, folks.
I also profiled the August 105 calls (IBMHA, $11.20, up $0.40) at $3.40 shortly after the opening bell that day as well. These profits are approaching returns of up to 250%. Set stops at $10.00-$10.50.
On Thursday, we also “rolled” into the August 115 (IBMHC, $3.50, up $0.40) when these calls were at $1.05. At current levels that represents profits of nearly 250% also. Set stops at $2.50.
Some of you asked if the IBM August 120 calls (IMBHD, $1.25, up $0.15) would be a good play but you have to remember the stock has moved $10 points in less than a week. There is a chance IBM hits $120-$125 before the August options expire but if you haven’t gotten in, you’re a little late to the party. I don’t mean that in a bad way, it’s just that we have already been in the August calls since last week so the party could almost be over.
I also wanted to add some of my reasons for profiling the trades last week because some of you are thirsty for information on how I look at things.
IBM was the one Tech company that I was willing to “bet” would do well and I suggested playing call options all last week. I only say the word “bet” because that is what YOUR broker will probably tell you (or your friends). You see, not a lot of people or brokers recommend these types of plays because A) they don’t know what they are doing and B) they have been taught that options are “risky”.
Well, I disagree. The one thing I said about IBM was that we had “serious resistance” at $110 and if it were broken we would see buyers come in. I even told you I had a “gut feeling” that IBM would do well after announcing earnings. The gut feeling is hard to teach but sometimes you will get a “feel” for how things are playing out.
After Intel’s news, the trade on IBM was a no brainer for me. The rest of the week felt “bullish” and IBM had beat and raised numbers from their last quarter. I did my homework and I shared it with you. As a result, it was one of the biggest trades of the year profiled in the Blog.
I’ll be back in a couple of hours with updates on Fairchild Semiconductor (FCS, $8.80, up $0.23) and USEC (USU, $6.24, down $0.21). I’m also looking at a few trades that may be good to day trade this week.
Rick@MomentumOptionsTrading.com
Tags: Bank of America, Cisco Systems, Ford, IBM
Posted in Company Commentary, Option Trades | No Comments »
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Trade Updates
Thursday, July 30th, 2009
11:15pm (EST)
Ford (F, $7.39, up $0.27)
December 6 calls (FLI, $1.85, up $0.20)
Entry Price: $1.25 (5/18/09)
Exit Price: $2.50
Return: 48%
Stop: $1.45
December 7 calls (FLJ, $1.20, up $0.13)
Entry Price: $1.00 (5/18/09)
Exit Price: $1.50-$2.00
Return: 20%
Stop: 75 cents, raise to $1.00
Action: Another new 52-week high for Ford. Nothing else I can add here.
Cisco Systems (CSCO, $21.98, up $0.26)
October 20 calls (CYQJD, $2.55, up $0.10)
Entry Price: $1.50 (6/2/09)
Exit Price: $3.00
Return: 70%
Stop: $2.00
Action: The stock hit a high of $22.40 and the call options traded as high as $2.92 which was a stone’s throw away from our exit target. Tech remains strong and we’ve been in this trade for 2 months now. It is starting to pay dividends and it wouldn’t have been a bad idea to close half the trade up at those levels. That makes it a risk-free trade from here on out.
Bank of America (BAC, $13.97, up $0.45)
November 15 calls (BYOKO, $1.26, up $0.11)
Entry Price: $1.50 (6/12/09)
Exit Price: $2.25
Return: -17%
Stop: If the stock falls below $11, close the position.
Action: Shares broke $14 today and you gotta love the action in BofA this week.
IBM (IBM, $117.86, up $0.60)
August 105 calls (IBMHA, $13.00, up $1.20)
Entry Price: $3.40 (7/14/09)
Exit Price: $12.00 (7/24/09 1/2 the trade was closed)
Return: 253%
Stop: $11.00, raise to $12
August 115 calls (IBMHC, $4.00, up $0.50)
Entry Price: $1.05 (7/16/09)
Exit Price: $2.00 (7/24/09 1/2 the trade was closed, other half sold at $3.25 yesterday)
Return: 245% together
Stop: CLOSED
Action: We were taken out of the 115’s on Wednesday and we have raised the stop on the 105’s call options. Yeah, the 115’s traded as high as $5.13…
Cerner (CERN, $65.57, up $0.44)
August 70 calls (CQNHN, $0.75, down $0.60)
Entry Price: $1.30 (7/27/09)
Exit Price: $2.20
Return: -42%
Stop: Lifted
Action: The calls opened at 25 cents and I said to “play the rebound” meaning we knew the stop was going to get hit and we knew this was an earnings trade. The options have another 3 weeks before they expire.
Microsoft (MSFT, $23.81, up $0.01)
August 23 calls (MSQHQ, $1.07, down $0.06)
Entry Price: $0.78 (7/27/09)
Exit Price: $1.60
Return: 99%
Stop: CLOSED
Action: I’ve been talking all week about this being a “short-term” trade and how we were going to be out by Friday. The exit price was $1.60 and the calls hit a high of $1.59. If you will notice this was a penny shy of $1.60. Now, if you didn’t close the trade then you were greedy. It is important to remember that once an exit target is reached you follow your game plan. I probably should have listed an exit target of $1.56 which is exactly a 100% return but I rounded up.
Visa (V, $67.21, up $0.23)
August 70 calls (VEHHN, $0.85, down $0.30)
Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -47%
Stop: Lifted
Action: This was the other earnings trade we left open. The calls traded as high as $2.00 today as Visa tried to clear $70 but they faded along with the stock the rest of the day. This was a profitable trade when the calls traded above $1.60. I’ll keep it on the books since I didn’t provide an update at 1:00 pm on the trade but the 80 cent stop was lifted.
Like I said, I don’t do a lot of earnings trades but I couldn’t resist the charts on Visa and Cerner.
Rick@MomentumOptionsTrading.com
Tags: Bank of America, Cisco Systems, Ford, Microsoft, options blog
Posted in Company Commentary, Earnings, Option Trades | No Comments »