Option Investor
Newsletter

Daily Newsletter, Monday, 5/23/2011

Table of Contents

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

Market Wrap

Good Grief, Now Italy?

by Todd Shriber

Click here to email Todd Shriber
The “I” PIGS, that being Italy, took its turn in the European sovereign debt crisis spotlight today, roiling global equity markets after Standard & Poor's pared its credit rating outlook on the country to “negative from “stable.”


To its credit and despite anemic growth (first-quarter GDP increased just 0.1%), Italy has been able to, at the very least, appear a bit stronger than its PIGS brethren. That said, there are obviously dour consequences to seeing a credit rating downgrade come Italy's way. I have not been shy about my wonderment and dismay that the likes of Portugal and Greece could have such a negative impact on global equity markets.

With regards to Italy, it is not a surprise markets would react poorly to the S&P news. After all, this was the tenth-largest economy in the world last year, according to IMF data. That puts Italy well-ahead of Greece and Portugal and three spots above Spain. While S&P did affirm Italy's A+ rating, the fifth-highest investment-grade rating, over the weekend, the move to “negative” from “stable” on the credit rating outlook means there is a one-in-three chance the country's credit rating is lowered at some point over the next two years.

Oddly enough, open interest in both puts and calls on the iShares MSCI Italy Index Fund (EWI) remains almost non-existent. No strike on either side has open interest of more than 72 contracts, but a look at the chart shows EWI is not the prettiest of ETFs out there right now. With oil plunging and Eni SpA (E) accounting for nearly 19% of EWI's weight, messing with this ETF could be quiet dangerous in the near-term.

Italy ETF Chart

Speaking of oil, as if the news out of Europe was not bad enough (it was), China's purchasing manager's index slid to 51.1 in May from 51.8 last month, compounding concerns that the world's fastest-growing major economy is not expanding fast enough to satisfy investors. Weak Chinese growth and the European debt crisis serve as a double-whammy for risky assets. Stuff like oil and stocks get whacked on days like today and that is just what happened with crude. Still, $95 appears to be holding as support, though a fall beneath that level could encourage fresh selling pressure. For more news and commentary on the energy sector, register for a free trial of the OilSlick daily newsletter (HERE).

Oil Chart

In stock-specific news, LinkedIn (LNKD) spent its last day as a stock that cannot be shorted trading in a range of almost $6 before finishing lower by 5.15% at $88.30. Short-selling restrictions on the stock are lifted tomorrow, but I do not expect LinkedIn to fall because of this. The float is only 9 million shares, so assuming the shares can even be found to borrow, they will most likely be home to some nasty hard-to-borrow fees.

This stock does not need anyone shorting it for it to fall. In just a few days, Linked has gone from a flirtation with $123 to around $88. Reasons are abound as to why this stock could fall even more and none of them involve short sellers. It is a terrible market environment for a company with such a lofty valuation to come public in. A market cap of $8 billion coming into today for a company with a 2010 profit of $15 million conjures up images of Silicon Valley circa 1999-2000. Traders may be using LinkedIn to keep themselves occupied until Facebook and Groupon grace us with their presences as public companies.

LinkedIn deserves credit for being a profitable company, something dozens of other tech/Internet companies that are no longer with us could not say when they went public in the 1990s. This just is not the time to be running into stocks that trade for 25 times this year's revenue as LinkedIn was the start of trading today.

LinkedIn Chart

You know it is crazy day for the market when... A plethora of a humorous quips can be inserted there, but I am not joking when I tell you that Krispy Kreme Doughnuts (KKD), once a high-flier in its own right, was the third-best performing stock on U.S. exchanges today. Shares of Krispy Kreme surged almost 26% after the company said its first-quarter profit more than doubled to $9.2 million, or 13 cents a share, from $4.5 million, or 6 cents a share, a year earlier. Revenue jumped 13.6% to $104.6 million. Analysts were expecting a profit of 9 cents on revenue of $96.5 million. Krispy Kreme reaffirmed fiscal 2012 operating income guidance of $22-$24 million.

