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Posts Tagged ‘PowerShares QQQ’

Trade Updates

Sunday, August 9th, 2009

11:35pm (EST)

Bank of America (BAC, $16.42, down $0.28)

November 15 calls (BYOKO, $2.60, down $0.27)

Entry Price: $1.50 (6/12/09)
Exit Price: $3.00
Return: 100%
Stop: CLOSED

Action: These calls hit $3.20 on Friday and I had raised our exit target Thursday night to $3.00. BofA traded to a high of $17.14 and we were stopped out on the way back down. Our next step is to see how BofA acts this week.

Now, here is where I want to talk about “rolling” out your positions. Let’s say you had bought 10 contracts for $1,500 back on June 12th which is when the trade was initiated. That gives you the luxury of taking a chance on some cheaper out-of-the-money calls.

The November 17.50 calls (BYOKZ, $1.40, down $0.16) and the November 20 calls (BYOKT, $0.66, down $0.12) could be used as a replacement for the 15′s. Target $1.25 as an entry price for the 17.50′s but they could be considered a buy up to $1.50if BofA runs again this week. For the 20′s set a limit price of 55 cents and don’t pay no more than 75 cents.

If your profits were $1,500 on 10 contracts for the original trade then you made a 100% return. You would be risking half of that if you bought 10 contracts of the 20′s. It would cost you $750 (75 cents x 10 contracts) and would give you the assurance that no matter what happens you still would be up 50% from your original investment. That means you could ride these things into the ground and they could expire worthless and you still netted 50%.

For you new subscribers, if you take this trade, then there is a chance BofA retreats and never touches $20. Then you would risk losing ALL of you capital if you don’t have stops in place. Having said that, set stops at half of your entry price. The stock has had a huge run over the last 10 trading days so you could also do just “half” positions. That means if you normally buy 10 contracts, buy 5. If you normally do 20 contracts, go with 10.

Cisco Systems (CSCO, $22.12, down $0.12)

October 20 calls (CYQJD, $2.64, down $0.13)

Entry Price: $1.50 (6/2/09)
Exit Price: $3.00 (8/4/09 1/2 the trade was closed)
Return: 100%
Stop: $2.50

Action: The call options traded to a high of $3.05 when Cisco hit $22.74 but faded as the day wore on. The break above $22.50 was good on a technical basis and that clears the way for a test of $24. I know I have been calling for $25 but the charts are saying if we clear this area, $24 would be the next hurdle.

You also could have closed the other half of this trade once the calls hit $3.00 on Friday but the stop protects our profits while waiting to see what Cisco does from here.

Visa (V, $69.17, up $0.52)

August 70 calls (VEHHN, $1.20, up $0.10)

Entry Price: $1.60 (7/27/09)
Exit Price: $3.20
Return: -25%
Stop: 80 cents

Action: Visa is another stock that is running right against resistance and $70 is the key this week. Otherwise, these calls will start to lose some serious “time premium” and they are still technically out-of-the-money.

Imax (IMAX, $9.35, down $0.05)

September 7.50 calls (IMQIU, $1.90, down $0.10)

Entry Price: $1.90 (8/4/09)
Exit Price: $3.00
Return: 0%
Stop: $1.50

Action: These call options are right at entry level prices and it will be interesting to see if Imax can keep it rolling. The company reported its first profit in 3 years and the shares made it above $10 after they announced earnings. It would be nice to see a few Wall Street boys come out with “upgrades” but Imax has the pieces in place to make a ton of cash.

Another trade I would like to add to the mix is the March 2010 12.50 calls (IMQCV, $0.50). These options do not expire until March 19th 2010. Folks, that is 8 months away. I’m going to run some quick figures by you and you will see why buying 10 contracts at 50 cents ($500) could pay off big time when March rolls around. If Imax is at $15, these call options are worth $2.50 each or $2,500 minimum. Since Imax’s slogan is “Think Big”, then if the stock is at $20, these calls are worth $7.50 or $7,500. $500 to $7,500 is a “15-bagger” as the great Peter Lynch would say…

PowerShares QQQ’s (QQQQ, $39.88, up $0.50).

August 40 calls (QQQHN, $0.63, up $0.12)

Entry Price: $0.65 (8/7/09)
Exit Price: $1.30
Return: -2%
Stop: 30 cents

Action: This was a trade that was added on Friday and the futures are mixed at 11:20pm. Dow futures are up 11, S&P 500 futures are up 1 while the Nasdaq futures are down 1. I will be back in the morning with the earnings outlook and what to watch for this week.

Rick Rouse
Rick@MomentumOptionsTrading.com

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Posted in Entertainment Stocks, Option Trades, Strategies, Trading Tips | No Comments »

Who’s Your Daddy

Friday, August 7th, 2009

1:20pm (EST)

Make no doubt about it, the bulls are totally in charge of this market. If there was any doubt, today’s breakout has sent the Nasdaq and S&P 500 to new highs. The Nasdaq is up 34 points to 2,007 while the S&P 500 is up 18 to 1,015. The jobs report was key and I told you last night I expected a big move.

We were closed out of a number of good trades yesterday but if this rally is for real there will be plenty of opportunities to make some money. We still have a few open positions and those are up today so we don’t really need to “press” the issue.

