Genentech | Momentum Stock Options Trading Alerts and Option Picks Blog

Blogs Directory

EatonWeb Blog Directory

Finance Seek Directory

Market Rebounds, Call Options Up

Tuesday, March 10th, 2009

It was a good day for for the market and it was a great day for us. The Dow surged 380 points, or 5.8%, and closed at 6,926. If there were another hour of trading today the Dow probably would have hit 7,000. The Nasdaq soared 90 points, or 7%, and finished at 1,358 while the S&P 500 traded higher by 43 points, or 6.3%, and settled at 719.

Financial stocks were blistering today after reports that the SEC will reinstate the uptick rule as early as next month. That and the fact that Citigroup (C, $1.45, up $0.40) said it was having a good quarter.

Well, I would hope so.

If you are borrowing money from the government at 0% and making loans, I would hope Citigroup would be doing well this quarter. Anyway, the financal rally was huge today and I was looking at them yesterday thinking…you know…these stocks are getting ridiciously cheap. Specifically, I was looking at the JPMorgan (JPM, $19.50, up $3.60) March 20 calls (JSACD, $1.25, up $0.85) when they were at 75 cents and the April 25 calls (JSADE, $1.00, up $0.60) when they were at 80 cents.

I wanted to pull the trigger put we have too many open positions and I didn’t want to overload you. However, the rally was on once Bernanke spoke before the bell about the banks and the trades we are following did really well.

Here is a quick rundown:

Exxon Mobil (XOM, $67.39, up $2.82)

April 70 calls (XOMDN, $2.25, up $0.58)
Entry Price: $1.25 (3/5/09)
Exit Target: $2.00
Return: 80%

Our exit target was “technically” hit but I don’t blame you if the position is still open. I mentioned the rally Exxon made after a similiar trading pattern back in October. A $2.00 stop gets us a 60% return if Exxon fails from here.

IBM (IBM, $87.25, up $3.77)

April 95 calls (IBMDS, $1.40, up $0.45)
Entry Price: $1.20 (3/6/09)
Exit Target: $2.40
Return: 17%

Big Blue came through after lagging the market at the open but ended the day in a strong uptrend.

Potash (POT, $75.01, up $5.70)

April 100 calls (PYPDT, $1.60, up $0.50)
Entry Price: $1.70 (3/4/09)
Exit Price: $3.40
Return: -6%

It looks like we were a couple of days early with this one but the calls recovered nicely today and volume was huge. Potash was the first pick of the three stocks we were targeting for this rally and although we are slightly down from our entry price, these call options should be okay if Potash can continue its huge run.

***Full Disclosure*** I still have an open position in the ConocoPhillips (COP, $38.00, up $1.47) March 40 calls (COPCH, $0.75, up $0.21). I bought 10 contracts yesterday at 58 cents and they traded as high as 87 cents today. Had I sold at the high, I was looking at a $290 profit. But I held on. My target is 75 cents to $1.00 and I didn’t sell because of the strong rally. We will see how it goes…

Other positions:

Genentech (DNA, $91.50, down $1.13)

March 95 calls (DWNCS, $0.55, up $0.10)
Entry Price: $1.50 (1/12/09)
Exit Target: $0.55 (3/10/09)
Return: -73%

I mentioned in the Weekly Wrap that I would close this one out on Monday and after a frustrating two months…it is finally gone.

Apollo Group (APOL, $68.96, up $2.58)

April 55 puts (OAQPK, $2.35, down $0.55)
Entry Price: $2.95 (3/6/09)
Exit Price: $2.50
Return: -15%

We were stopped out of the April puts with a small loss but we made 100% on the March puts. Apollo went along for the ride on the market’s dollar today and we were stopped out at $2.50.

I also profiled Take-Two Interactive Software (TTWO, $6.85, up $0.84) Sunday night in the newsletter and the June 10 calls (TUOFB, $0.50, up $0.20) as a possible trade. The calls could have been bought on Monday for 25 cents. The stock traded higher throughout the day in anticipation of its earnings announcement and you could have been out before the closing bell with a 100% return. The company beat expectations but in after-hours trading the stock was down 45 cents.

We are now long on calls so let’s hope the rally continues. Otherwise, set your stops to protect these profits.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Apollo Group, Citigroup, ConocoPhillips, Exxon Mobil, Genentech, IBM, JPMorgan, Potash, Take-Two Interactive Software
Posted in Company Commentary, Earnings, Option Trades | No Comments »

Start Half Positions In IBM

Friday, March 6th, 2009

IBM (IBM, $84.44, down $3.04) continues to plunge and we added the April 100 calls (IBMDT, $0.53, down $0.37) to our Watch List when the call options were at $1.10. They have been cut in half with today’s 3% drop in shares of IBM.

The April 95 calls (IBMDS, $1.22, down $0.73) are now trading at the price of the 100′s so let’s start our half position here in the 95 call options. The Dow is down 48 points to 6,544 and the market appears nervous after getting an unemployment number of 8.1%.

