Option Investor
Newsletter

Daily Newsletter, Monday, 5/2/2011

Table of Contents

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

Market Wrap

No bin Laden Boost

by Todd Shriber

Click here to email Todd Shriber
For those of us that took a peak at equity futures Sunday night following news of Osama bin Laden's death at the hands of a U.S. Navy Seals team at his Pakistan compound, Monday's performance by stocks is nothing short of disappointing. While crowds across the U.S. were spotted cheering news of the death of the mastermind of the September 11, 2001 terrorist attacks, Mr. Market's enthusiasm for the news quickly waned as three major U.S. indexes suffered small losses and the Russell 2000 really took it on the chin, slumping 1.2%.

Stats Table

Not surprisingly, the ''buy the dollar because bin Laden is dead'' trade lasted about a nanosecond. Well, a tad longer because the U.S. dollar index was higher from Friday's close, but it also touched 72.22, a level last seen nearly three years ago. The dollar index shot above 73 overnight on the bin Laden news, but the greenback's intraday performance today was not all that impressive, indicating that it is going to take a lot more than the death of a marquee terrorist figure to right the currency's ills.

This is not a political statement, but I will guess that plenty of Americans and folks in other countries are happy bin Laden is dead. Still, the dollar faces myriad problems that would still be around if bin Laden was alive today. Investors are not big fans of the buck these days as the chart indicates.

US Dollar Index

The market quickly realized that the dollar was not going to elicit a lot of excitement today and gold finished the day higher yet again and the decline in oil was negligible. Silver was where the action was on the downside with the primary culprit being news that CME Group (CME), parent company of the Comex, the exchange where silver trades in the U.S., boosted its margin requirements on silver contracts 13% to $14,513 per contract from $12,825 on Friday.

Combine that with light volume and a chorus of traders saying silver was overbought and you have the recipe for a decline. An educated guess would be that CME wants to dampen volatility in the silver market by creating a more expensive barrier to entry. That could have the intended impact, but there is no guarantee it will mean the end of silver's uptrend. On Nov. 9, 2010, CME raised the margin requirement to $6,500 an ounce from $5,000. We all know what silver has done since then.

Silver Chart

In economic news, the Institute for Supply Management said its manufacturing index fell to 60.4 in April from 61.2 in March, but the April reading still beat the 59.5 median estimate of economists. Readings above 50 are considered bullish and the index has accomplished that feat for 21 straight months. For a positive spin on the April number, consider that it it has been matched or exceeded in only 89 months since the start of 1948, or 11.7% of the time, according to Zacks Investment Research.

ISM Chart

It can also be said that Monday's action was disappointing because there was a pair of noteworthy takeover announcements totaling over $10 billion and that was not enough to generate market-wide enthusiasm. Starting with the larger of the two deals, Israeli generic drug giant Teva (TEVA) said it will acquire Cephalon for $6.8 billion, a deal that values Cephalon at $81.50 a share, an almost 6% premium to where the shares closed on Friday.

The combined company would have a portfolio of branded drugs with $7 billion in annual sales and more than 30 potential products in late-stage development, according to the Associated Press. Cephalon's big revenue drugs include Provigil, a treatment for sleep disorders, and the cancer treatment Treanda.

Cephalon Chart

Take a look at this chart and you will quickly understand why the next deal I will discuss took place:

Coal Prices

Prices for metallurgical coal, the grade of coal that is in high demand by Asian steelmakers, jumped 74% in the first quarter to $225 per ton, according to Bank of America Merrill Lynch, and that is prompting more consolidation in the coal sector. The latest deal comes courtesy of Missouri-based Arch Coal (ACI), the second-largest U.S. coal company, which announced today it will pay $3.4 billion for International Coal (ICO) to boost its metallurgical coal exposure.

Arch will pay $14.60 a share for ICO, a 32% premium to where the shares closed on Friday. Arch is forecasting pro forma metallurgical coal sales of 11 million tons this year and 14 million tons over the next three years thanks to the purchase of International Coal, Bloomberg reported. The company expects $70 million to $80 million in annual cost savings as a result of the deal and expects it will boost profits next year.