However, if you are stretched for a trade…you could play the PowerShares QQQ’s (QQQQ, $40.01, up $0.63). It is a little risky going long before the weekend because you leave yourself open to a lot of risk. The August 40 calls (QQQHN, $0.70, up $0.19) are up 37% on today’s rally and would have further room to run if the market continues higher.

If you do enter the trade, set limit prices at 65-70 cents and set stops at half of your entry price. Remember, you could get taken out if the market drops lower on Monday right off the bat because of some politcal news or something.

I’ll be back Sunday night with the Weekly Wrap.

Rick@MomentumOptionsTrading.com

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Posted in Market Commentary, Option Trades | No Comments »

Market's Woes Continue

Wednesday, July 8th, 2009

2:30pm (EST)

After spending the first couple of hours in positive territory, the market has given up all of its gains as all three of the major indexes have turned negative. The S&P 500 is getting hitting the hardest as it is down nearly 1%, or 10 points, to 871.

Yesterday I explained how the S&P 500 rolled over and fell below its 200-day moving average. A closer look at the chart also reveals a head-and-shoulders pattern that has been penetrated. The full impact of last Thursday’s jobs losses is starting to set in and the bulls seem to be retreating. Talk about another stimulas package is also weighing on the market.

The PowerShares QQQ’s (QQQQ, $34.45, down $0.08) are trading lower and the July 36 puts (QQQSJ, $1.60, up $0.10) have traded to a high of $1.80 today. We could get a “dead-cat bounce” so be careful with these if you haven’t started taking profits. There may be more room for profits in these options but start putting stops in place.

American International Group (AIG, $12.88, down $0.87) is taking another pounding as it is down 7%. The July 18 puts (AIGSR, $5.75, up $1.15) opened at $4.80 while the July 15 puts (AIGSO, $3.20, up $0.67) opened at $2.80 have hit a low of $2.34. I have been mentioning the weakness in AIG and today was a good day to go out and make some money.

Amgen (AMGN, $59.98, up $7.75) just couldn’t make it past $61 which is what the chart showed us this morning but the July 60 calls (YAAGL, $1.25, up $1.21) are still up 3,000%. That was not a typo. These options closed at 4 cents yesterday and opened up at 60 cents. I mentioned these BEFORE the opening bell and they have hit a high of $1.80 today.

I’ll be back tonight with an update on Alcoa (AA, $9.18, down $0.23).

Rick Rouse
Rick@MomentumOptionsTrading.com

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Posted in Company Commentary, Market Analysis, Market Commentary, Option Trades, Strategies, Watch Lists | No Comments »

Monday Night Football

Monday, July 6th, 2009

11:30pm (EST)

Yeah, I knew that headline would get your attention instead of a “Monday Night Wrap”…

In what turned out to be a decent day if you are a bull, the market managed mixed gains after spending most of the session in the red. We were looking at a nasty open which was somehow mitigated by a better-than-expected ISM Services Index reading. I won’t bore you with the details on what this economic announcement means (Google or Bing it…) but it seemed to help.

Call it a mild victory for the bulls, or, call it the calm before the storm if you are bearish. In any event, the Dow wound up higher by 44 points and closed at 8,324. The S&P 500 added 2 points but still finished under 900 at 898. The Nasdaq took a hard dive right after the opening bell but managed to recover some of those losses. Still, it was not enough as the Tech index fell 9 points to finish at 1,787.

Taking a look at specific stocks, Alcoa (AA, $9.26, down $0.60) took a trip to a low of $9.03 after an analyst predicted even bigger losses than current Wall Street estimates. The current average estimate has pegged the company losing 32 cents a share but the one analyst sees a loss of 58 cents.

The July 10 put options (AASB, $1.02, up $0.40) were profiled at $1.00 and made it to a high of $1.16 when Alcoa hit its low for the day. I didn’t think they would do much but when you do the math it is still a 15% gain. Earnings are on Wednesday so try and be out of the trade before then.

Alcoa is getting “cheap” and the best time to buy beaten down stocks are when the clouds are the darkest. I think Alcoa is at least a $15 stock once aluminum demand picks back up and we will have to wait to see what earnings may bring. If the stock continue lower and falls below $8, I may seriously pick up some shares for my own portfolio. I’m not a big stock buyer but Alcoa is a steal at these levels if your time horizon is one or two years.

The PowerShares QQQ’s (QQQQ, $35.41, down $0.19) July 36 puts (QQQSJ, $0.94, up $0.04) traded 75,000 contracts as option traders played them like a fiddle today. I said to use them as a direct play on the market’s weakness but we didn’t get the ”snowball” or downside that we were hoping. Still, some traders were able to pick these put options up for under a $1.00 as they traded to a low of 93 cents after the opening bell. The puts traded to a high of $1.26 which represented a 25% gain. Keep them on your Watch List…

If you will notice, a lot of trades that I have been profiling have been short in nature because of the volatility in the market. We should get a clear direction over the next few weeks so until then, we have to keep tighter stops on our positions and be quick to pull the trigger on profits.

Rick@MomentumOptionsTrading.com

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Posted in Market Commentary, Option Trades | No Comments »
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Trader Comments:

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    LAWRENCE O.
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    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.

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    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!

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    “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.”
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