We are seeing the downtrend in Apollo Group (APOL, $63.81, down $2.98) pick up steam and Genentech (DNA, $90.00, up $8.36) got a higher bid from Roche. Gotta love the action and we are right in the middle of it! Check back in Sunday night for the Weekly Wrap…

Rick Rouse
Rick@OptionsMentoring.com

Tags: Apollo Group, Genentech, IBM
Posted in Option Trades | No Comments »

Weekly Wrap for 2/22/09

Monday, February 23rd, 2009

1. Commentary
2. Gold and Platinum
3. Trading Bank of America
4. 2008/ 2009 Portfolios
5. Current Trades
6. Earnings
7. Closing Thoughts

**************************************************

1. Commentary

If 666 is the number of the beast, it must be that of a bear because it roared its ugly head at the market. The market was nervous all of last week which led to a big decline in the three major indexes. After taking Monday off, the mood was no better Tuesday on Wall Street with the market still waiting for more details on how the government would deal with the toxic assets that have plagued banks’ balance sheets. On Friday, those fears reached panic as talk of nationalizing the banks reached a frenzy.

When Senate Banking Committee Chairman Christopher Dodd said banks may have to be nationalized for a short time, the market was underwater and sinking fast. The rebound off the lows came after the Obama administration said they support a privately held banking system. If that weren’t bad enough, there was talk of Europe’s recession being worse than expected.

As a result, we got 6% losses across the board for the week. The Dow fell 485 points to finish at 7,365 while the Nasdaq skidded 93 points to close at 1,441. The S&P 500 was punished for a 57 point loss and settled at 770. YTD, the Dow is off 16%, the S&P 500 is down 15% and the Nasdaq has lost about 9%.

That fact that the market couldn’t rally despite President Obama announcing the details of the Homeowner Affordability and Stability Plan shows the uncertainty the market is facing. Usually, this type of event would have moved the market significantly higher but the market appears to be more concerned with the toxic assets on the banks books, and until they are removed from their balance sheets, pressure will remain on the sector and the market as a whole.

**************************************************

2. Gold and Platinum

The hot topic of late has been gold which broke through the $1,000 mark and finished at $1,002/ ounce, up nearly $26, or 2.6%, on Friday. Naturally, there are gold bulls calling for $1,500 and even $2,000 an ounce but lets not get ahead of ourselves.

Gold peaked at $1,033 and fell as low as $750 in November. From those lows we have already rallied 50% so that tells me gold has become overbought in the short-term. However, that doesn’t mean gold can’t continue higher. Over the last couple of years, gold has had a pretty good run from late January until the end of February and history seems to be repeating itself this year.

With the market lacking a clear direction since the passage of the stimulus package and bank bailout plans, gold could continues to benefit as a safe haven. We have done well playing gold’s surge as you will see in the “Current Trades” section but don’t be surprised if we get a little breather in the rally.

Elsewhere, silver gained 55 cents and is at $14.50/ ounce while platinum added $13.60 to close the week at $1,096/ ounce. Copper lost 6 cents and is at $1.42/ pound.

I haven’t mentioned platinum that much but I’ve been researching it here of late. Platinum is 3x rarer than gold and is a key component in automobile emissions controls, jewelry, electronics and lab equipment. Platinum was at $2,000 around this time last year and historically trades at a much higher multiple versus gold. As far as platinum stocks go, they have been hammered. Stillwater Mining (SWC, $4.40, down $0.21) and North American Palladium (PAL, $1.55, down $0.05) are a couple of names that come to mind but you see where their stock prices are at. Stillwater is down from a 52-week high of $23 while North American is down from $9+.

Platinum metals biggest market is the automotive industry, where platinum and palladium are used in the manufacture of catalytic converters for exhaust systems. Naturally, these two stocks have suffered as the drop-off in auto sales have hurt their business. This has not helped the market for platinum although the demand for the metal remains strong. It’s used heavily used in catalytic converters, which control engine emissions, and with emissions standards tightening, the demand will be there.

There is no platinum ETF’s (exchange traded funds) but there are ETN’s (exchange traded notes) you can watch. The iPath Platinum Sub-Index (PGM, $26.71, up $0.37) and the E-TRACS UBS Long Platinum (PTM, $13.26, up $0.14) are a couple ways to play the sector.

I’m more interested in gold at the moment as the uncertainty of the auto industry is still front and center. Platinum could move another 20%, however, I’m sticking with gold for as long as the rally lasts.

**************************************************

3. Trading Bank of America

Bank of America (BAC, $3.79, down $0.14) hit a record low on Friday and Citigroup (C, $1.95, down $0.56) tanked to nearly a 20-year low as both companies were under heavy selling pressure on talks of them being nationalized.

Citigroup hit a low of $1.61 while BofA hit a low of $2.53. I had mentioned last week that the action in BofA was going to be intense and you can have taken advantage of the chaos on Friday. Although we have a few active trades in BofA there was an opportunity to trade the March options off their lows.

This is a true story. As the talks of BofA and Citigroup intensified the BofA March 4 calls (BYOCD, $1.06, up $0.21) were trading at 67 cents a little after 1PM. There was a friend of mine who I was teaching the market to because he had just opened an options account. He was anxious to make a trade and I told him there are opportunities to trade but you have to be quick and not get caught up in the emotion.

