Get RSS Feed
Trade Updates – Tuesday, November 3, 2009
11:30am (EST)
New Trades!!!
Trade #1
Imax (IMAX, $10.41, up $0.14)
Buy to OPEN IMAX November 10 calls (IMQKB, $0.80, up $0.15)
Imax will report earnings on Thursday BEFORE the bell and this may well be an “all-or-nothing” trade. There are a couple of reasons why we like this trade.
The last time the company reported earnings they posted a profit which was a first in quite some time (if ever). From August 4th, here were my thoughts before earnings when the stock was at $9:
“I will agree that the stock is risky because Imax hasn’t turned a profit in years. That could all change Thursday when the company reports current earnings. Wall Street is expecting a profit of 2 cents. Last quarter, Imax was expected to lose 8 cents a share and came in at a loss of 6 cents. There are only 5 analysts who follow the company so the chance for upgrades are there if Imax does report a profit or beats estimates.” (END)
Two days later on August 6th:
“Imax (IMAX, $9.84, up $0.34) finally turned a profit. We were in this trade like wool on sheep and Imax didn’t let us down. For the quarter, the company posted a profit of $2.6 million, or $0.05 a share versus a loss of $12.2 million, or $0.29, a year earlier. Revenue came in at $41 million or a 94% increase.” (END)
As you can see, Imax did not get a big pop that day after a sweet earnings report but the stock also didn’t sell-off. We are still in a choppy market and if Imax doesn’t turn back-to-back profits then share could take a hit.
Well, if you will notice from the August 4th update, an analyst DID come out with a “Overweight” rating just last week.
Trade #2
Barrick Gold (ABX, $38.97, up $2.46)
Buy to OPEN November 40 calls (ABXKH, $1.20, up $0.73)
These calls have been exploding this morning. They OPENED at 40 cents and we started watching them at 60 cents. These calls could make a run to $2.00 and they are moving fast. Do not pay over $1.30-$1.35 for them. This will only be a one or two day trade and the stock appears to be headed to over $40. Its 52-week high is $42.10.
****************************************************
9:05am (EST)
Research in Motion (RIMM, $55.74, down $2.99)
November 55 puts (RFYWK, $2.25, up $1.10)
Entry Price: $1.00 (10/30/09)
Exit Target: $2.00
Return: 153%
Stop: $2.00 (sold half @ $2.80 on 11/2) (see special note)
Action: Wow! Research In Motion fell to a low of $54.30 on Monday after an analyst downgraded the stock to a “Sell” rating from “Buy”. It looks like we beat the Street to this trade as we told you the smart-phone trade was getting long in the tooth.
The put options hit a high of $2.95. We said to close half in our afternoon update yesterday when the puts were going for $2.80. We also said to place a stop of $2.00 on the other half.
RIMM has entered the “freefall” that I was trying to show on the chart and hopefully shares continue lower from here on out. If we do get a rebound the stop is place to protect the other half. If the position is stopped out at $2.00 the return would be 140%.
If we are not stopped out, we will raise the stop along the way to lock in further profits. Remember, these options expire on November 20th.
Special Note: RIMM is up 50 cents in pre-market trading this morning so be careful with the $2.00 stop if you want to keep the other half of the trade open. You can lower this to $1.75 if you want to give it a little more wiggle room but if we are stopped out we may just roll the position into some December put options.
Garmin (GRMN, $30.46, up $0.59)
December 25 puts (GQRXE, $0.90, down $0.20)
Entry Price: $0.75 (10/29/09)
Exit Target: $1.50+
Return: 20%
Stop: 50 cents
Action: Continue to hold.
Apollo Group (APOL, $57.36, up $0.26)
November 55 puts (OAQWK, $1.60, down $0.20)
Entry Price: $1.00 (10/28/09)
Exit Target: $2.00
Return: 60%
Stop: 50 cents, raise to $1.10
Action: Continue to hold.
