Option Investor
Newsletter

Daily Newsletter, Thursday, 1/20/2011

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

It Could Have Been Worse

by Todd Shriber

Click here to email Todd Shriber
Stocks were able to shrug off losses that were far worse earlier in the day to avoid the worst two-day stretch for the S&P 500 since November, but even with a late-day pick-me-up, all three major U.S. indexes closed in negative territory today despite a batch of encouraging economic data. The Dow barely closed in the red and actually looked like it might find its way to positive territory while the S&P 500 lost just over a tenth of a percent. The Nasdaq lost nearly 1% and the Russell 2000 tumbled 1.13%.

Stats Table

China's latest GDP report showed the world's fastest growing major economy expanded at a pace of 9.8% in the fourth quarter, easily topping economists' estimates and casting fresh doubt over the effectiveness of the tightening measure Beijing has thus far employed. At this point, it is quite obvious that the Chinese economy is proving very difficult for the guys in Beijing to control and all that does is stoke concerns about inflation, the four-letter buzz word for emerging markets in 2011.

It is a viscous circle when it comes to Chinese economics. The GDP beats estimates and that shows tightening measures are not working and that means more will be on the way. U.S. stocks sell-off as a result. Of course the other option would be for China's GDP report to disappoint, but we wold still be left with a sell-off. Pick your poison, but neither is particularly appetizing.

The China news combined with rising inventories here in the U.S. weighed on oil prices today with NYMEX-traded crude tumbling as low as $88 per barrel for the first time in 10 days. The U.S. Energy Information Administration said oil inventories rose 2.62 million barrels for the week ending Jan. 14 compared with estimates of a draw of 600,000 barrels. What should be really worrisome for the oil bulls is that oil declined on a day of positive jobless claims news.

Oil Chart

Speaking of those economic data points, the National Association of Realtors reported December existing home sales surged 12.3% to a seasonally adjusted 5.28 million units. That compares with a November reading of 4.68 million units. Economists had been expecting the December number to come in at 4.8 million units.

The Conference Board's December reading of leading economic indicators rose 1% after gaining 1.1% in November, perhaps buoying sentiment that the U.S. economic recovery may quicken its pace this year. Economists were expecting a December reading of 0.6%. Leading economic indicators have now risen for six straight months.

The Labor Department said initial claims for jobless benefits dropped to 404,000 last week from a revised reading of 441,000 the previous week, good for the biggest decline since February 2010. Continuing claims fell to 3.86 million, the lowest point in two years.

The trend for jobless appears to be downward, certainly a good sign for the U.S. economy and a real spark could be seen if ''support'' for the four-week moving average at 400,000 is broken. That number still hovers close to 412,000. It appears that we are getting closer to the point where we have a real recovery, one that actually produces enough jobs to bring down unemployment, rather than the pseudo-recovery we have been in for the last year and a half, according to Zacks Investment Research.

Jobless Claims

There was a slew of earnings news today, but I will keep the focus on some of the marquee names rather than get into every company that reported today. An interesting factoid about today's reports: It was a bad day to be a triple-digit stock that offered up a disappointing outlook.

Take the case of Freeport McMoRan (FCX), the largest U.S. copper miner. Sure, it was nice the Arizona-based company said its fourth-quarter results surged 60% and it has to be acknowledge this stock has doubled since last June thanks to soaring copper and gold prices, but a different fate may be awaiting this high-flier in 2011.

China is expected to ramp domestic production of base metals and Freeport announced its 2011 copper and gold sales will lag the numbers posted by the company in 2010. Freeport said copper sales are expected to drop to 3.85 billion pounds in 2011 from 3.9 billion pounds in 2010. It previously forecast 2011 sales of 3.9 million pounds while gold sales are expected to be 1.4 million ounces this year, down from 1.86 million in 2010, it said, and below its previous forecast of 1.5 million ounces, according to Reuters.

Add to that the fact that Freeport is forecasting higher production costs of $1.10 per pound of copper this year compared with 79 cents per pound last year and throw in China's GDP news, which pressured copper futures, and it was an ugly day to be long Freeport.

Freeport McMoRan Chart

Speaking of triple-digit laggards, the worst offender is F5 Networks (F5). The Seattle-based maker of software that manages computer networks plunged $29.63, or 21.4%, to $109.15 after announcing some disappointing guidance. F5 saw volume that was about 11 times the daily average and most of the declines were seen before the open as the shares traded in a range of less than $9 today.

