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Wednesday, September 8th, 2010
1:10pm (EST)
The bulls are back in familiar territory as the market awaits President Obama’s speech on a $250 billion jobs recovery plan. The Beige Book is also due out in about an hour while Consumer Credit will come out a little after that.
The President will be talking about a $50 billion infrastructure investment to rebuild and repair the nation’s roads, railways and runways. He will also ask for a permanent extension of research and development tax credits for businesses that will include the ability to write off 100% of their spending on new plants and equipment through 2011.
These events should be move the market and right now the bulls are pushing resistance once again. Volume is light which leads us to believe the market could go either way. If the bulls are going to break through heavy resistance they are going to need more fire power. Plus, the President hasn’t been too confident in his body language lately and any nervousness on his part, the bears will catch.
As far as specific stocks, Netflix (NFLX, $147.74, up $5.95) is at all-time highs and continues to expand its business in so many ways. We loved this stock back in November 2009 when shares were under $60 and although we don’t trade stocks, it has easily been a safety net for anyone who bought some and put it away.
We are hopeful the company will do a 3-for-2 or 2-for-1 stock split so we can start playing options on it again but there might be an opportunity for us to do a straddle or strangle option trade with the October options although the premiums are going to be pretty high.
As we head to press, the Dow is up 77 points to 10,417 while the S&P 500 is higher by 10 points to 1,101. The Nasdaq is showing a 26 point pop and is at 2,234.
We have a lot to cover in our Members Area and we will probably profile a Netflix trade on our Watch List as early as tomorrow. We will do a little more research and give you an update in the morning. Another old friend of ours, Dendreon (DNDN, $42.43, up $2.20) is up over 5% today on no specific news.
Tags: Dendreon, dndn, Netflix, NFLX, option picks, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off
Tuesday, August 10th, 2010
1:10pm (EST)
The bulls were behind the 8-ball before the opening bell sounded as economic data out of China revealed imports slowed significantly in the latest period due to declining demand and a tightening of monetary policies.
The news pushed futures significantly below fair value which led to a nasty open. The bears have done a good job of holding resistance levels, and, perhaps yesterday was another “head fake”. We have mentioned in the past that resistance (and support) levels can sometimes be “stretched” and that could be the case again today with the Dow down nearly triple-digits ahead of today’s big Fed announcement.
Although we have been trading “light” in recent weeks, we still believe that the market will continue to experience some wild and volatile price swings in the coming months which will present better opportunities to trade.
We have slowly been positioning ourselves in some bearish trades during the recent market rally over the past few weeks and these trades are on the move today. Sometimes it is hard to buy puts in a rising market just like it is hard to buy calls in a declining market but this is how you set your trades up for triple-digits returns. You may not always get the best entry price but the key is to recognize the trend before others do.
The Dow is currently trading at 10,609, down 90 points. The S&P 500 is off by 12 points and is at 1,115 while the Nasdaq is lower by 35 points to 2,270.
Of course, all eyes will be on the Fed and there is a chance for major move in the market once their announcement is released. We talked about the Fed’s options this morning and given today’s mini sell-off, the bulls are looking for a life jacket. However, if the Fed doesn’t appear it is going to come to the economic rescue then the bulls will be sinking with today’s ship.
As far as specific stocks, there are a few companies trading higher in an otherwise sea of red. One of our favorites, Netflix (NFLX, $124.43, up $7.53) is challenging its 52-week high of $127.96, which was set in mid-June, after announcing a deal with Epix that will expand Netflix’s library of movie titles.
Fossil (FOSL, $45.50, up $3.03) is up 7% after beating Wall Street’s earnings estimates. The company announced a profit of $55 million, or $0.80 a share, versus $17 million, or $0.25 a share, in the year ago quarter. Revenue jumped nearly 30% to $417 million for the quarter, compared to $316 million, in last year’s period.
The Fossil August 45 call options (FOSL100821C00045000, $1.45, up $0.75) are up over 100%.