The coal sector has been kind to investment bankers in recent months. Add up the Arch/ICO deal, a $3.3 billion purchase by Walter Energy (WLT) and Alpha Natural's $8.5 billion deal for Massey Energy (MEE) and there has been over $15 billion worth of deals in this space in just a few months. Per usual, traders were kicking around a few names that could be the next coal targets. I spotted Patriot Coal (PCX) and James River (JRCC) in a couple of reports on the matter. Consol Energy could be one to keep an eye as well as the company may look to sell some coal assets to focus more on natural gas.

For one stop-shopping for most of the potential buyers and sellers in the coal industry, the Market Vectors Coal ETF (KOL) might be worth a look. For more news on the coal industry, register for a free trial of the OilSlick daily newsletter (HERE).

After hours, another chapter was written in the ongoing saga to acquire NYSE Euronext (NYX), the operator of the New York Stock Exchange, when Nasdaq OMX (NDAQ) and IntercontinentalExchange (ICE) decided to take their $11 billion bid for NYSE Euronext straight to the company's shareholders, making the overture hostile.

NYSE Euronext has all but ignored Nasdaq and ICE in favor of a $10.2 billion bid from Germany's Deutsche Boerse, a move that has irked some shareholders. To this point, NYSE Euronext has not really done much beyond tell its shareholders to vote in favor of the Deutsche Boerse plan and the German company has shown no indication it will boost its offer.

If Nasdaq and ICE are successful in their bid for their rival, the deal would undoubtedly draw intense antitrust scrutiny, something the companies have said they can sidestep by splitting the NYSE Euronext's businesses among them. Nasdaq wants the cash equities operation while ICE wants the derivatives business. I do not want to speculate about what is going to happen next with this situation because there's a fair chance I will be wrong, but I feel safe in saying this story is nowhere near complete.

NYSE Euronext Chart

Looking at the charts, on Sunday night, it looked as though the S&P 500 would open up right near resistance at 1373 and make a run past that area. That run never came to fruition and with a loss of just two points, the situation is not much different today than it was after Friday's close. The 1373 level is still first resistance followed by the all-important 1400 mark. The 1340-1345 area looks like support. S&P 500 Chart

The situation is not much different on the Dow as the blue-chip index still faces resistance in the 12,950-13,000 area. Pfizer (PFE) reports earnings tomorrow, but I expect that to a be a non-event and the rest of the week is empty in terms of Dow earnings. Support is well off at 12,400.

Dow Chart

The Nasdaq earnings calendar is also pretty barren this week in terms of marquee reports. The index is still above old resistance at 2861, which may turn to new support. The Nasdaq needs to reclaim 2875 before dealing with resistance at 2900.

Nasdaq Chart

As the Russell 2000 was the sturdiest performer among the indexes on Friday, it was the weakest link today, shedding 10.5 points to close right at old resistance/hopefully new support at 855 (give or take a couple of tenths of a point). Resistance would be the 865-870 area and then 880, but I know I will be watching how strong support is at 855 over the next few days.

Russell 2000 Chart

As I always, I am trying to steer clear of letting one day decide my outlook for the week, but I think the ''Sell in May'' crowd may have gotten some ammo today when considering the following factors: The death of bin Laden, over $10 billion in M&A activity, Warren Buffett saying over the weekend that he is still bullish on the U.S. economy and it was the first trading day of the month, normally a fine day to be long. It was just an ugly way to start the week when it should have been so much more.


New Option Plays

Consumer Electronics

by James Brown

Click here to email James Brown


NEW DIRECTIONAL CALL PLAYS

Apple Inc. - AAPL - close: 346.28 change: -3.85

Stop Loss: 334.40
Target(s): 359.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
AAPL has spent the last several days digesting its gains following the big bounce off its April lows (near $320). The $340 level appears to have multiple layers of converging support. We want to be ready to buy a dip should one appear this week. I am suggesting we buy calls at $341.00. More conservative traders could use a tight stop close to the $340 level (maybe 338.50). I am suggesting a stop loss at $334.40. If triggered at $341.00 our upside target is $359.00. More aggressive traders could aim higher. A breakout past the February highs near $365 might portend a run toward the $400 level.