Still, the company is forecasting fiscal second-quarter revenue of $275 million to $280 million, below the Wall Street estimate of $280.7 million. F5 expects to earn 84-86 cents per share on an adjusted basis in the quarter. Analysts are currently calling for 85 cents a share.

If you are looking for the silver lining here it is that several banks and research firms rushed to F5's defense using phrases such as ''buying opportunity'' and ''compelling risk/reward'' following the sell-off. Of course that did not stop some of them from paring their price targets on the stock.

F5 Chart

Over in the world of financials, for all the recent earnings reports that have prompted investors to end this sector's party before it really got started, there was some decent news today courtesy of Morgan Stanley. Perhaps the investment banking gods were shining on Morgan Stanley today after rival Goldman Sachs (GS) disappointed investors earlier this week.

Whatever the case may be, Morgan Stanley surged $1.27, or 4.6%, to $29.02 after saying it earned $836 million, or 41 cents a share, in the fourth quarter, compared with $617 million, or 29 cents a share, a year earlier. Revenue jumped 14% to $7.81 billion. Analysts had been calling for a profit of 35 cents a share on revenue of $7.35 billion.

Investment banking revenue climbed to $1.8 billion, up 5% from a year earlier and up 44% from the third quarter while revenue in Morgan Stanley institutional securities business, including investment banking, sales and trading, jumped 12% to $3.6 billion, according to the Wall Street Journal.

Morgan Stanley Chart

In after hours news, Google (GOOG) said its fourth-quarter profit rose to $2.54 billion, or $7.81 a share, from $1.97 billion, or $6.13, a year earlier. Excluding one-time items, the largest U.S. provider of Internet search services earned $8.75 a share, topping the $8.08 per share estimate of analysts polled by Bloomberg. Revnue checked in at $6.37 billion, beating analysts' forecasts of $6.06 billion.

California-based Google is also making some headway against Apple (AAPL) in the increasingly competitive smartphone market. Phones that run on Google's Android operating system are widely viewed as among the most viable competitors to the iPhone's stranglehold on this market. Well, Apple is not the market leader, yet, that honor goes to BlackBerry maker Research In Motion (RIMM), but Google is giving Apple a run for second place.

Android topped Apple’s iPhone in U.S. smartphone subscribers for the first time in November, accounting for 26 percent of the market, compared with 25 percent for Apple, Bloomberg reported, citing ComScore Inc.

Neither the smartphone data or the earnings news is the real Google news. The big headline is that co-founder Larry Page will replace Eric Schmidt as CEO. Schmidt has been with the company since 2001, is not leaving the company, but Page will take over day-to-day operations. Investors do not appear to be concerned as shares of Google are up 1.4% in the after-hours session.

Google Chart

Google wasn't the only big Silicon Valley company to make headlines after the market closed. Dow component Hewlett-Packard (HPQ) is showing four board members the door for the handling of the Mark Hurd debacle last year. Hurd, the CEO widely credited for turning HP around, left under a black cloud that involved some dubious expense reports and perhaps inappropriate behavior with a female consultant. Former eBay (EBAY) CEO and California gubernatorial candidate Meg Whitman is expected to be among the new HP board members.

Looking at the charts, the S&P 500 needs to get back above 1292 and then deal with resistance just over 1300, probably around 1304 to keep the rally going. I do not want to say the rally is officially over right now, but it is looking tired and a move to 1261 could be in the offing. If that dip is not bought, a decline to 1235 could be next.

S&P 500 Chart

The 11,850 looks like some token round-number resistance for the Dow, so the pivotal number to watch on the upside is 11,950. If earnings season has shown us anything it is that it probably will not be the catalyst to drive indexes higher, but for the truly optimistic, the Dow still has several of its higher priced constituents left to report. The index could take a wicked tumble if support at 11,570 does not hold.

Dow Chart

I think things look a little worse with the Nasdaq. Apple's blowout quarter did not do anything to help jolt the index higher and I do not expect Google to do anything miraculous for the Nasdaq either. A break of 2700 could set up a decline to 2635-3650.