As I was explaining to him what was going on with BofA’s stock, I was showing him the March 4 calls and explaining to him how they work. (I also couldn’t believe he paid $4,000 for an options course that does not mentor you but that’s another story). He didn’t know I worked for one of the best options mentoring sites out there…

Anyway, when news hit that the government “supports a privately held banking system”, BofA started rallying shortly after 1:30PM. He bought 10 contracts of the March 4 call options at 67 cents and you could see the excitement as he watched the calls trade higher over the next couple of hours. I told him to exit the trade no matter what by the end of the day and he couldn’t figure out why.

I told him the stock would likely rally for the rest of the day but the uncertainty of nationalization still hangs in the balance. Although we don’t know if this is going to happen for certain, it was too big of a risk and I told him if the market gives you a 35% return in a day, take it. He did and sold at 99 cents. In 2 1/2 hours he made $300.

The comments from the White House helped shares of Citigroup and Bank of America recover some of their losses but I don’t know if it will be enough. Bank of America’s stock was up another 23 cents to $4.02 after the close.

We will have to see how this one plays out but BofA did say that it was told by Washington that nationalization wasn’t an option under consideration. The U.S. government has injected more than $100 billion into the nation’s largest banks last year and Citigroup and Bank of America have received the most support. That is something to think about despite the fact of what Washington is saying.

**************************************************

4. 2008/ 2009 Portfolios

I have gotten a lot of requests to post a “track record” of the options trades I cover in the blog and in the Weekly Wrap. I have been spending the past few weeks researching the blog and I’m excited to say that I should have the results by the end of the month.

When I started the log last April, it was a way for us (OptionsMentoring.com) to keep you up to date on the market while at the same time teaching you about options. The research and daily blogs have even helped my trading skills too as I try and recommend trades that are easy to understand and follow. I also explain the trades in more detail which has also
helped me keep focused.

Please realize that I don’t personally do every trade I blog about but I do trade some of my recommendations. The portfolios should be used for informational purposes only but you will notice how I stick to stocks that I know and ones whose trends I can easily recognize. I covered well over 100 trades in 2008 and so far in 2009, there are almost 50.

You will notice that I like to keep positions between $1,500-$2,500 a trade which usually gets me 10, 20, or 30 contracts at a time. If you start an options account with $2,000, then obviously, your purchasing power will not be as great and you have less room for error. A couple of bad option trades means you might have to put more cash in your account. I usually recommend you have at least $5,000 when you start an account but if you only have $2,000 then realize commissions could eat a lot of your profits if you are only buying 1 or 2 contracts at a time.

Once these are posted, I will let everyone know…

**************************************************

5. Current Trades

Akamai Technologies (AKAM, $17.71, up $0.15)

Akamai Technologies held its own despite the market’s uncertainty although we were stopped out of the March 17.50 calls (UMUCW, $1.25, unchanged) at $1.10. The stock opened at $17.28 on Tuesday and the options opened at $1.10. The trade was technically a loss but I didn’t mind taking a 10% because I didn’t want to fight it. Yes, the calls are still trading at their original entry price and even hit a high of $1.80 on Thursday when the shares hit $18.49. However, I wanted to take advantage of some of the other opportunities in the market.

I mentioned if we are stopped out that maybe we would re-enter the trade at a later date and cheaper price. That still holds true but let’s concentrate on what is open.

Bank Of America (BAC, $3.79, down $0.14)

I unwillingly kept these open on Friday mainly due to the fact that they were cheap out-of- the-money call options and the fact that BofA was making strong statements in the market while its stock was tanking. The only thing I regret about the March 6 calls (BYOCF, $0.45, up $0.14) and the March 7 calls (BYOCG, $0.32, up $0.13) is that I didn’t buy protection or that I didn’t make the trade a straddle. We could have made more than enough to cover the call side of the trade if we had evened it up with put options. That’s why they call it hindsight…

Anyway, these positions were entered at 90 cents and 60 cents, respectively, on 2/12. The stock was up another 23 cents to $4.02 in Friday’s after-hours session.

Dow Jones Industrial Average Index (DJX, $73.66, down $1.00)

The March 75 puts (DJXOW, $3.85, up $0.45) were profiled Tuesday night in the blog and again Wednesday morning. We entered the trade at $3.10 and these put options traded as high as $4.50 on Friday. That was almost a 50% profit and you could have closed the trade if you did not feel comfortable holding it over the weekend.

The March 74 puts (DJXOV, $3.50, up $0.50) could have been bought for $2.75 on Wednesday’s open and hit a high of $3.65 on Friday.

I had mentioned on Friday in the blog that the Dow could slip below 7,300 and that it did. That was my “immediate” target for the Dow but we have to be careful of a “snap-back” rally. If you left the trades open, be cautious of this and don’t give back your profits if the market starts to rally. However, we could be looking at future gains if the Dow continues to crack.

