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Posts Tagged ‘RadioShack’

Apollo Group Down After Barron’s Comments

Monday, November 9th, 2009

12:50pm (EST)

Finally, Barron’s has done us a favor…

Most of you know Barron’s and I don’t see eye-to-eye on a lot of things and every now and then it seems the magazine will run an article on a company that we have profiled as a trade.  Call it déjà vu, luck of the draw, or how the cookie crumbles but the firm ran a negative piece in its Weekend Roundup on the for-profit colleges that talks about how the low graduation rates are and the high debt students are carrying despite not graduating. 

Of course, we have been on this trade like grass on dirt and we recently rolled out of a profiled Apollo Group (APOL, $53.84, down $2.17) November put position into a December put option position.  Current subscribers are up 30% on the new trade and we are looking for more downside if we can get some more negative SEC news about the company… 

Well, well, well…look who got an upgrade this morning…Abercrombie & Fitch (ANF, $37.69, up $2.68) is flying higher after Goldman Sachs (GS, $175.36, up $3.58) upgraded the stock from “Neutral” to “Buy” and added it to their Conviction Buy List.  Goldman also raised their 6-month price target from $36 to $45.  FBR and Credit Suisse also came out with upgrades. 

We have had some luck shorting Abercrombie & Fitch and the 7% surge today has put the stock right in our target zone.  However, the storm is too strong for us to step in here and the company announces earnings on Friday.  Some think the company will surprise but we don’t feel the urge to buy call options either.  We just don’t trust the company… 

RadioShack (RSH, $20.17, up $2.43) is up nearly 14% today after the company said they will sell Apple’s (AAPL, $199.73, up $5.39) iPhone at their stores.  The company said the iPhone will be available in the Dallas-Fort Worth and New York City areas beginning later this month and in stores nationwide in 2010.  We recently profiled a RadioShack trade that returned many of you over 150%, and as you can imagine, the analysts are tripping over each other to upgrade this one. 

Credit Suisse also upgraded RadioShack from “Neutral” to “Outperform”, calling the news a “game-changer”.  I like how powerful that made this sound because it will help the Shack’s earnings in the quarters to come.  Credit Suisse echoes our sentiment and commented that the iPhone could add more than 25 cents to 2010 earnings.  The price target was raised from $15 to $25.

FBR Capital got into the action by raising their 2010 estimate from $1.75 to $2.00 per share.  The raised their rating on RadioShack to ”Outperform” and the price target from $23 to $26.

Another stock we have been watching closely is Research In Motion (RIMM, $60.78, up $2.06) which broke through $60 despite a downgrade from Susquehanna.  There seems to be some takeover chatter hitting the water coolers this morning and most of it centers on Microsoft (MSFT, $28.68, up $0.16).  Although it is nothing new, some traders think Microsoft could finally be interested in launching a bid for RIMM.

This rumor will likely get shot-down as the day drags on although the deal between the two companies makes a lot of sense…

And finally, Priceline.com (PCLN, $175.07, up $3.07) reports AFTER the bell.  We were under the assumption the company would be reporting BEFORE the bell but obviously that is not the case.  Our resource had said the firm would report before the bell and when we didn’t see anything by 9am this morning we should have double-checked.  In any event, the trade we profiled from Friday is positive and we have updated the trade in the Members Area along with a few others…

The Dow has hit a new high for the year as it is up 155 points to 10,179.

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Posted in Company Commentary, Earnings, Hot Stocks, Market Commentary, Option Trades | Comments Off

MomentumOptionsTrading.com Weekly Wrap for 10/25/09

Sunday, October 25th, 2009

Market Commentary

It was a choppy week of trading as the bulls battled the bears to keep the Dow over 10,000.  The market got some solid earnings reports but it wasn’t enough to muster any kind of momentum for the bulls as the lost the battle on Friday.  The Dow lost 109 points and ended the week down 24 points to settle at 9,972.