Nasdaq Chart

The Russell 2000 was a leader on the upside and it looks like the small-cap index could be playing the same role on the way down. The Russell would need to move back to 800 and clear that resistance before dealing with more meaningful resistance at 820, but that may be a near-term stretch because the index is now just a point away from the pivotal 777 level. If that area does not hold, another 15-20 points probably come of the index and that may be an optimistic scenario.

Russell 2000 Chart

The Russell 2000 is an appropriate index to finish up on as it was one of the catalysts that kept this rally going, perhaps long than it should have. Now small-caps or riskier fare in general are stalling and looking ready to decline. I cannot say I am encouraged that stocks fell on a day when three good economic data points crossed the wires. A decline for the S&P 500 down to 1261 would not be terrible if the dip is bought and recent precedent shows it probably will be.


New Option Plays

Outdoor Footwear

by James Brown

Click here to email James Brown


NEW DIRECTIONAL PUT PLAYS

Decker's Outdoor Corp. - DECK - close: 74.91 change: -2.23

Stop Loss: 80.25
Target(s): 70.50, 65.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see Trigger

Company Description

Why We Like It:
The once high-flying DECK appears to have run out of gas. This shoe company soared to all-time highs in December. The first half of January saw it consolidate sideways in the $77-82 zone. Now the stock is breaking down. More aggressive traders may want to buy puts right now. I am suggesting we wait for a bounce to $77.00 to open bearish put positions. Broken support near $77.50 and $80.00 should be new overhead resistance. If we are triggered at $77.00 I'm suggesting a stop loss at $80.25. Bear in mind that DECK can be somewhat volatile and readers may want to keep their position size small. Our targets are $70.50 and $65.50.
The Point & Figure chart for DECK is bearish with a $65 target.

Trigger @ $77.00

- Suggested Positions -

Buy the 2011 February $75.00 PUTS (DECK1119N75) current ask $4.00

- or -

Buy the 2011 March $75.00 PUTS (DECK1119O75) current ask $6.00

Annotated Chart:

Entry on January xxth at $ xx.xx
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 1.5 million
Listed on January 20th, 2010


In Play Updates and Reviews

Rough Day for the Bulls

by James Brown

Click here to email James Brown

Editor's Note:

Wednesday's sell-off continued Thursday morning. While the major market indices managed an afternoon bounce to trim their losses it was a rough day for the bulls. We had five bullish candidates get stopped out today (AMZN, CMI, IPI, MICC, and WYNN).

-James

Current Portfolio:


CALL Play Updates

Caterpillar - CAT - close: 93.61 change: -1.93

Stop Loss: 92.25
Target(s): 99.80
Current Option Gain/Loss: - 35.1%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: Yuck! It was another down day for CAT. Shares lost -2% and closed under what should have been support at the $95.00 level. While the market trimmed its losses, shares of CAT did not see the same afternoon bounce. This is a warning sign. More conservative traders will want to consider an early exit now! I am not suggesting new positions at this time.

Keep in mind that earnings are on the 27th of January and we don't want to hold over the event.

- Suggested Positions -

Long the 2011 February $100 calls (CAT1119B100) Entry @ $1.45

chart:

Entry on January 18th at $ 95.15
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 4.2 million
Listed on January 5th, 2010


Cognizant Technology Solutions - CTSH - close: 73.61 change: -0.94

Stop Loss: 73.90
Target(s): 79.90, 83.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
01/20 update: CTSH appears to be breaking down from its $76.50-73.50 trading range. I don't see any changes from my prior comments. Right now our plan is to buy calls on a breakout with a trigger at $76.65. However, we might want to consider buying calls on a dip or a bounce near the $70.00 level and CTSH's rising 50-dma.

Don't forget that this is an aggressive play and likely to be a short-term trade that only last a few days. We do not want to hold over the early February earnings report. If triggered at $76.65 our first target are $79.90. Keep your position very small to limit your risk.

- Suggested Positions (very small positions only!) -

Trigger to open positions @ 76.65

Buy the 2011 February $75.00 call (CTSH1119B75) current ask $3.00

- or -

Buy the 2011 February $80.00 call (CTSH1119B80) current ask $1.00

Entry on January xxth at $ xx.xx
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on January 18th, 2010


FedEx Corp. - FDX - close: 93.51 change: -0.83

Stop Loss: 91.75
Target(s): 99.90, 104.75
Current Option Gain/Loss: -100% and -34.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: FDX briefly traded under the $93.00 level and short-term support at its rising 40-dma. The close back under the $94.00 level is worrisome. If you're holding the April calls you might want to consider an early exit now. Currently our stop loss is at $91.75.