Genentech (DNA, $85.02, up $0.26)

Well, this was not one of my better trades and I’ll be the first to admit. Out of nearly 50 trades I have profiled this year, this was going to be the first one that was headed for a loss until Akamai Technologies beat it to the punch. Look, everybody has a losing trade and I’m no different but this one really frustrates me.

The February 95 calls (DWNBS) ended up expiring worthless and were profiled at 85 cents back in January. I could have gotten out at 40 cents but I kept the position open because the March 95 calls (DWNCS, $0.30, up $0.05) are my backup. Granted, they haven’t performed well either but they still have value. They actually lost 10 cents for the week.

I’m not so sure anything will get done between Roche and Genentech by the time the March call options expire but Roche is still trying to get the cash together. Meanwhile, Genentech’s stock performed well for the week despite three people taking one of Genentech’s drugs are believed to have died of a rare brain infection. Given the uncertainties, it would be wise to cut our losses and move on. However, I’m stubborn with this one and am still holding out hope that $100/ share offer is coming from Roche.

Research in Motion (RIMM, $39.15, down $2.94)

We took advantage of the continued weakness in the stock and I profiled a couple of put options on Wednesday when the shares were at $43.22. The stock closed 10% lower from that original write-up and hit a low of $38.44 on Friday.

Research in Motion fell from $57 to $49 after lowering guidance which pushed the stock below its 10 and 20-day moving averages. I mentioned the next level it appeared likely to test was its 50-day. RIMM took care of that. The next support lies at its 52-week low of $35.09. I’m not sure if we get there or not because the bulls might be ready to make a statement. However, it sure feels like that low will be taken out.

The March 40 puts (RUPOH, $3.70, up $1.35) were profiled at $2.15 and hit a high of $4.15 on Friday. The March 35 puts (RUPOG, $1.60, up $0.20) were recommended at 85 cents and hit a high of $1.90!

In the blog on Friday, RIMM was at $40 at 11AM and broke down like a rented mule afterward. Obviously, both put options could have been closed for 100% profits. I don’t always tell you exactly when to close positions but if you have followed the blog my rule of thumb is 50% stops and 100% profits.

If RIMM reaches news lows again this week, set stops there or exit the trade if the stock starts to head back up.

Spider Gold Shares (GLD, $97.80, up $2.03)

The ETF added $5 for the week as gold continued its surge. At one point, shares hit a high of $98.99. I’ve been talking about two key levels with this trade. Gold hitting $1,000 and this ETF hitting $100. Both parts of that equation have basically happened as both call options hit 100% returns.

The March 99 calls (GLDCU, $3.50, up $0.80) were profiled at $2.05 and hit a high of $4.20 on Friday.

The March 100 calls (GLDCV, $3.20, up $0.70) were recommended at $1.90 and traded to $3.80 before falling back.

When others start rushing in, that is when we start heading for the exits. No one knows how far gold will rally and it’s all about supply and demand right now. Here is another position where 100% profits could have been taken before the weekend.

I’ll provide updates as usual in the blog and I’ll be looking to close some of these out to enter new trades. The market never dances with the same partner twice so we could get some new candidates this week.

**************************************************

6. Earnings

Monday: Campbell Soup (CPB, $29.45, down $0.11), Forest Oil (FST, $15.78, down $0.49), Healthcare Realty Trust (HR, $14.63, up $0.90), Kaydon (KDN, $25.91, up $0.48), Nordstrom (JWN, $11.89, up $0.06) and Texas Roadhouse (TXRH, $8.45, up $0.28).

Tuesday: Domino’s Pizza (DPZ, $6.55, up $0.33), DreamWorks Animation (DWA, $19.41, down $0.14), First Solar (FSLR, $134.01, up $2.71), FirstEnergy (FE, $47.39, down $0.83), H.J. Heinz (HNZ, $32.56, down $0.39), Home Depot (HD, $19.46, down $0.70), Macy’s (M, $7.86, up $0.20), Marvel Entertainment (MVL, $23.81, down $0.83), Office Depot (ODP, $1.51, down $0.02), Papa Johns International (PZZA, $21.19, up $1.21), RadioShack (RSH, $11.26, down $0.05), Target (TGT, $29.75, down $0.14) and Wynn Resorts (WYNN, $24.95, up $1.95).

Wednesday: Del Monte Foods (DLM, $6.57, down $0.13), Dollar Tree Stores (DLTR, $35.18, up $0.81), Express Scripts (ESRX, $56.27, down $0.07), Garmin (GRMN, $15.17, down $0.75), J. M. Smucker (SJM, $41.54, up $0.14) and Washington Post (WPO, $390.30, down $1.20).

Thursday: Autodesk (ADSK, $15.26, down $0.59), Boyd Gaming (BYD, $3.52, down $0.03), Cinemark Holdings (CNK, $8.19, down $0.36), Cooper Tire & Rubber (CTB, $4.61, down $0.17), Deckers Outdoor (DECK, $57.60, up $2.44), Dell (DELL, $8.41, up $0.29), Gap (GPS, $11.55, down $0.01), Kohls (KSS, $34.84, up $0.13) and Safeway (SWY, $20.90, up $0.56).