We are getting aggressive with an earnings trade of our own TODAY as we have been eyeballing a company that will report earnings on Friday. These are cheap out-of-the-money options with the same type of potential as the Fossil call options just mentioned. Subscribers, check the Members Area for today’s NEW TRADE!
Tags: call options, FOSL, Fossil, how to trade options, momentum options trading, Momentum stocks, Netflix, NFLX, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Company Commentary, Earnings, Market Analysis, Market Commentary | Comments Off
Thursday, July 22nd, 2010
9:00am (EST)
The market traded north and south of the breakeven line for much of yesterday before taking a skid in the final couple of hours after Federal Reserve Chairman Ben Bernanke started talking.
Wall Street needed to hear only two words before the bears started to name that song. Big Ben’s “unusually uncertain” lyrics certainly won’t be as famous as “irrational exuberance” (the quote made by Alan Greenspan back in the day), but they were enough to rattle the market.
Bernanke also noted that central bankers were “prepared to take further policy actions as needed” to support a recovery. These remarks worried the bulls about the current economic recovery, and as a result the market sold-off.
We mentioned yesterday Ben’s body language would be watched closely, and he looked nervous in the spotlight. His voice was rather depressing compared to his usual upbeat comments, and it showed.
As a result, the Dow recorded a triple-digit loss of 109 points, or 1.1%, to settle at 10,120. The index traded to a high of 10,265 while the low was 10,065. It was the fourth session in-a-row the Dow has flirted with the 10,000 level.
The S&P 500 fell 14 points, or 1.3%, and closed at 1,069. The index finished just below the 1,070 level but could be gearing up to challenge 1,100 again this morning.
The Nasdaq appeared like it was going to be the clear winner on Wednesday but it shed 35 points, or 1.6%, and was last seen at 2,187. The index will likely make another run at its 200-day moving average of 2,240 as the index traded to a high of 2,236 yesterday and looks poised to do so again today. Tech also settled back below the 2,200 level which is still capping all rallies on a closing basis.
Turning to earnings, one of our favorite stocks let the Street down in after-hours last night. Netflix (NFLX, $119.65, down $0.74) failed to live up to the hype after the company topped earnings, but revenue came in light. The company also gave full-year guidance that also wasn’t up to par as shares are getting hit for a 10-spot this morning in early action.
Netflix reported a profit of $44 million or $0.80 a share, versus $32 million, or $0.54 a share, in the year ago quarter. Revenue came in at $520, up from $409 million, a year earlier. Analysts were looking for earnings of $0.71 a share on sales of $524 million so they missed by $4 million or so.
We were expecting a blowout quarter for Netflix and the overall results were golden, but, we were also worried about their top-line numbers as many companies are coming in on the light end. However, there are also quite a few companies that beat on both the top and bottom line and futures are showing a nice pop.
As we head to press, Dow futures are higher by 109 points to 10,167 while the S&P 500 futures are showing a 14 point pop and are at 1,078. The Nasdaq 100 futures are up 20 points to 1,835. Upside targets will be Dow 10,200-10,300; S&P 1,100; and Nasdaq 2,250 this morning.
Tags: call options, how to trade options, momentum options trading, Momentum stocks, Netflix, NFLX, option picks, option stock picks, options alerts, options newsletter, options track record, put options, stock options trading, volatile options
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Wednesday, June 9th, 2010
1:15pm (EST)
The bulls are having a follow-through day as they are pushing the market higher as Ben Bernanke continues to give an update on the recovering U.S. economy. He also added that Europe’s woes might only add a “modest” drag to our recovery if the euro can find some support and today, the currency is back over $1.20.
Although the Fed Chairman did says jobs and housing remain weak, the Dow is enjoying another triple-digit gain and is currently up 110 points, or 1.1%, at 10,050. The S&P 500 is higher by 13 points, or 1.2%, and is at 1,075 while the Nasdaq is enjoying a 30 point surge, or 1.4%, and is at 2,201.