- Suggested Positions (only small positions so far) -

Buy the 2011 January $100 call (FDX1122A100) Entry @ $0.80

- or

Buy the 2011 April $100 call (FDX1116D100) Entry @ $2.96

01/13: New targets for the April calls (99.90 and 104.75)
01/12: New stop loss @ 91.75
01/08: New exit strategy for January calls. Try to exit at 40 cents or more.
12/17: FDX opens at $94.23 - our entry point.
12/16: Adjusted Entry - initiate small positions now (@ Friday's open)

Entry on December 17th at $94.23
Earnings Date 12/16/10 (confirmed)
Average Daily Volume = 2.1 million
Listed on November 29th, 2010


International Business Machines - IBM - close: 155.80 change: +0.11

Stop Loss: 147.85
Target(s): 154.50, 159.90
Current Option Gain/Loss: +46.4%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/20 update: IBM is completely ignoring the widespread market weakness. Shares recovered from their morning dip to post a gain. The stock is short-term overbought so it would only be natural to expect some profit taking. I am not suggesting new bullish positions at this time. Our final target is $159.90.

- Suggested Positions -

Long the 2011 April $155 calls (IBM1116D155) Entry @ $2.25

01/19: Target Hit @ 154.50. April call @ $4.20 (+46.4%)
01/18: New stop loss @ 146.40. New targets at $154.50 and $159.90
01/18: As planned, exit the January calls (+87.4%)
01/13: Exit the January calls on Tuesday before the close (& earnings)
01/06: New stop loss @ 144.75
01/03: New targets @ $152.50, and $159.50

Entry on December 29th at $146.75
Earnings Date 01/18/11 (confirmed)
Average Daily Volume = 4.7 million
Listed on December 14th, 2010


NetApp, Inc. - NTAP - close: 56.22 change: -1.41

Stop Loss: 54.90
Target(s): 62.25, 64.50
Current Option Gain/Loss: -56.4%
Time Frame: 4 to 5 weeks
New Positions: see below

Comments:
01/20 update: As we expected NTAP gapped open lower as investors reacted to the FFIV news but the drop in NTAP was not as bad as we feared. Shares opened at $55.69 (instead of near $54) and traders bought the dip near support at the $55 area. Under more healthy circumstances I would be tempted to buy calls right here on this bounce from $55. However, given the tone of trading today I would not want to initiate new positions at this time. Our stop loss is at $54.90.

- Suggested Positions (small positions only) -

Long the 2011 February $60 calls (NTAP1119B60) Entry @ $2.50

Entry on January 12th at $59.04
Earnings Date 02/16/11 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on January 11th, 2010


Research In Motion - RIMM - close: 62.40 change: -0.88

Stop Loss: 59.90
Target(s): 64.75, 67.50
Current Option Gain/Loss: -10.1%, and - 5.1%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: RIMM held up reasonably well for a tech stock. I cautioned traders yesterday to look for a dip toward $62.00 and RIMM hit $61.88 midday. I'd rather wait for a dip closer to $60.00 before considering new bullish positions. No new trades at this time. Our final target remains $67.50.

- Suggested Positions -

Long the 2011 February $62.50 calls (RIMM1119B62.5) Entry @ $2.47

- or -

Long the 2011 March $65.00 calls (RIMM1119C65) Entry @ $2.35

01/13: New stop @ 59.90
01/13: 1st Target Hit @ 64.75. Feb. call @ $4.00 (+61.9%) Mar. call @ $3.75 (+59.5%)
01/12: New stop loss @ 58.45

Entry on January 6th at $61.00
Earnings Date 03/31/11 (unconfirmed)
Average Daily Volume = 9.9 million
Listed on January 5th, 2010


SPX Corp. - SPW - close: 73.86 change: -1.27

Stop Loss: 71.75
Target(s): 77.40, 79.90
Current Option Gain/Loss: - 7.4%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/20 update: SPW slipped lower and ended the session with a -1.6% loss. Shares are hovering near the $74 level again. I'm not suggesting new positions at this time. However, if we see another dip or bounce near the $72.00 level we might want to jump in with some new call positions.