Buy-the-dip Trigger @ $341.00

- Suggested Positions -

Buy the June $350 calls (AAPL1118F350)

Annotated Chart:

Entry on May xxth at $ xx.xx
Earnings Date 07/20/11 (unconfirmed)
Average Daily Volume = 16.6 million
Listed on May 2nd, 2011


In Play Updates and Reviews

No Lasting Reaction

by James Brown

Click here to email James Brown

Editor's Note:

The stock market failed to see any lasting reaction to the news that Osama Bin Laden is dead. The major indices settled with minor losses. Oil service stocks, and some of the commodities (like silver) were big underperformers today.

Our FOSL play has been stopped out and I'm suggesting an early exit in our VRTX trade.

-James

Current Portfolio:


CALL Play Updates

Acme Packet Inc. - APKT - close: 78.18 change: -4.43

Stop Loss: 74.45
Target(s): 89.00, 97.50
Current Option Gain/Loss: -49.5% and -34.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/02 update: I could not find any specific reason behind APKT's relative weakness on Monday. I warned readers that APKT could be volatile so it's probably just normal profit taking. Actually I would be tempted to use this dip as a new entry point but you could wait for a bounce in the $76-78 zone first before initiating positions. Let's keep our position size small to limit our risk. Broken resistance at $75.00 should be new support.

Our upside targets are $89.00 and $97.50. FYI: The Point & Figure chart for APKT is bullish with a $95 target.

- Suggested Positions - (SMALL POSITIONS)

Long the May $85 call (APKT1121E85) Entry @ $2.28

- or -

Long the June $85 call (APKT1118F85) Entry @ $4.49

Entry on April 29th at $81.20
Earnings Date 04/26/11
Average Daily Volume = 2.5 million
Listed on April 28th, 2011


Deere & Co - DE - close: 97.39 change: -0.11

Stop Loss: 92.49
Target(s): 99.70, $104.00
Current Option Gain/Loss: +47.8%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
05/02 update: Monday proved to be a quiet day for DE. If the market decline continues we can look for a dip near $95 as a new entry point. We will not hold positions over the mid May earnings report.

- Suggested Positions -

Long the May $97.50 call (DE1121E97.5) Entry @ $1.61

04/30 Adjusted targets to $99.70 and $104.00.

Entry on April 21st at $95.25
Earnings Date 05/18/11 (unconfirmed)
Average Daily Volume = 3.8 million
Listed on April 20th, 2011


Fastenal Co. - FAST - close: 66.89 change: -0.20

Stop Loss: 63.75
Target(s): 69.50, 74.00
Current Option Gain/Loss: - 4.5% & - 6.6%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
05/02 update: FAST didn't see a lot of movement today. Shares were slowly fading lower before the stock pared its losses this afternoon. I don't see any changes from my prior comments. I'd wait for a new dip or bounce in the $66-65 zone before considering new positions.

More conservative traders might want to raise their stops. Our targets are $69.50 and $74.00. We should expect the $70.00 area to offer some resistance and FAST will likely pull back on the first test of $70.

FYI: FAST is due to split 2-for-1 on May 23rd. Plus, the Point & Figure chart for FAST is bullish with a $72 target.

- Suggested Positions -

Long the May $65.00 calls (FAST1121E65) Entry @ $2.20

- or -

Long the June $70.00 calls (FAST1118F70) Entry @ $0.75

Entry on April 26th at $66.25
Earnings Date 04/12/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 23rd, 2011


Fortune Brands - FO - close: 64.53 change: -0.55

Stop Loss: 61.75
Target(s): 67.50, 69.75
Current Option Gain/Loss: - 15.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/02 update: It's not surprising to see a little profit taking in FO and the $64.00-63.50 area should be support. Yet we're almost out of time. The earnings report is Thursday, May 5th before the opening bell. This means we need to exit on Wednesday at the close to avoid holding over earnings. More conservative traders might want to consider inching up their stop loss.

(Small Positions) - Suggested Positions -

Long the May $65.00 call (FO1121E65) Entry @ $1.00

Entry on April 26th at $64.00
Earnings Date 05/05/11 (confirmed)
Average Daily Volume = 973 thousand
Listed on April 5th, 2011


SPDR Gold ETF - GLD - close: 150.41 change: -1.96

Stop Loss: 149.75
Target(s): ---.--, 154.50
Current Option Gain/Loss: +226.0%, and +208.2%
2nd Option Position Gain/loss: +305.4% and +272.7%
Time Frame: 6 to 12 weeks
New Positions: see below

Comments:
05/02 update: The GLD briefly traded to a new high this morning at $153.61 before reversing lower. This afternoon the market started to see profit taking across the commodity space. The GLD lost -1.2% but silver fell about -9%. We currently have a stop loss at $149.75 for our GLD trade. More conservative traders may want to take profits now! I am not suggesting new positions at this time.