Friday: Magellan Health Services (MGLN, $35.54, down $0.51), Republic Services (RSG, $23.81, down $0.03), Shanda Interactive Entertainment (SNDA, $31.49, up $1.10) and Westar Energy (WR, $17.22, down $0.67).

I’m watching First Solar, Home Depot, Wynn Resorts and Dollar Tree Stores for possible trades.

**************************************************

7. Closing Thoughts

It is kind of scary watching the market go down if you are clueless to what is going on with Wall Street. I understand a lot of people don’t have the luxury of watching ticker tape or following the news on a daily basis but if there is a way you can, then I encourage you to start. For me, the breakdown in the market last week was like waiting for snow in a grey-filled sky. It was cold, I knew the snow was coming and I was anxious to go out and play in it. If you are an option trader or a market watcher, there are certain times where you can feel the pulse of the market which allows you to get into some good trades. The market’s mood was clearly evident last week and there were opportunities to make money despite the negative sentiment on Wall Street.

With today’s technology, it is easy to track stocks or options using your phone. If you have a brokerage account you can trade stock or options by using a regular phone or a smart-phone.

With email, you can set alerts on certain stocks and get something in your inbox when that stock hits your alert. The point I’m trying to make is that I often hear people don’t have to follow the market. They only seem to follow it when stocks go up because they don’t know how to short a stock or buy a put option when opportunity knocks.

As you have seen, there are 100%-er’s out there every week. It’s up to you to have the committment to grow your portfolio. When things are at there worse, don’t panic. Get in there and look for trades that make sense.

No one knows where the market will close on Monday or next Friday or in May. My number one tip for people that ask me about the market is that I tell them to trade the trend. And as long as the trend remains volatile, the more opportunity there is to make money. Should be another volatile week…

Rick Rouse
Rick@OptionsMentoring.com

Tags: Bank of America, Genentech, Gold, nationalization, platinum, RIMM, stock market commentary
Posted in Earnings, Market Analysis, Option Trades | No Comments »

Weekly Wrap for 2/16/09

Monday, February 16th, 2009

1. Commentary
2. Oil and Gold
3. Options Education
4. Credit Spreads
5. Current Trades
6. Earnings
7. Closing Thoughts

**************************************************

1. Commentary

The market was under tremendous pressure last week and as the saying goes, pressure bursts pipes. Wall Street took a back seat to Washington as the stimulus package and details on the financial relief plan were all that mattered to traders.

The market’s downturn started as soon as Treasury Secretary Geithner spoke on Tuesday and carried into Wednesday as the Dow hit a low of 7,835. The much-anticipated Geithner speech was originally scheduled for Monday but got delayed a day as Congress was hammering out the final details of the stimulus package. Maybe the delay was a good thing because downside momentum picked up and by Thursday the Dow was at 7,660. If it wasn’t for a late day short-covering rally, it could have been much worse.

It was another week of uncertainty and that is one thing the market hates. With little details or clues on a nearly $800 billion stimulus package, the market had little direction and lacked enthusiasm. As a result, the Dow lost 420 points, or 5.2% to end the week at 7,850. The S&P 500 fell 42 points, or 4.8%, to settle at 826 while the Nasdaq gave up 57 to finish at 1,534, a loss of 3.6%.

This brings all three indexes at a loss for the year with the Dow off by 10.6% and the S&P 500 by 8.5%. The Nasdaq was in the black last week but is now down 2.7% YTD. The November lows appear like a sure bet to be tested and I’ll talk more about that later on.

The market was closed Monday for Presidents Day and on Tuesday the President is set to sign the stimulus bill in Denver. We will have to watch the futures on Tuesday morning to get a feel for the market’s movement but trading next week will again be volatile either way. On Wednesday, Obama is also expected to outline his mortgage-rescue proposal. And on Friday, we have the expiration of the February options cycle.

Should be another interesting week…

**************************************************

2. Oil and Gold

Although U.S. markets were closed on Monday, oil and gold still traded.

Oil prices stayed above $37 a barrel after OPEC stated over the weekend that more production cuts are possible as they adjust to weakening global demand for crude. Oil had a big day on Friday, rising $3.53, to settle at $37.51. The problem here is that OPEC wants to cut production to get prices back to $70 because many countries have budgets that depend on oil and they want the price higher.

By cutting production, demand will increase and the price of oil heads higher. The problem with that is that inventories are already rising as demand continues to slow amid the global economic downturn. The sentiment among the oil buffs is that crude prices are unlikely to rise above $40 per barrel, even if OPEC decides to cut as much as 2 million barrels per day next month. Either way, I don’t think we are going to see $70 anytime soon and would bet on the low $30′s before $70.

Gold was down slightly and is fetching about $942/ ounce. There are a lot of different ways to look at gold as far as charts go and by that I mean investors use indexes, ETF’s, or even stocks. The bottom line is that most of the charts everyone is analyzing is showing bullish patterns and the market is bullish. It almost seems a sure bet gold will break $1,000 but this is when I get a little cautious. We’ve been down this road before and if you’ll recall, we had the gold bulls telling us gold was headed to $1,500. That was a year ago and it still hasn’t happened.