In economic news, Wholesale inventories increased 0.4% in April, while sales rose 0.7%. Both numbers were pretty much in-line with what the pencil pushers were looking for.
One stock that continues to buck the trend is Netflix (NFLX, $116.38, up $6.05). We did a big write-up in November 2009 when shares were at $55 and we said at the time we expected the stock to double by June 2010. In fact, we had a tiger by the tail but we let it go. At the time, we profiled the Netflix June 80 calls (NFLX100619C00080000, $36.35, up $8.40) when they were at $1.65.
We were stopped out of the call options two weeks later on the Black Friday after Thanksgiving on the Dubai news. Our 2009 portfolio shows a 24% loss. Well, if you do the aforementioned math, the return would have been over 2,100% had we kept them open. Some of our subscribers did…
Imagine turning $1,650 into $36,000 in a little over 7 months.
The good news is that there are other stocks that could follow Netflix’s path and when we get through this turmoil in the current market place we will be looking at more LEAP options.
We have a lot to cover today in our Members Area so let’s get on it! We will be back in the morning with the 9am update.
Tags: momentum options trading, Netflix, NFLX, option picks, options alerts, stock options trading
Posted in Company Commentary, Hot Stocks | Comments Off
Tuesday, March 30th, 2010
1:00pm (EST)
We haven’t mentioned Netflix (NFLX, $74.84, up $0.94) in a while, but it is stock we watch every day. In fact, we wanted to talk about it today for a reason and to give those of you who aren’t subscribers a look inside our exclusive Members Area.
Sometimes in option trading when the market is flat or hard to read it’s easier to look for trades six months to a year out which are often referred to as LEAPs.
In November 2009, we profiled a Netflix call option trade and here were our initial thoughts (quotes are from 11/13/09):
“Netflix (NFLX, $58.19, down $1.25) is a company we are watching now because it has the look and feel of a stock that wants to go to $100. Right now it’s at 52-week highs and we are waiting for a break above $60. Nice round number huh? Well, the exact 52-week high is $59.89 and a break above $60 could lead to more momentum.
For high risk traders, you could play the November calls for a day trade or longer but realize these options expire next Friday. The safer play would be to look at the December calls. If Netflix does break $60 then we may send out an alert based on market conditions.
One interesting thing and here is where our new trade comes into play.
If Netflix could manage to make a run to $100 by June 2010 then we will do very well with this trade. The big reason we think the stock could go to $100 by next summer is due the serious sense it makes for someone to buy them.
Microsoft (MSFT, $29.36, up $24) already has a partnership with Netflix and would be the most logical choice. Combining the xBox with Netflix’s Roku box seems like a match made in internet heaven.
You want to know why Blockbuster (BBI, $0.83, up $0.02) is closing shops faster than a beach bar going into winter. If you have a Netflix mailing plan you can get unlimited streaming of 50,000 movie and TV shows by getting this Roku box. Just go to your computer, find the movie/show you want and enjoy it as soon as you get to the couch.
Come to think of it, Apple (AAPL, $201.99, down $1.26) would make a good fit too. Either way, even without a buyout offer, Netflix could have the muscle to make it to $100 in 8 months on its own. We would love to see the stock come back down to $55-$56 which is where short-term support lies but we will also be watching for the break above $60.” (END)
Here were out thoughts two weeks later after we were stopped out on the Dubai news. We had a tight stop on this trade and here were our comments outside the Members Area before the open (quotes are from 11/27/09):
“After pushing the major averages to new highs for the year, the bulls will be in trouble today as the bears looked poised for a HUGE market correction today. We were up late checking the futures market and shortly after midnight the Dow futures we down a whopping 247 points to 10,195. The S&P 500 futures are off by 32 to 1,076 while the Nasdaq 100 futures are lower by 54 points to 1,740.
There is news out of Dubai that shook the Asia markets and there was a heavy sell-off as investors worried about banks’ exposure to Dubai World’s debt. Dubai World is the city state’s largest corporate entity and has asked creditors for as six-month stay on debt repayments of nearly $60 billion.”