- Suggested Positions -

Long the May $145 call (GLD1121E145) Entry @ $1.84

- or -

Long the June $150 call (GLD1118F150) Entry @ $1.33

- Second Entry Point, April 12th, Entry April 13th -

Long the May $145 call (GLD1121E145) Entry @ $1.48

- or -

Long the June $150 call (GLD1118F150) Entry @ $1.10

04/30 New stop loss @ 149.75, consider taking profits now!
04/27 New stop loss @ 141.90
04/26 UPDATE: The gap down on Tuesday morning affected our exit prices. May $145 call @ +58.6% and +97.2%. June $150 calls @ +68.4% and +103.6%
04/25 Take Profits Now. Sell all or part of our position. Options are at: May $145 calls $3.50 (+90.2% & +136.4%), June $150 calls $2.76 (+107.5% & +150.9%)
04/20 New stop loss @ 139.90

Entry on April 6th at $142.40
Earnings Date --/--/--
Average Daily Volume = 12.5 million
Listed on April 5th, 2011


Google Inc. - GOOG - close: 538.56 change: -5.54

Stop Loss: 518.75
Target(s): 549.00, 558.00
Current Option Gain/Loss: +26.6%
Time Frame: 2 to 3 weeks
New Positions: see below

Comments:
05/02 update: Warning! The action in GOOG today is bearish. The stock has produced a bearish engulfing candlestick pattern. This potentially a reversal pattern but it needs to see follow through lower. More conservative traders may want to exit early. I am not suggesting new positions at this time.

Currently our targets are at $549.00 and $558.00. FYI: The high today was $545.73.

Prior Comments:
This is a very aggressive, higher-risk trade. Keep positions small.

(Very Small Positions) Suggested Positions:

Long the May $550 call (GOOG1121E550) Entry @ $3.00

04/30 Adjusted exit strategy. First target at $549.00. Final target at $558.00.

Entry on April 25th at $525.25
Earnings Date 04/14/11 (confirmed)
Average Daily Volume = 3.3 million
Listed on April 23rd, 2011


International Business Machines - IBM - close: 172.15 change: +1.57

Stop Loss: 164.75
Target(s): 174.00, 179.50
Current Option Gain/Loss: Unopened
Time Frame: 6 to 9 weeks
New Positions: Yes, see Trigger

Comments:
05/02 update: IBM was showing relative strength today. Shares hit a new high at $173.54 this morning before settling with a +0.9% gain. We are still waiting for a pull back.

I am suggesting we buy calls on a dip at $167.50. If triggered we'll use a stop loss at $164.75. Our targets are $174.00 and $179.50. FYI: The Point & Figure chart for IBM is bullish with a $208 target.

Buy-the-Dip Trigger @ 167.50

- Suggested Positions -

Buy the June $170 calls (IBM1118F170)

Entry on April xxth at $ xx.xx
Earnings Date 04/19/11
Average Daily Volume = 4.8 million
Listed on April 27th, 2011


Intuit - INTU - close: 55.12 change: -0.44

Stop Loss: 53.45
Target(s): 58.75
Current Option Gain/Loss: -33.3%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/02 update: Some of INTU's technical indicators continue to deteriorate as the stock moves sideways. I remain cautious and would wait for a close over $56.00 before considering new positions. We do not want to hold over the mid May earnings date.

I would keep our position size small to limit our risk (1/2 or less than your normal trade size).

- Suggested Positions -

Long the May $55.00 call (INTU1121E55) Entry @ $2.40

04/30 Adjusted target to $58.75

Entry on April 20th at $55.25
Earnings Date 05/19/11 (unconfirmed)
Average Daily Volume = 2.4 million
Listed on April 14th, 2011


Jos. A Bank Clothiers - JOSB - close: 50.82 change: -1.60

Stop Loss: 49.95
Target(s): 59.50
Current Option Gain/Loss: - 78.5% and -51.4%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/02 update: JOSB was a big underperformer today with a -3.0% decline. There was nothing specific in the news to account for today's relative weakness. Shares are likely to have support near $50.00 and the 30-dma but we have a stop loss at $49.95. A dip near $50.00 runs the risk of spiking lower intraday and hitting our stop loss. I am not suggesting new positions at this time.