I’m not saying it won’t or gold can’t continue its rally but $960 will be a key level of resistance. You could make an argument that gold is rising because of the bailout programs now going on around the world and that argument is valid. The more ‘liquid’ countries make their money it puts more pressure in finding a trustworthy commodity. Gold happens to be that commodity and this could be the key on where gold is headed.

**************************************************

3. Options Education

If you are new to options trading then getting started can be an overwhelming task. Yes, there is a lot of terminology that comes with trading options and there are numerous ways to get started. What you don’t want to do is get caught in a trap for paying too much for your education. There are websites out there that charge a ton of money that claim to teach you options trading but are you really getting your money’s worth?

I hear stories of what people pay for an options education and I’m amazed at some of the prices that people are paying for option courses. People are paying $7,000 for some of the “trading software” that these option courses say you must have. I have heard investors who have spent $25,000 for an options education and they still don’t know what they heck they are doing. This is crazy.

Everybody has their way of doing business but I really believe if you are new to options trading, the best advice I can give you is to have a mentor. There are many strategies you can incorporate in your options trading account but you have to understand what they and do and not be afraid to learn them.

A lot of people are telling me their 401K plans are down 30% and 40%. My first question is why? They say “I don’t know”…

Look, what we teach here at OptionsMentoring.com are tools that you can use to protect your accounts from getting hammered while generating cash flow. We don’t upsell you on software, we teach you to use the tools that come with most brokerage accounts. It’s that simple. Other firms get you to believe that you “need” their software to “filter” trades or to “screen” option trades. If you have an account at Schwab, E*Trade, OptionsXpress, ThinkorSwim or elsewhere, you can use the tools that come with your brokerage account.

What we teach you is how to manage a trade, make adjustments, entry and exit points, and show you in real time how things work. We can teach you how to use credit spreads to generate extra cash flow for your trading account, retirement account and even your 401K.

We also offer real-time classroom training three times a week where you can interact with an instructor. You also have the ability to speak with someone live that will work with you one-on-one. In other words, a mentor.

I bring this up because I get a lot of requests on where to start and what to look for in the stock market. The key is getting started and learning to take charge of your investments without believing you need a “guru” to manage your account. You have to start somewhere and there is a lot of misleading information out there.

If you are serious about options trading my best advice is to give us a try. I’m not saying that as a sales pitch but because I really think we offer a program for a good value and one that can make you money.

**************************************************

4. Credit Spreads

Now that I have peaked your interest in option credit spreads, I’ll explain how they work.

Credit spreads can be used to generate income in your portfolio. When you sell an option and buy a lower strike priced option, you generate a net credit to your trading account. Credit spreads can be bullish (you think a stock is going up or bull call spreads) or bearish (you think a stock is going down or bear call spreads) or neutral. We specialize in the neutral strategies.

This strategy allows you to achieve both steady income with controlled risks. This is accomplished by selling and buying call or put options depending on your assumption of where a stock is headed or if you believe it will stay flat. You collect a premium up front and all you have to do is wait until the expiration date, when hopefully the positions expire worthless. The beauty of a credit spread is that the “time decay” is on your side, not working against you.

Without making this too technical, a credit spread involves both the purchase and sale of put options or call options that expire at the same time but have different strike prices. You would use put and call options if you are bullish or bearish on a stock, index, and or ETF (exchange traded fund).

Credit spreads that are out-of-the-money allow you to collect the premium on the option that is closer to the security you are following and pay for an option that is a little further out. This results in a net credit which is the money you keep in your account and the goal is to have both options expire worthless.

However, the one thing we teach you that many other option courses that are priced a lot higher than ours don’t is how to adjust your trades. By having a mentor, you will learn the probability of the trade, how to set alerts and adjust your trades. These are the three simple most important aspects of the trade and without knowing this, you could be headed for serious trouble.

The feedback we get from students that have tried other option trading courses is that the mentoring part of our program is the single most important attribute of our course. I’ll be blunt with you. The current market is one that is presenting the opportunity of a lifetime despite the fear that we are headed lower. Even if you are bullish, stocks are cheap from a historic standpoint and the volatility shouldn’t scare you either. It’s time, if you are really serious about option trading, to take the leap from textbook to real world trading. We make the learning curve that much faster and easier because we mentor you. Having a mentor to look over your shoulder is priceless.

Education is the most important tool you can ever have to build your retirement account. Don’t you think it’s time to start learning options and take control of your accounts? There were a slew of people that cashed in their retirement accounts in 2008 because they were so scared it was going to keep going lower and they pulled out of the market altogether. Instead of panicking, learn to make money in all kinds of markets. That is what we are here for.

Our Chief Market Strategist is Mike Albright and he can be reached at 1.877.709.8716. I encourage you to call him if you are seriously looking for ways to generate income in your portfolios.