Forget LinkedIn setting the stage for Facebook and Groupon. Maybe Krispy Kreme is setting the stage for Dunkin Donuts, another widely anticipated IPO expected to roll out this year.

Krispy Kreme Chart

In the ''Everything Comes Full Circle'' category, International Business (IBM) has surpassed fellow Dow component and old rival Microsoft (MSFT) in market value for the first time since 1996. IBM is now the fourth-largest U.S. company by market value behind XOM, AAPL and GE.

As the chart below illustrates, MSFT's slide in market value since the bursting of the tech bubble has been nothing short of epic. As an interesting personal aside, I gave a presentation in a college class during my last semester in 2000, just a couple of months before the tech party really stopped, about why Microsoft would become the first company with a trillion market cap. I got a ''B'' on that project, but apparently that was an act of generosity on the part of my professor. Fortunately, that was for a journalism class, not a business class.

Kidding aside, an investor putting $100,000 into both stocks 10 years ago would now have about $143,000 in IBM stock and about $69,000 in Microsoft stock, Reuters reported, and that is all we really need to know.

Microsoft Market Cap

Last week's market decline was the third in as many weeks and with the ominous start to this week, looking at the charts will not be too pleasant today, but here we go. The S&P 500 had been obeying a tight range between 1330 and 1340 for a week or so, but that party ended with a thud today with a fall to 1317. Multiple attempts to crack the 1340 resistance failed and now the index is resting around another support area. Further declines could very well take the S&P 500 to 1290-1295.

S&P 500 Chart

The situation on the Dow is not much better as the chart is marked by the same ominous series of lower highs and lower lows that can be seen on the S&P 500 chart. Support at 12,400 looked firm, but a close nearly 20 points below that level today could portend more declines. Yes, the Dow is the blue-chip index, but it is also possible to parse through each of its 30 constituents and find some kind of headwind for nearly all of them.

Oil's decline and the move away from high-beta fare are killers for XOM, CVX and CAT. Financials are a mess. CSCO and MSFT wreak of dead money. I could go on. Only one Dow stock was higher today. Congrats to McDonald's (MCD).

Dow Chart

The Nasdaq was easily the worst performer of the Big Three Indexes today. Forget that psychological support at 2800. The Nasdaq had previously bounced off 2760, but closed below that area today. Below 2750, there is plenty of room for the Nasdaq to retreat all the way back to 2700. I suppose it can be argued that Apple held up relatively well today, losing just 0.24%. On the other hand, the stock is down more than 5% in the past month, while the Nasdaq itself is down less than 3% over the same time.

Nasdaq Chart

If the Russell 2000 was not officially a mess prior to today, it is now. Its 1.8% slide today made it the worst performer among the the major indexes and support at 820 did not hold with the index closing at 814. That also took the index below the 100-day line at 817 and from here, it is not out of the realm of possibility that the Russell 2000 sheds another 30-40 points.

Russell 2000 Chart

I am not opposed to a ''buy the dips'' approach because it has worked countless times over the past couple of years. That said, caution is needed here and with more dips likely on the way, eager buyers might do well to sit on their hands and wait for another 20-30 S&P 500 points to evaporate before rushing into new long positions.


New Option Plays

What are you watching?

by James Brown

Click here to email James Brown

Editor's Note:

Looking at the stock market since its early May highs the major indices just produced a new lower low in its three-week bearish trend. Now the S&P 500 and the NASDAQ composite sit on technical support at its 100-dma. Will they bounce or will the breakdown?

I am not adding any new candidates tonight. Instead, I'm providing a small watch list of stocks that caught my eye today.

DE - Deere & Co has fallen to its 200-dma. The last time shares hit this technical support was back in July 2010 and it proved to be a great bullish entry point. Readers may want to wait for a bounce.

HANS - Hansen Natural Corp. is not showing much weakness. This could be one to wait and watch for buy-the-dip entry point.

TDC - Teradata has consistently bounced from its rising 50-dma. The stock could test this level again soon.

MON - Monsanto displayed relative strength today. Shares look poised to breakout past their 50-dma.

