11:00pm (EST)
Abercrombie & Fitch (ANF, $31.54, down $2.71)
September 32 puts (ANFUJ, $2.20, up $1.00)
Entry Price: $1.25 (8/14/09)
Exit Target: $2.50
Return: 76%
Stop: 60 cents, raise to $1.75
Action: Abercrombie was a train wreck all day and we did well by buying the puts during Friday’s run-up in the shares. Our exit target is $2.50 but we may get more juice out of this lemon if ANF dips below $30. Notice our stop was raised to protect profits…Yeah, you knew I was going to mention the August 32.50 puts (ANFTZ, $1.40, up $1.05) which soared 300% didn’t you? Again, I can’t take credit for the August put options because I listed them by mistake but many of you liked the trade anyway and hit a huge homerun today.
Bank of America (BAC, $16.56, down $0.83)
January 20 calls (BYOAT, $1.25, down $0.18)
Entry Price: $1.18 (8/12/09)
Exit Target: $2.20
Return: 6%
Stop: 55 cents, raise to $1.10-$1.15
Action: If you bailed on this trade today, I wouldn’t blame you. In fact, there is a good chance these call get cheaper if the market can’t bounce back. We can still give the trade a chance but stops can be raised to $1.10-$1.15. No need to hang around if we can get them cheaper in a few weeks or a month.
Citigroup (C, $4.00, down $0.04)
January 7.50 calls (CAQ, $0.14, down $0.01)
Entry Price: $0.14 (8/12/09)
Exit Target: 50 cents
Return: 0%
Stop: None
January (2011) 10 calls (VRNAB, $0.37, down $0.03)
Entry Price: $0.40 (8/12/09)
Exit Target: 80 cents
Return: -8%
Stop: None
Action: Citigroup made a nice comeback after falling to a low of $3.80 right out of the gate. In fact, at one point the stock was almost back to even. Volume was still brisk and remember there are no stops on these positions. I raised the one on Bank of America because the options were over $1.00 and that is a lot of premium to lose. The option prices for these Citigroup calls aren’t quite as much and the 2011 have 16 months before they expire.
Home Depot (HD, $26.11, down $1.03)
August 26 puts (JGLTM, $0.64, up $0.38)
Entry Price: $0.54 (8/17/09)
Exit Target: $1.00
Return: 19%
Stop: $1.00
August 25 puts (HDTE, $0.32, up $0.22)
Entry Price: $0.26 (8/17/09)
Exit Target: 50 cents
Return: 23%
Stop: $1.00
Action: These two trades were listed yesterday but take them for what they are. They are cheap “out-of-the-money” puts that will do really well if Home Depot takes a dive in the morning. For you new folks, this is options expiration week which mean the August options expire on Friday. This type of event happens every month and is often quite volatile as traders try to bring stocks closer to their strike prices. If HD drops 8%-10% after reporting earnings in the morning then these puts will explode. Otherwise, if there is no movement or the stock trades back to $27 then you could be looking at a bath.
Imax (IMAX, $9.11, down $0.09)
September 7.50 calls (IMQIU, $1.70, unchanged)
Entry Price: $1.90 (8/4/09)
Exit Target: $3.00
Return: -11%
Stop: $1.00
March 2010 12.50 calls (IMQCV, $0.47, unchanged)
Entry Price: $0.45 (8/10/09)
Exit Target: $1.00+
Return: 4%
Stop: None
Action: Continue to hold.
Wells Fargo (WFC, $26.30, down $1.43)
September 26 puts (FHUUZ, $1.45, up $0.55)
Entry Price: $1.30 (8/11/09)
Exit Target: $2.60
Return: 12%
Stop: $0.65, raise to $1
Action: Wells ended the day right near its low of $26.25 and this position has now turned positive. The exit target for these puts remains $2.60 but if we can get a quick run to $2.00 then we will raise the stop again.
Note: Futures are higher as I go to press…Dow futures are up 40, the Nasdaq futures are up 8 while the S&P 500 futures are up 4. Of course, it’s 11pm at night here on the right coast so we still have the Asian and European markets to get through before we open. Today’s action was ugly but I didn’t feel like there was a lot of panic. However, if the hits keep coming there will be a few bulls that run for cover. How well we hold up depends on the amount of buyers that come in on the dips.
Rick@MomentumOptionsTrading.com
Get RSS Feed
Futures Up, Hasbro Beats Street
Monday, February 8th, 2010
9:10am (EST)
Futures are trading slightly higher this morning as the market looks to end a four-week losing streak. There is no economic news out today so the market will try to rally off earnings and enthusiasm. In fact, it is a relatively quiet week in terms of economic reports except the weekly unemployment report which is due out Thursday.
Hasbro (HAS, $33.30, up $2.50) is up 9% in pre-market trading after reporting a profit of $166 million, or $1.09 a share, versus of $94 million, or $0.62 a share, in the year-ago quarter. Wall Street has pegged the company to earn 81 cents a share.
The fourth quarter is big for toy makers since it contains the holiday period and can make up to half of the quarter’s sales. Hasbro said revenue climbed to $1.38 billion from $1.23 billion, topping Wall Street’s estimate of $1.34 billion.
Home Depot (HD, $27.98) got an upgrade to ”Overweight” from “Equal Weight” from Morgan Stanley (MS, $27.26) as they believe Home Depot’s realignment has positioned them well to benefit from a housing recovery. Morgan gave the stock a $35 price target.
As we head to press, Dow futures are up 18 to 9,959 while the S&P 500 futures are higher by 3 to 1,063. The Nasdaq 100 futures are off by a point and are at 1,746.
Tags: HAS, Hasbro, hd, Home Depot, Morgan Stanley, MS, option picks, option signals, options alerts, stock options trading
Posted in Earnings, Market Analysis, Market Commentary | Comments Off