The Nasdaq fell 2 points for the week and closed at 2,154 while the S&P 500 closed at 1,079, down 8 points.  The bears didn’t do any real damage but there were a couple of days last week that selling was heavy into the close.  That suggests Wall Street is getting nervous and we should get a clear picture on things going forward with another heavy round of corporate earnings this week.

In the earnings section below, we have a number of companies in BOLD and those are the ones that we are watching for clues on the economy.  Others are in bold because they will likely move significantly, up or down, when they announce earnings.

We outlined some near-term targets for the market in last week’s Weekly Wrap (Dow, 10,400; Nasdaq 2,275; S&P 500 1,175) but the better-than-expected earnings results have not translated to any big gains for the market.  Companies are still doing a great job of cutting costs but by trimming their workforce it continues to weigh on unemployment which in turn hurts consumer spending.
These factors alone have weighed on the market but companies are saying good things.  However, the bulls appear tired and we could continue to have choppy trading if the bears take advantage of them resting.  This was pretty clear a few days last week when the market plunged in the final hour of trading.

Either way, it should be another interesting week.

Before we get into the list of companies reporting earnings this week, we wanted to talk about Microsoft (MSFT, $28.02, up $1.43) again.  In our 1pm update on Friday we talked about playing earnings and we took a look at what would have happened if you had placed your bets on Microsoft before the company announced earnings on Friday.

If you were bullish you got paid.  The November 27 calls (MSQKB, $1.40, up $0.75) closed with a 115% gain on Friday and traded as high as $2.40.  They closed at 65 cents on Thursday.  This is why you SELL into strength the next day after a company announces earnings.  If you bought 10 contracts, you gave back $1,000 if you didn’t get out at the high which was achieved in the first 10 minutes of trading.

If you were bearish, they you got your lunch money stolen.  The November 26 puts (MSQWA, $0.17, down $0.50) fell 75%.

Now, with Microsoft at $26.50 on Thursday before the closing bell, you could have bought BOTH contracts which is known as a strangle option trade.  A straddle is when you buy both a call and put option with the same strike price.

To maximize your returns on the strangle trade you would have had to close the calls at the open and sold the puts at the close, OR, you could have left the puts open in hopes of the stock falling back down over the next few weeks.  The put options do not expire until November 20th.

So what would the return have been you ask?  Well, the call options were going for 65 cents and the put options were going for 67 cents on Thursday.  Together, you were looking at $1.40 for both options or $1,400 for 10 contracts of each.

If you could have managed to get out of the calls at $2.35 and if you would have sold the puts at 15 cents, you would have netted $2.50, or $2,500.  That would have been a return of nearly 80% by playing it safe.  Of course, for strangle option trades to work you usually need a 5%-10% move or more in the stock AND you have to make sure the option prices aren’t inflated.  As you can see, there are numerous ways to trade earnings and we wanted to show you other ways to use options in your portfolio.

We will be back in the morning with the 9am update.  The current trades will be covered as well and don’t forget RadioShack (RHS, $15.66, up $0.12) reports before the bell.  For those of you who are not current subscribers, you can sign up anytime between now and 8am Monday morning to get the trade updates and any new trades in the comings days, weeks, and months…

EARNINGS for the week (quotes are from Friday’s close):

Monday: Arch Capital Group (ACGL, $68.88, down $0.17), Atlas Air (AAWW, $35.47, down $0.76), Cabot Oil & Gas (COG, $38.90, down $0.85), Corning (GLW, $15.65, up $0.05), Dollar Thrifty Automotive (DTG, $24.81, down $0.83), Flextronics (FLEX, $7.24, down $0.27), Lacrosse (BOOT, $14.75, up $2.00), National Oilwell Varco (NOV, $46.89, down $1.71), PrePaid Legal (PPD, $41.68, down $1.87), RadioShack (RSH, $15.66, up $0.12), Rent-A-Center (RCII, $20.63, down $0.04), SOHU.com (SOHU, $71.35, up $2.61), Verizon (VZ, $28.85, down $0.17) and Winn-Dixie Stores (WINN, $13.55, down $0.09).