**************************************************

5. Current Trades (from the Weekly Wrap and Blog.OptionsMentoring.com)

Akamai Technologies (AKAM, $17.72, down $0.12)

Akamai managed to test $18+ a few times last week and the March 17.50 calls (UMUCW, $1.45, down $0.05) were entered at $1.25 on 2/9. The calls traded as high as $1.75 and are showing a profit. We are set for a rocky week and the call options could struggle if the market heads lower. Stops should be set at $1.25. If we are stopped out, maybe we will re-enter the trade at a later date and cheaper price. If the stock manages to start the week off in positive territory, we will manage our position from there.

Bank of America (BAC, $5.57, down $0.30)

The March 6 calls (BYOCF, $0.90, down $0.25) and the March 7 calls (BYOCG, $0.60, down $0.20) were entered at 90 cents and 60 cents, respectively, on 2/12. They are right at our entry prices after the stock’s 5% slide on Friday. There are no stops on these call options but conservative traders may want to set 50% loss limits. There will be more action in this stock this week than Chris Brown at the Grammy’s. Trust me. The February options expire this Friday and there will be a battle on where the stock settles on expiration day. Our options have another four weeks until expiration but they will be volatile as well.

Genentech (DNA, $83.25, down $0.75)

The February 95 calls (DWNBS, $0.05, unchanged) are in front of the firing squad this week. This trade was a total disaster as the call options we profiled at 85 cents. We could have gotten out at 40 cents but I kept the position open because the March 95 calls (DWNCS, $0.40, unchanged) are backup. The March calls were up 10 cents for the week but haven’t been much of a wingman at this point.

Spider Gold Shares (GLD, $92.55, down $0.62)

The ETF had a terrible start to the week and hit a low of $87.60 on Monday before bouncing back with multiple up days. The March 99 calls (GLDCU, $2.05, down $0.40) and the March 100 calls (GLDCV, $1.80, down $0.40) were entered at $2.05 and $1.90. Both positions were up over 20% before Friday’s letdown. Stops are set at half our entry levels.

**************************************************

6. Earnings

Tuesday: Chesapeake Energy (CHK, $18.60, up $0.17), Fossil (FOSL, $12.09, up $0.74), FreightCar America (RAIL, $18.71, down $0.65), Jack in the Box (JACK, $23.03, down $0.24), La-Z-Boy (LZB, $0.95, up $0.12), Medtronic (MDT, $32.81, up $0.01), Rick’s Cabaret (RICK, $3.93, up $0.04), Transocean (RIG, $60.15, down $0.04) and Wal-Mart Stores (WMT, $46.53, down $1.60).

Wednesday: Advance Auto Parts (AAP, $32.82, down $0.18), Baidu (BIDU, $128,20, down $3.80), Blue Nile (NILE, $22.92, down $0.08), Deere & Company (DE, $36.11, down $1.19), Denny’s (DENN, $2.16, up $0.01), Hewlett-Packard (HPQ, $35.87, up $0.63), OfficeMax (OMX, $4.49, down $0.31), Owens Corning (OC, $13.41, up $0.04), Playboy Enterprises (PLA, $1.67, down $0.03), Priceline.com (PCLN, $72.66, up $0.45) and Whole Foods Market (WFMI, $9.97, down $0.32).

Thursday: Expedia (EXPE, $9.17, up $0.07), Goldcorp (GG, $31.75, down $0.10), Intuit (INTU, $22.97, down $0.28), Newmont Mining (NEM, $41.58, down $1.17), Noble Energy (NBL, $54.02, up $0.54), Reliance Steel (RS, $24.26, down $0.06), Sprint Nextel (S, $2.82, up $0.32) and Toro (TTC, $27.44, down $0.90).

Friday: Barrick Gold (ABX, $37.94, down $1.04), JCPenney (JCP, $15.77, down $0.04) and Lowe’s (LOW, $17.80, down $0.73).

**************************************************

7. Closing Thoughts

Last week took the wind out of the bulls’ sail as the Dow broke below the 7,800 support level. The November low is 7,400 and if that level is broken there is no immediate support which could trigger an even bigger decline. The flip side of that coin is that the stimulus packages work quicker than anyone could ever imagine and the world goes back to spending like there is no tomorrow.

This week will be the expiration of the February option chains and that will add a little extra spice to trading. Plus, we get some heavyweight earnings. Wal-Mart and Chesapeake Energy start us off on Tuesday. Wal-Mart could miss it earnings number and many analysts are now expecting something like 94 cents a share instead of the 99 cents Wall Street had figured. That would be a far cry from the $1.03 and $1.07 range Wal-Mart gave last month.

Wal-Mart is on the brink of setting fresh 52-week lows as the stock fell another 3% on Friday. If $46.25 is broken, Wal-Mart could skid as low as $42-$43. There was huge volume in the February 45 puts (WMTNI, $0.51, up $0.28) as over 7,000 contracts traded. I wouldn’t engage in these particular options but if the March 42.50 puts (WMTOV, $0.85, up $0.20) are still under a buck when trading resumes on Tuesday, they have a good chance of doubling if Wall Street punishes the stock.

Wednesday we get Federal Reserve Chairman Ben Bernanke and it is almost a given the market heads lower whenever he talks. I’m not sure what the stats are but every time I tune in to listen to him, the market heads south. We also get a report on housing starts for January.