CF - CF Industries is another fertilizer-related stock and today shares broke out past resistance near $145 although I'm a little reluctant to chase an $8.70 move.

- James


In Play Updates and Reviews

Stocks Tumble on Europe Woes

by James Brown

Click here to email James Brown

Editor's Note:

The U.S. market remains hostage to the situation in Europe. Plenty of stocks gapped open lower at the open as the dollar moved higher on euro weakness. EL and SSO were both stopped out. I'm suggesting an early exit on the FCX trade. Meanwhile UTX (call) and ROP (put) were both triggered.

-James

Current Portfolio:


CALL Play Updates

Apple Inc. - AAPL - close: 334.40 change: -0.82

Stop Loss: 317.00
Target(s): 339.00, 359.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger

Comments:
05/23 update: AAPL gapped open lower this morning but shares bounced near the $330 level. The stock managed a large rebound off its lows but still closed in the red. If the market continues to sink we could see AAPL drop toward the $320 level. I am adding a buy-the-dip entry point to buy calls at $321.00 with a stop loss at $317, which is under the simple 200-dma. We'll remove the breakout trigger at $352.50.

Buy-the-Dip Trigger @ $321.00 <-- Updated

- Suggested Positions -

Buy the June $330 calls (AAPL1118F330)

- or -

Buy the July $330 calls (AAPL1116G330)

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


Boeing Co - BA - close: 76.28 change: -1.24

Stop Loss: 71.45
Target(s): 79.75, 84.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/23 update: There were worries that BA would be forced to delay its new 787 model, expected "midyear 2011". This particular model is already 18 months behind schedule. Meanwhile the Dreamliner 787 is nearly three years behind schedule. Shares of BA gapped open lower but found support near $76 again. Please note that I am adjusting our buy-the-dip entry point from $75.00 to $74.00 and we'll move our stop loss to $71.45. If triggered our targets are $79.75 and $84.50. The Point & Figure chart for BA is bullish with an $87 target.

Trigger @ $74.00

- Suggested Positions -

Buy the June $80 call (BA1118F80) current ask $0.80

Entry on May xxth at $ xx.xx
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 4.8 million
Listed on May 17th, 2011


Express Scripts - ESRX - close: 59.53 change: -0.45

Stop Loss: 56.75
Target(s): 64.00, 68.50
Current Option Gain/Loss: -28.1% & -13.9%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/23 update: ESRX broke down under its simple 10-dma. Yet traders bought the dip twice near $59.00 today. I would hesitate to launch new positions. We might get a better entry point near $58 soon. Our targets are $64.00 and $68.50. FYI: The Point & Figure chart for ESRX is bullish with a $72 target.

- Suggested Positions -

Long the June $60 call (ESRX1118F60) Entry @ $1.53

- or -

Long the August $60 call (ESRX1120H60) Entry @ 3.15

Entry on May 10th at $59.21
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 4.6 million
Listed on May 9th, 2011


Forest Labs Inc. - FRX - close: 34.84 change: -0.53

Stop Loss: 33.25
Target(s): 39.00, 42.50
Current Option Gain/Loss: -53.8% & -28.5%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/23 update: FRX gapped open lower under $35 but traders bought the dip at its 10-dma. I have been suggesting that readers might want to wait for a dip into the $34.50-34.00 zone as a potential entry point. That could happen soon. At this point I'd focus on a decline near the $34.00 level or better yet wait for a bounce from $34 as our next entry point. Our target is the $39.00 level and the $42.50 mark.

- Suggested Positions -

Long the June $37 call (FRX1118F37) Entry @ $0.65

- or -

Long the August $37 call (FRX1120H37) Entry @ $1.40

Entry on May 20th at $35.29
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.2 million
Listed on May 19th, 2011


Goldman Sachs - GS - close: 135.84 change: +0.85

Stop Loss: 128.45
Target(s): 134.00, 137.50
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see trigger

Comments:
05/23 update: Hmm... the action in GS was interesting. The stock gapped open lower like many stocks did today. Yet GS quickly recovered and actually closed positive. This doesn't change our plan. The 2010 lows are near $130. I am suggesting we launch very small bullish positions on a dip at $130.25. This is a very aggressive, higher-risk trade.