Tuesday: Apollo Group (APOL, $74.03, down $0.78), Baidu (BIDU, $435.31, up $19.71), Black Box Network Services (BBOX, $27.59, down $0.06), Buffalo Wild Wings (BWLD, $40.51, down $0.80), Cephalon (CEPH, $53.92, down $0.82), DeVry (DV, $55.50, down $0.19), DreamWorks Animation (DWA, $31.90, down $0.66), Franklin Resources (BEN, $112.93, up $0.69), Group 1 Automotive (GPI, $32.84, down $1.63), Harris (HRS, $39.45, down $0.93), Massey Energy (MEE, $31.64, down $1.08), McKesson (MCK, $60.31, down $0.46), NutriSystem (NTRI, $19.54, up $0.39), Open Text (OTEX, $39.28, down $0.55), Panera Bread (PNRA, $55.95, up $0.36), Rayonier (RYN, $42.86, down $0.40), Under Armour (UA, $31.51, up $0.23), United States Steel (X, $40.87, down $0.76), ValueClick (VCLK, $12.85, down $0.17), Visa (V, $74.12, down $1.57) and Wynn Resorts (WYNN, $62.46, down $0.92).

Wednesday: Akamai Technologies (AKAM, $21.50, down $0.10), Cerner (CERN, $82.02, down $1.33), Churchill Downs (CHDN, $36.92, down $1.42), ConocoPhillips (COP, $51.97, down $0.96), Express Scripts (ESRX, $80.70, down $0.78), First Solar (FSLR, $152.39, down $3.69), Flowserve (FLS, $105.15, down $1.04), GlaxoSmithKline (GSK, $40.24, down $1.30), Goodyear Tire & Rubber (GT, $17.75, up $0.02), Hanesbrands (HBI, $23.20, up $0.08), International Paper (IP, $23.72, down $0.66), Jones Apparel Group (JNY, $18.55, down $0.72), Lazard (LAZ, $40.37, down $0.22), O’Reilly Automotive (ORLY, $35.02, down $0.79), Owens Corning (OC, $23.18, down $0.70), Praxair (PX, $82.68, down $1.81), Ryland Group (RYL, $20.99, down $1.14), StellarOne (STEL, $11.92, down $0.33) and WellPoint (WLP, $46.03, up $0.01).

Thursday: Allergan (AGN, $56.73, down $0.76), Apache (APA, $99.39, down $2.69), Barrick Gold (ABX, $37.57, down $0.36), Chicago Mercantile Exchange Holdings (CME, $319.96, up $2.44), Dynamic Materials (BOOM, $19.48, down $0.71), Expedia (EXPE, $26.36, up $0.48), ExxonMobil (XOM, $73.57, down $0.87), Genworth Financial (GEN, $10.40, down $0.64), Kellogg (K, $50.20, down $0.44), MetLife (MET, $36.95, down $1.14), Mohawk Industries (MHK, $48.02, up $0.42), Moody’s Corporation (MCO, $25.03, down $0.55), OfficeMax (OMX, $11.70, down $1.23), Procter & Gamble (PG, $57.64, down $0.49), Shaw Group (SHAW, $28.86, down $0.50), Stanley (SXE, $25.75, down $0.87), Strayer Education (STRA, $220.95, down $1.05), Timberland (TBL, $14.40, down $0.34) and Waste Management (WM, $30.93, down $0.55).

Friday: Alliant Energy (LNT, $27.47, down $0.42), Black Hills (BKH, $25.29, down $0.40), Chevron (CVX, $76.68, down $0.61), Coventry Health Care (CVH, $18.70, up $0.06), Dominion Resources (D, $35.17, down $0.32), Penske Automotive Group (PAG, $18.35, down $0.42), Regency Centers (REG, $36.05, down $0.19), Sony (SNE, $28.91, down $0.35) and Washington Post (WPO, $467.10, down $9.00).

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Posted in Hot Stocks | Comments Off
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Trader Comments:

    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.

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    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!

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    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!

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

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    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.

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    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.

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    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.

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    KEN
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    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.”
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