- Suggested Positions -

Long the 2011 February 75.00 calls (SPW1119B75) Entry @ $2.16

01/19: 1st Target Hit @ 77.40. Option @ $3.35 (+55%)
01/18: New stop loss @ 71.75

Entry on January 11th at $73.49
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 396 thousand
Listed on January 10th, 2010


PUT Play Updates

Google Inc. - GOOG - close: 626.77 change: -4.98

Stop Loss: n/a
Target(s): n/a
Current Option Gain/Loss: see below
Time Frame: 1 Day or 1 month
New Positions: No

THIS IS A STRANGLE TRADE (not a simple put play)

Comments:
01/20 update: After its morning decline GOOG spent the rest of the session churning sideways as investors waited for the company's earnings report out tonight. Wall Street is expecting a profit of $8.09 a share. The company reported earnings of $8.75 with revenues of $6.37 billion, also better than expected. Unfortunately, the stock is not seeing a very big afterhours reaction. The stock is only trading near $640 afterhours. We needed to see a much bigger move!

Our plan was to initiate a strangle position at the close today to capture any post-earnings move tomorrow morning. We had a very aggressive January trade, with January options that expire in one day. Plus, we had a February trade. I suggested options that were $50 out of the money to make this trade less expensive and still within a reasonable move for GOOG. We are NOT suggesting new positions at this time.

Since GOOG settled at $626.77 and the initial play description was working with GOOG at $631 I don't see any changes in our suggested strike prices.

EXIT PLAN: We want to exit our JANUARY OPTIONS on Friday morning at the open. We'll hold on to our February options for a few days and re-evaluate. If GOOG doesn't see a big enough gap on Friday morning our January option values are going to vanish into thin air!

STRANGLE TRADE: Buy an out of the money CALL and PUT

STRANGLE #1 (January options) initial cost $3.45

Buy the 2011 January $680 call (GOOG1122A680) Entry @ $1.65

- AND -

Buy the 2011 January $580 put (GOOG1122M580) Entry @ $1.80


STRANGLE #2 (February options) initial cost $15.10

Buy the 2011 February $680 call (GOOG1119B680) Entry @ $6.20

- AND -

Buy the 2011 February $580 put (GOOG1122N580) Entry @ $8.90

Entry on January 20th at $626.77
Earnings Date 01/20/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on January 19th, 2010


iShares Russell 2000 Index - IWM - close: 77.71 change: -0.82

Stop Loss: 80.80
Target(s): 75.00
Current Option Gain/Loss: +12.1%
Time Frame: 1 to 2 weeks
New Positions: see below

Comments:
01/20 update: Stocks did continue lower but the major indices produced an afternoon rebound to pare their losses. The IWM tagged its rising 40-dma and tested the early January lows near $77.50. I wouldn't be surprised to see a little oversold bounce tomorrow but look for short-term resistance near $79.00, which is where we can launch new positions. I want to reiterate this is an aggressive entry point since the market's trend is still up!

Small Position only

Long the 2011 February $77 puts (IWM1119N77) Entry @ $1.65

Entry on January 20th at $78.14
Earnings Date --/--/--
Average Daily Volume = 38 million
Listed on January 19th, 2010


CLOSED BULLISH PLAYS

Amazon.com Inc. - AMZN - close: 181.96 change: -4.91

Stop Loss: 183.40
Target(s): 192.50, 199.75
Current Option Gain/Loss: -95.7%, and -31.1%
Time Frame: 4 to 6 weeks
New Positions: See below

Comments:
01/20 update: It was another painful session for AMZN with shares down -2.6%. The stock is off nine points in the last two days. The NASDAQ was hardest hit this morning and while the major averages bounced off their midday lows, shares of AMZN did not see the same rebound. AMZN's low today was $181.00 and our stop loss was hit at $183.40.