FYI: The most recent data listed short interest in JOSB at more than 21% of the small 27.3 million-share float. Together the increase the risk of a short squeeze.

- Suggested Positions -

Long the May $55 calls (JOSB1121E55) entry @ $0.70

- or -

Long the June $55 calls (JOSB1118F55) entry @ $1.75

Entry on April 26th at $52.75
Earnings Date 06/02/11 (unconfirmed)
Average Daily Volume = 510 thousand
Listed on April 25th, 2011


O'Reilly Automotive - ORLY - close: 59.55 change: +0.49

Stop Loss: 57.75
Target(s): 62.75, 67.25
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see Trigger

Comments:
05/02 update: ORLY was showing relative strength today and broke out to new three-month highs. Yet shares failed to breakout past the $60.00 mark. Our plan is to buy calls at $60.15. If triggered our targets are $62.75 and $67.25. The market is a little overbought here so I would keep our position size small.

Trigger @ $60.15

- Suggested Positions -

Buy the May $60 calls (ORLY1121E60)

- or -

Buy the June $60 calls (ORLY1118F60)

Entry on May xxth at $ xx.xx
Earnings Date 04/27/11
Average Daily Volume = 1.1 million
Listed on April 30th, 2011


Powershares QQQ ETF - QQQ - close: 58.97 change: -0.05

Stop Loss: 56.45
Target(s): 64.00
Current Option Gain/Loss: Unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see Trigger

Comments:
05/02 update: The NASDAQ Composite only lost -0.3% today. The NASDAQ-100 index actually closed in positive territory although it was less than +0.2%. The QQQ slipped into the red in spite of the NDX's gain. I don't see any changes from my weekend comments. The plan is to buy calls on a dip. We're setting our buy-the-dip trigger at $58.15. More conservative traders could wait for a dip toward the 30 or 50-dma instead. If we are triggered at $58.15 we'll use a stop loss at $56.45. The Qs don't move very fast so we'll have to be patient.

buy-the-dip Trigger @ $58.15

- Suggested Positions -

Buy the June $60 calls (QQQ1118F60)

- or -

Buy the July $60 calls (QQQ1116G60)

Entry on May xxth at $ xx.xx
Earnings Date --/--/--
Average Daily Volume = 50 million
Listed on April 30th, 2011


Ross Stores Inc. - ROST - close: 73.40 change: -0.29

Stop Loss: 69.75
Target(s): 77.25, 79.50
Current Option Gain/Loss: - 2.2%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/02 update: ROST spiked higher this morning but traders were selling into strength near the $74.60 level. This happened twice before ROST settled lower. Today's action looks like a short-term bearish reversal pattern. I would look for a dip toward the $72.00 level soon. We do not want to hold over the mid May earnings report so I am suggesting we use the May calls, which expire after the 20th.

Our first target is $77.25. Our secondary target is $79.50. FYI: The Point & Figure chart for ROST is bullish with a $97 target.

- Suggested Positions -

Long the May $72.50 calls (ROST1121E72.5) Entry @ $2.25

Entry on April 28th at $73.55
Earnings Date 05/19/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on April 23rd, 2011


United Technologies Corp. - UTX - close: 90.00 change: +0.42

Stop Loss: 83.49
Target(s): 89.50, 94.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/02 update: The rally continues for UTX and shares posted another gain and closed right on round-number resistance at $90.00. I still think this is resistance and aggressive traders could buy puts now in an effort to scalp a couple of points on a dip. Bigger picture I'm bullish on UTX but we want to buy calls on a dip at $86.50. If triggered at $86.50 we'll use a stop loss at $83.49. Our targets are $89.50 and $94.00.

Buy-the-dip Trigger @ $86.50

- Suggested Positions -

Buy the June $90 calls (UTX1118F90)

Entry on April xxth at $ xx.xx
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


PUT Play Updates

Apollo Group Inc. - APOL - close: 40.76 change: +0.73

Stop Loss: 42.55
Target(s): 38.15, 35.50
Current Option Gain/Loss: -37.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/02 update: APOL was showing some relative strength today. That's a bit disconcerting given the market's eventual decline on Monday. APOL should have tough resistance near $42 and its 50 and 200-dma. There is no change from my prior comments.