Trigger @ 130.25 (very small positions)

- Suggested Positions -

buy the June $135 call (GS1118F135)

Entry on May xxth at $ xx.xx
Earnings Date 07/19/11 (unconfirmed)
Average Daily Volume = 6.5 million
Listed on May 21st, 2011


International Business Machines - IBM - close: 168.26 change: -1.90

Stop Loss: 165.90
Target(s): 174.75, 179.50
Current Option Gain/Loss: - 20.3%
Time Frame: 6 to 9 weeks
New Positions: see below

Comments:
05/23 update: IBM gapped open lower and eventually closed down -1.1%. If the market continues to sink this week we could see IBM hit our stop at $165.90 soon. I am not suggesting new positions at this time.

- Suggested Positions -

Long the June $170 calls (IBM1118F170) Entry @ $2.60

05/12 Adjusted first target to $174.75
05/10 New stop loss @ 165.90

Entry on May 5th at $167.50
Earnings Date 04/19/11
Average Daily Volume = 4.8 million
Listed on April 27th, 2011


Illumina Inc. - ILMN - close: 71.75 change: -1.11

Stop Loss: 69.90
Target(s): 79.50, 84.00
Current Option Gain/Loss: -67.2%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/23 update: ILMN is still correcting lower. Shares touched their 30-dma this morning before trimming its losses. The short-term trend is still down and I'm expecting a drop closer to $70.00. Wait for this dip or a bounce from the $70 area before considering new positions.

FYI: The most recent data listed short interest in ILMN at 22% of the 121 million-share float.

- Suggested Positions -

Long the June $75 call (ILMN1118F75) Entry @ $2.75

Entry on May 11th at $74.50
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 10th, 2011


Jos. A Bank Clothiers - JOSB - close: 55.01 change: +0.03

Stop Loss: 52.90
Target(s): 59.50
Current Option Gain/Loss: +22.8%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/23 update: JOSB managed to show a little bit of strength today. Shares quickly recovered from the morning spike lower to $53.62. While the gain today was very, very minor it's a move in the right direction. Unfortunately if the market continues to sink JOSB will likely follow. Readers may want to consider an early exit now. 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. The risk of a short squeeze is pretty high.

- Suggested Positions -

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

05/18 new stop loss @ 52.90
05/14 Exit the May calls. May $55 call @ 0.90 (+28.5%)
05/12 New stop loss at $51.75

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


NetApp, Inc. - NTAP - close: 52.82 change: -0.88

Stop Loss: 51.75
Target(s): 58.00
Current Option Gain/Loss: -38.4%
Time Frame: about 3 weeks
New Positions: see below

Comments:
05/23 update: We have just two days left for this trade. Readers may want to exit early right now. Currently the plan is to exit on Wednesday at the close to avoid holding over the earnings report.

- Suggested Positions -

Long the June $55 calls (NTAP1118F55) Entry @ $1.90

05/19 Plan on exiting May 25th at the close
05/18 New stop loss @ 51.75

Entry on May 9th at $53.33
Earnings Date 05/25/11 (confirmed)
Average Daily Volume = 5.8 million
Listed on May 7th, 2011


Sherwin-Williams Company - SHW - close: 85.32 change: -0.47

Stop Loss: 83.95
Target(s): 92.25, 98.50
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see Trigger

Comments:
05/23 update: SHW is retreating further away from resistance near $87.00. If we see shares close under $84 and its 50-dma then we will drop this stock as a bullish candidate.

Currently we're waiting for a breakout higher. I'm suggesting a trigger at $87.00. If triggered our first target is $92.25. Our second, much more aggressive target is $98.50. I would not be surprised to see some resistance near the $90 and $95 levels. The Point & Figure chart for SHW is bullish with a $99 target. If the stock can rally past $87 it will produce yet another buy signal.