The market will be walking on eggshells Thursday as the Labor Department will release weekly jobless claims figures. Throw in the fact that General Motors (GM, $2.50, down $0.15) and Chrysler are front and center for showing how they can repay billions in loans, options expiration on Friday, and you can see why the market is likely to be jittery.

Be sure to check the blog for updates…

Rick Rouse
Rick@OptionsMentoring.com

Tags: Bank of America, Genentech, Gold, Oil
Posted in Market Analysis, Option Trades | No Comments »

Trade Updates: Google Stop Hit/ Akamai Technologies Pops Higher

Tuesday, February 10th, 2009

Google (GOOG, $372.97, down $5.80) is trending lower this morning and the party is over for our February 370 calls (GGDBN, $13.10, down $3.90). We raised the stop yesterday to $15 and the call options were profiled last Monday at $2.30. The trade made 5x your money if you got in under $3.

Akamai Technologies (AKAM, $18.13, up $0.60) is trading nearly 2% higher and I profiled this stock in the Weekly Wrap on Sunday night. The March 17.50 calls (UMUCW, $1.70, up $0.45) are up 35% and traded for $1.25 and under on Monday. There is no specific news concerning the company and the stock is rallying with the rest of Tech.

Genentech (DNA, $84.05, up $1.36). I don’t want to list the options because those calls have been left unheard. Pun intended. We learned today that Genentech asked Roche to pay $112 a share to acquire the remainder of the company it did not own last July. That figure was above Roche’s then $89-a-share offer and the current $86.50 price tag. Roche’s hostile tender offer expires on March 12 and Genentech has said it will announce something in ten days. That doesn’t help our February 95 calls (DWNBS, $0.05, unchanged) which will probably expire worthless.

The financial trades were closed yesterday which brought down the number of open positions that I have been following. I usually don’t recommend more than 3 to 5 open positions at any one time but the financial plays were something I wanted you to take advantage of.

We are getting closer to hearing something from Geithner in a few minutes and it will be interesting to see how the market reacts. The smart money says we head lower and the Dow could test 8,000 again before today is over with.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Akamai Technologies, Genentech, Google
Posted in Option Trades | No Comments »

« Older Entries

Start 2012 with the BEST options newsletter on the internet. With 5 triple-digit option trade winners in the books, we couldn’t have asked for a better beginning for 2012. If you started with a $10,000 trading account, our option picks could have made you 150% in January. In other words, a $10,000 account would be worth nearly $25,280 as we have gone 18-1. Our Weekly Wrap is off to a 7-0 start for the year.

Here are some of our profitable recommendations: MSFT call options +124%, STX call options +100% in 2 weeks, 114% and 131% on 2 MGM call options trades in 3 weeks and 107% in AFL call options in 6 days. Some of our double-digit gains include +58% on WPRT calls, +80% on TSM and +38% on INT call options.

Over the past 4 years we are averaging a 70% winning percentage for all our trades despite volatile, flat and choppy markets. Come see why some of Wall Street's pros are following us instead of the Journal!

Here are some of our profitable 2011 recommendations: ORLY call options +191%, VMW call options +100%, JOYG call options +169%; GS put options +184%; FDX put options +164%; OXY put options +74%; +137% on RIMM put options, +1,167% on RMBS puts in 11 days, +296% on FCX calls; +157% on ZAGG calls; +110% on LNKD puts; +133% on RLD put options.

If you are missing these juicy profits, come give us a try. Get your password to our Members Area instantly when you sign up TODAY! One profitable trade will easily pay for your membership. You can request our 2008-2011 Track Records by sending us an email or filling out the box below. 665 Total Trades; 459 WINNERS or 7-out-of-10.

REGINA L.
I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year
of membership rather than the one quarter. Thanks again, and LOVE YOU ALL.

STEVE T.
Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help.

SCOTT H.
Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide.

PETER G.
Rick & Team, GREAT Call on NKE for my two trading accounts:
1) Entry at .65, out at 1.45, 1.55 Profit = $415
2) Entry at .60, out at 1.75, 1.50 Profit = $485

LAWRENCE O.
Hey Rick! Here is an update on what your picks have done in my accounts.

1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

C.J.
Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

SHAUN
Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

MICHAEL K.
I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
profitable calls. Keep up the good work.

PARAG P.
Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

JAY P.
Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

MIKE
Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

TRISH D.
Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

MIN L.
Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

JOE G.
Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

GREG F.
Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

NOEL
I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

TODD F.
Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

PAUL H.
What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

NOEL
“Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

CHRISTIAN
“Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

JOHN
“I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

CHARLES M.
“I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

BRYAN C.
“I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

JOHN H.
“I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

JEFFREY
“Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

ED
“I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

GREG
“Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

KEN
“Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

GARETT
“Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

TERENCE
“Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

Posts Tagged ‘Genentech’

Market Rebounds, Call Options Up

Start Half Positions In IBM

Weekly Wrap for 2/22/09

Weekly Wrap for 2/16/09

Trade Updates: Google Stop Hit/ Akamai Technologies Pops Higher