More conservative traders may want to exit this trade immediately. I am not suggesting new positions at this time. Our profit targets are $38.15 and $35.50.
The Point & Figure chart for APOL is bearish with a $31 target.

- Suggested Positions -

Long the May $40.00 puts (APOL1121Q40) Entry @ $1.24

04/19 New stop loss @ 42.55

Entry on April 13th at $41.21
Earnings Date 06/30/11 (unconfirmed)
Average Daily Volume = 2.3 million
Listed on April 12th, 2011


iShares Silver Trust - SLV - close: 42.83 change: -4.05

Stop Loss: n/a
Target(s): 40.15 & 36.25
Current Option Gain/Loss: +25.8%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/02 update: It's really frustrating to be correct on a stock's direction and still have the trade not work out as you expected. Silver prices started to sell-off sharply on Sunday and the SLV gapped open lower at $44.10. Then gold and silver saw a bounce, probably due to the market's reaction to the Bin Laden death news, and then precious metals surged lower.

Our plan was to open small bearish positions with July put options. The July $40 puts opened at $2.05. Currently the bid is at $2.58 so we're not in bad shape but it would have been a lot nicer to open positions with the puts closer to $1.50 instead. All right, enough complaining.

Given the big move today (-8.6%) I would not launch new positions at this time. We can look for another failed rally in the $45-46 area as a possible entry point. Unfortunately such a move could be intraday like today's failed rally near $46.00.

We should probably expect a bounce near the $40.00 level. I am officially setting our exit targets at $40.15 and at $36.25. You will have to decide where you want to exit or sell half at the first target and half at the second.

(Small Positions) Suggested Positions -

Long the July $40.00 PUT (SLV1116S40) Entry @ $2.05

05/02 Silver dropped and the SLV gapped open lower at $44.10.

Entry on May 2 at $44.10
Earnings Date --/--/--
Average Daily Volume = 79 million
Listed on April 30th, 2011


CLOSED BULLISH PLAYS

Fossil Inc. - FOSL - close: 91.54 change: -4.24

Stop Loss: 91.95
Target(s): 99.75, 104.75
Current Option Gain/Loss: -47.1%, and -36.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/02 update: Ouch! What happened to FOSL today? The stock underperformed with a -4.4% decline. I can't find any specific news to account for this weakness. Shares broke down under last week's low and hit our stop loss at $91.95. The $90.00 level might offer some support but our play has been closed. Our plan was to keep positions small.

(small positions only) - Suggested Positions -

May $100 call (FOSL1121E100) Entry @ $2.65, Exit @ $1.40 (-47.1%)

- or -

June $100 call (FOSL1118F100) Entry @ $3.75, Exit @ $2.40 (-36%)

05/02 Stopped out @ $91.95, Options @ -47.1% & -36%

chart:

Entry on April 20th at $95.60
Earnings Date 05/10/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on April 13th, 2011


Vertex Pharmaceuticals - VRTX - close: 55.05 change: -0.00

Stop Loss: 49.90
Target(s): 51.85, 58.50
Current Option Gain/Loss: +116.0%
Time Frame: about 2, maybe 3 weeks
New Positions: see below

Comments:
05/02 update: I am giving up early on our VRTX trade. The plan was to exit tomorrow (Tuesday) at the closing bell to avoid holding over earnings. Yet after the action these past two trading days I am suggesting we exit now. The stock spiked to another relative high over $56 this morning and then faded to close unchanged on the session.

I would rather exit now than wait until tomorrow afternoon.

- Very Small Bullish Positions -

May $50.00 calls (VRTX1121E50) Entry @ $2.50, Exit $5.40 (+116%)

05/02 Exit early. VRTX @ $55.05, Option @ +116%
04/30 Consider an early exit now to lock in a gain.
04/27 New stop loss @ 49.90
04/26 1st Target Hit @ 51.85, Option @ $3.40 (+36%)

chart:

Entry on April 10th at $48.28
Earnings Date 05/03/11 (confirmed)
Average Daily Volume = 2.1 million
Listed on April 9th, 2011