Trigger @ $87.00

- Suggested Positions -

buy the June $90 call (SHW1118F90) current ask $0.65

- or -

buy the Sept. $90 call (SHW1117I90) current ask $2.50

Entry on May xxth at $ xx.xx
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on May 14th, 2011


Tiffany & Co. - TIF - close: 68.27 change: -0.97

Stop Loss: 67.90
Target(s): 74.50
Current Option Gain/Loss: -47.9%
Time Frame: about five days
New Positions: see below

Comments:
05/23 update: The situation doesn't bode well for TIF. Shares have closed under their 20-dma. Now they rest near the $68.00 level of very short-term support. If the market continues lower we will likely get stopped out. More conservative traders will want to strongly consider an early exit right now. I am inching our stop loss up from $67.70 to $67.90. No new positions at this time. Remember, We want to exit ahead of the May 26th earnings report.

- Suggested Positions -

Long the June $72.50 call (TIF1118F72.5) Entry @ $1.48

05/23 new stop @ 67.90

Entry on May 19th at $70.45
Earnings Date 05/26/11 (unconfirmed)
Average Daily Volume = 1.49 million
Listed on May 18th, 2011


Union Pacific - UNP - close: 101.59 change: -0.40

Stop Loss: 98.95
Target(s): 109.00, 114.00
Current Option Gain/Loss: -43.2%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/23 update: UNP rebounded from its morning lows near $100 and trimmed its losses to just -0.4%. This is encouraging and I've been suggesting readers look for a bounce from the $100 area. The $104 level remains overhead resistance. If the market continues to sink there is a good chance that UNP will stop us out (probably on its way to the 100-dma).

- Suggested Positions -

Long the June $105 call (UNP1118F105) Entry @ $1.62

Entry on May 9th at $102.19
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 3.4 million
Listed on May 7th, 2011


United Technologies Corp. - UTX - close: 86.09 change: -1.41

Stop Loss: 83.49
Target(s): 89.50, 94.75
Current Option Gain/Loss: -35.0%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
05/23 update: Our bullish play on UTX has been triggered. The stock gapped open lower at $86.41 and spent the rest of the day consolidating sideways near support at the $86.00 level. Our trigger to buy calls was at $86.50 so the trade was opened this morning. Readers may want to wait for a dip closer to the $85.00 level and its 50-dma before initiating new positions. More conservative traders may want to use a stop closer to $85 instead of ours at $83.49.

- Suggested Positions -

Long the June $90 calls (UTX1118F90) Entry @ 0.40

chart:

Entry on May 23rd at $86.41
Earnings Date 04/20/11
Average Daily Volume = 3.7 million
Listed on April 27th, 2011


Wynn Resorts Ltd. - WYNN - close: 142.47 change: -2.51

Stop Loss: 146.40
Target(s): 159.75, 169.00
Current Option Gain/Loss: Unopened
Time Frame: 4 to 6 weeks
New Positions: Yes, see Trigger

Comments:
05/23 update: WYNN is testing support near $140 again. Once again traders are buying the dip near $140. Aggressive and nimble traders could buy calls now with a stop very close to the $140.00 mark. My concern is the stock market is poised for more declines and WYNN could break down below the $140 level soon. If we see a close under $140 we'll drop WYNN as a potential trade. Currently we have a breakout trigger to buy calls at $152.00.

Trigger @ $152.00

- Suggested Positions -

Buy the June $160 calls (WYNN1118F160) current ask $2.15

Entry on May xxth at $ xx.xx
Earnings Date 07/28/11 (unconfirmed)
Average Daily Volume = 2.1 million
Listed on May 11th, 2011


PUT Play Updates

Pioneer Natural Resources - PXD - close: 89.22 change: -1.72

Stop Loss: 96.15
Target(s): 85.25
Current Option Gain/Loss: + 9.0%
Time Frame: 4 to 6 weeks
New Positions: see below

Comments:
05/23 update: PXD dipped near support at $88 this morning. The stock pared its losses but still closed down -1.8%. Shares look poised to break this support and plunge toward $85 soon. More aggressive traders could aim for a drop near the 200-dma instead.

Earlier Comments:
We want to keep our position size small to limit our risk because oil and oil stocks have been increasingly volatile lately. Our target is $85.25. FYI: The Point & Figure chart for PXD is bearish with a $72 target.