Inside our Members Area that day:
2010 June 80 calls (QNQFP, $1.40, down $0.25)
Entry Price: $1.65 (11/13/09)
Exit Target: Closed at $1.25 on (11/27/09)
Action: Netflix got hammered at the open and traded to a low of $54.71 shortly after. Needless to say we were stopped out on both trades.
We did pretty well today by cutting our losses and taking the emotion out of our trades. Yes, some of the positions bounced back but we feel a lot better going into the weekend with a clean slate for next week.
It is rare a risk event this big hits the market but they do happen. As an option trader, it doesn’t matter how much you like a certain trade…just take your lumps and regroup. We target 100% returns on our trades which gives us the luxury of having two 50% losing trades for every winner. Our success rate is much better than that of course as we have been able to hit on 8 out 10 trades on average for 2009.
However, there are times when the market will whipsaw us out of some great trades and you just have to go back to the drawing board and figure out what it all means. That is what we will be doing this weekend and we will be back with an update on Sunday night.” (END)
The point we want to make is that the Netflix June 80 calls (QNQ100619C00080000, $3.50, up $0.47) have now doubled which showed our research was spot on. Although we had a “tight stop” on this trade sometimes it pays not to have one and go with your instincts.
This trade ended up getting ridiculously cheap as Netflix dropped to a low of $48 by mid-January. However, the stock jumped 13 points when Netflix announced earnings and closed above $60. The company is also working on becoming a global force in the near future which really got Wall Street excited.
It’s important to keep these things in mind when looking for new trades or waiting for stocks to breakout but we should have revisited the story once shares broke through our $60 resistance level.
As far as the market, the bulls are struggling to hold the morning gains as the Dow is up 5 points to 11,900. The S&P 500 is flat at 1,172 while the Nasdaq is higher by 2 points to 2,405.
We are profiling another NEW TRADE in today’s write-up so let’s get to the Members Area…
Tags: Netflix, NFLX, option picks, option signals, options alerts, stock option picks, stock options trading
Posted in Hot Stocks | Comments Off
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Tight Trading Range Continues, Netflix (NFLX) At All-Time Highs
Wednesday, September 8th, 2010
1:10pm (EST)
The bulls are back in familiar territory as the market awaits President Obama’s speech on a $250 billion jobs recovery plan. The Beige Book is also due out in about an hour while Consumer Credit will come out a little after that.
The President will be talking about a $50 billion infrastructure investment to rebuild and repair the nation’s roads, railways and runways. He will also ask for a permanent extension of research and development tax credits for businesses that will include the ability to write off 100% of their spending on new plants and equipment through 2011.
These events should be move the market and right now the bulls are pushing resistance once again. Volume is light which leads us to believe the market could go either way. If the bulls are going to break through heavy resistance they are going to need more fire power. Plus, the President hasn’t been too confident in his body language lately and any nervousness on his part, the bears will catch.
As far as specific stocks, Netflix (NFLX, $147.74, up $5.95) is at all-time highs and continues to expand its business in so many ways. We loved this stock back in November 2009 when shares were under $60 and although we don’t trade stocks, it has easily been a safety net for anyone who bought some and put it away.
We are hopeful the company will do a 3-for-2 or 2-for-1 stock split so we can start playing options on it again but there might be an opportunity for us to do a straddle or strangle option trade with the October options although the premiums are going to be pretty high.
As we head to press, the Dow is up 77 points to 10,417 while the S&P 500 is higher by 10 points to 1,101. The Nasdaq is showing a 26 point pop and is at 2,234.
We have a lot to cover in our Members Area and we will probably profile a Netflix trade on our Watch List as early as tomorrow. We will do a little more research and give you an update in the morning. Another old friend of ours, Dendreon (DNDN, $42.43, up $2.20) is up over 5% today on no specific news.
Tags: Dendreon, dndn, Netflix, NFLX, option picks, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary | Comments Off