- Suggested (SMALL) positions -

2011 January $190 calls (AMZN1122A190) Entry @ $2.35, exit $0.10 (-95.7%)

- or -

2011 February $200 calls (AMZN1119B200) Entry @ $3.85, exit $2.65 (-31.1%)

01/20: Stopped @ 183.40. Jan. call @ 0.10 (-96%), Feb. call @ 2.65 (-31%)
01/18: New stop loss at $183.40
01/15: New stop loss @ 181.80, New targets 192.50, 199.75

chart:

Entry on December 28th at $182.10
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume = 5.0 million
Listed on December 27th, 2010


Cummins Inc. - CMI - close: 108.02 change: -3.41

Stop Loss: 108.75
Target(s): 117.50
Current Option Gain/Loss: -100% and -31.2%
Time Frame: 6 to 8 weeks
New Positions: see below

Comments:
01/20 update: Ouch! The profit taking in CMI accelerated lower on Thursday. Shares broke support near $109.00 and hit our stop loss at $108.75. This looks like a bearish reversal and nimble traders might want to consider bearish positions.

(small positions only to limit our risk)

- Suggested Positions -
2011 January $115 calls (CMI1122A115) Entry @ $1.12, exit $0.00 (-100%)

- or -

2011 March $115 calls (CMI1119C115) Entry @ $4.73, exit $3.25 (-31.2%)

01/20: Stopped out. Jan. call @ -100%, March call @ -31%
01/04: New entry point on afternoon bounce.
01/01: Adjusted targets to $114.50, 117.50
12/27: CMI opens at $110.18
12/25: Buy calls now at current levels (small positions)
12/21: New entry point @ $110.25, New stop @ 108.75, New option strikes.

chart:

Entry on December 27th at $110.18
Earnings Date 02/02/11 (unconfirmed)
Average Daily Volume = 1.8 million
Listed on December 11th, 2010


Intrepid Potash, Inc. - IPI - close: 34.59 change: -0.96

Stop Loss: 34.75
Target(s): 39.90, 42.00
Current Option Gain/Loss: -65.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: Agriculture stocks continued to drop on Thursday and IPI hit our stop loss at $34.75.

- Suggested Positions -

2011 February $40 calls (IPI1119B40) Entry @ $1.00, Exit $0.35 (-65%)

01/20: Stopped out. Feb. calls @ $0.35 (-65%)
01/19: Play triggered at $37.25

Chart:

Entry on January 19th at $ 37.25
Earnings Date 03/01/11 (unconfirmed)
Average Daily Volume = 717 thousand
Listed on January 12th, 2010


Millicom Intl. Cellular - MICC - close: 94.25 change: -0.75

Stop Loss: 93.75
Target(s): 99.90
Current Option Gain/Loss: -16.6%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
01/20 update: MICC succumbed to profit taking this morning. Shares actually gapped open lower under support near $94.00. The stock opened at $93.61. Our stop loss was $93.75 so the play was closed immediately.

FYI: It looks like MICC must have had a special dividend because several of the options have odd strike prices ending in .40.

- Suggested Positions -

2011 April $100.00 calls (MICC1116D100) Entry @ $3.30, Exit $2.75* (-16.6%)

01/20: Stopped out. April call @ 2.75 (-16.6%)*
01/19: As planned, exit the January calls. Exit @ 0.70 (-69%)
01/13: New stop loss @ 93.75
01/06: New stop loss @ 92.49
01/03: New stop loss @ 91.75, New target at $99.90

chart:

*Our exit price is an estimate. I have conflicting data suggesting the April calls would have closed at $3.90 or $3.00 and neither price seems probable.

Entry on December 23rd at $94.23
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume = 518 thousand
Listed on December 22nd, 2010


Wynn Resorts Ltd. - WYNN - close: 116.24 change: -1.94

Stop Loss: 116.95
Target(s): 124.75, 128.00
Current Option Gain/Loss: - 49.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
01/20 update: We've been stopped out of our aggressive trade on WYNN. The stock suffered a late morning slide that took it to the $114.00 level before trimming its losses to just -1.6%. Our stop loss was hit at $116.95. Yesterday I suggested conservative traders exit early.

Our plan was to keep our positions very small because this is an aggressive, higher-risk trade.

(Very Small Positions) - Suggested Positions -

2011 February $125.00 calls (WYNN1119B125) Entry @ $3.24, Exit $1.65 (-49%)

01/20: Stopped out. February call @ $1.65 (-49%)
01/19: Cautious traders may want to exit early now.
01/18: Play triggered on gap open higher at $120.50

chart:

Entry on January 18th at $120.50
Earnings Date 02/24/11 (unconfirmed)
Average Daily Volume = 2.0 million
Listed on January 15th, 2010