-Small Bearish-

Long the June $90 PUT (PXD1118R90) Entry @ $3.30

Entry on May 16th at $91.64
Earnings Date 07/27/11 (unconfirmed)
Average Daily Volume = 1.9 million
Listed on May 14th, 2011


Roper Industries - ROP - close: 82.07 change: -1.31

Stop Loss: 84.05
Target(s): 78.00, 75.50
Current Option Gain/Loss: -20.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/23 update: Our new trade on ROP is already open. The stock gapped open lower at $82.07, dipped to $81.50 intraday and closed back near support at $82 and its 100-dma. Our trigger to buy puts was hit at $81.75. I would still consider new positions now although there is a chance ROP will fill the gap with a bounce toward $83 before rolling over.

Our targets are $78.00 and $75.50. The $80 level might offer a little support so don't be surprised to see a bounce. I would keep our position size small to limit our risk. Currently the Point & Figure chart is bearish with a $75 target.

(small positions) Suggested Positions -

Long the June $80 PUT (ROP1118R80) Entry @ $1.20

Annotated Chart:

Entry on May 23rd at $81.75
Earnings Date 07/26/11 (unconfirmed)
Average Daily Volume = 570 thousand
Listed on May 21st, 2011


CLOSED BULLISH PLAYS

Estee Lauder Companies - EL - close: 98.31 change: -2.34

Stop Loss: 98.75
Target(s): 107.00, 109.95
Current Option Gain/Loss: -66.6%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/23 update: Monday was a rough day for shares of EL. The stock gapped open lower at $99.62 and quickly fell below short-term support near $99.00. Our stop loss was hit at $98.75.

- Suggested Positions -

June $105 call (EL1118F105) Entry @ $1.95, Exit 0.65 (-66.6%)

05/23 Stopped out @ 98.75, Option @ -66.6%

chart:

Entry on May 19th at $102.10
Earnings Date 08/11/11 (unconfirmed)
Average Daily Volume = 1.1 million
Listed on May 18th, 2011


Freeport McMoran - FCX - close: 47.42 change: -0.96

Stop Loss: 45.99
Target(s): 53.50
Current Option Gain/Loss: - 36.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
05/23 update: I am giving up on our aggressive FCX trade. Concerns over Europe sent the euro lower, which pushed the dollar higher. A rising dollar is normally bearish for commodities. Copper fell over -3% and yet gold managed a gain. I'm a little surprised that FCX did not see sharper declines today and there is a chance that the $46.00 level might hold as support. However, the trend for the dollar is higher and today marks a breakout from its recent sideways consolidation. Thus I'm suggesting we exit our FCX trade early! Earlier comments:
I consider this a very aggressive and higher-risk trade. We want to keep our position size very small.

- Very Small Positions -

June $50 call (FCX1118F50) Entry @ $1.52, Exit 0.96 (-36.8%)

05/23 Exit Early. FCX @ $47.42, Option @ -36.8%

chart:

Entry on May 19th at $48.72
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 21.8 million
Listed on May 18th, 2011


ProShares Ultra(long) S&P 500 - SSO - close: 52.71 change: -1.27

Stop Loss: 52.75
Target(s): 59.00
Current Option Gain/Loss: -78.7% and -52.5%
Time Frame: 8 to 10 weeks
New Positions: see below

Comments:
05/23 update: Stocks gapped open lower on Monday. The SSO opened at $52.61. This is below our stop loss at $52.75 so the play was closed immediately. The SSO and S&P 500 now both sit on their simple 100-dma.

Small Positions Only - Suggested Positions -

Jun $56 call (SSO1118F56) Entry @ $1.60, Exit 0.34 (-78.7%)

- or -

Sep $60 call (SSO1117I60) Entry @ $2.00, exit 0.95 (-52.5%)

05/23 Gap down at the open. Stopped out. Options @ -78.7% & -52.5%

chart:

Entry on May 5th at $54.39
Earnings Date --/--/--
Average Daily Volume = 11.3 million
Listed on May 4th, 2011