Option Investor
Play Updates

Holding Our Own Into Year End

Printer friendly version

None of our plays declined last week and one was a huge winner. With the markets flat I have no complaints.

Dropped Plays


Energy Play Updates

HLX $6.57 -0.46 - Helix Energy Solutions

Helix was at a new our week high on Wednesday but the drop in crude brought it back to flat. No change in play.

Position: 2010 $10 LEAP Call WAI-AB @ $2.45

FXI $30.55 +0.56 - iShares China Index

Another new high on Thursday but a minor decline knocked it back for only a minor gain. The drop in commodity prices and oil prices is a huge benefit to China. The FXI will eventually explode once those benefits start working through the system.

Breakout trigger: $29, hit 12/08

Position: 2010 $35 LEAP Call YOF-AI @ $5.10

DIG $26.93 -2.67 - Proshares Ultra Oil & Gas

I was shocked by the lack of a material decline in DIG given the -27% drop in oil prices for the week. We gave back about 60% of the prior week's gain and that is not a bad deal. The ramp into the OPEC meeting helped defray the post meeting drop.

Company Info:

Ultra Oil & Gas ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Dow Jones U.S. Oil & Gas Index.

Breakdown trigger: $30, hit 12/1

Position: MAR $35 Call DPB-CG $5.40

FSLR $140.68 +23.76 - First Solar

Outstanding! Not only did they get added to the Nasdaq 100 but an analyst at Pacific Crest said FSLR had reached "grid parity." That means they are producing electricity per KWH equal to or less than conventional electricity. A 12.6 megawatt plant in Nevada is producing without subsidies at $0.075 per KWH and conventional power is $0.09 per KWH. This is the holy grail of the solar community. Once solar is cheaper than conventional power the battle has been won and it will only get cheaper as technology progresses.

The only other company close is SunPower and we are playing that though Cypress Semiconductor.

Covered Call position:

Long 100 Shares FSLR @ $128
Short 2010 $150 LEAP Call LZL-AA currently $40.70
Profit if called is $40.70 in premium + $22 in stock (49%)

Put spread position:

Long 2010 $100 LEAP Put LQM-MT @ $32.90
Shrt 2010 $250 LEAP Put LZL-MJ @ $135.70, net credit $103

SMG $28.72 -.34 - Scotts Miracle Gro

SMG appears to have lost its bloom but support at $28 is still holding. Stop is $27.

Breakdown trigger: $25, hit 11/21

Position: 2010 $30 LEAP Call WOF-AF @ $5.20

FLS $52.05 +0.02 - Flowserve

After an $8 gain last week I will be happy with a flat performance. Still FLS was at a new 6-week high on Wednesday. The trend is still with us.

Breakdown trigger: $45, hit 12/1

Position: April $55 Call FGV-DK (no leaps) $5.33

Stock Positions

ESLR $3.04 +0.29 - Evergreen Solar

No change in play.

Evergreen was picked by RBC Capital as one of the top 20 stocks to benefit from the Obama infrastructure plan. Part of the plan is to make office buildings more energy efficient through upgrades to their energy handling and the addition of solar.

Too cheap for LEAPS, buy the stock instead.

Position: Stock in ESLR @ $2.75

CSIQ $6.22 +0.67 - Canadian Solar

No change in play.

Canadian not only supplies solar for commercial and residential applications but also sells those solar panels you see on the top of road signs, traffic lights, warning lights, etc. They are diversified and don't rely on only one product.

Stock too cheap for leaps, buy the stock.

Position: Stock in CSIQ @ $5.55

FTK $2.30 -$.75 Flotek

No news but a 10% drop on Friday. No change in play.

Options on FTK cost nearly as much as the stock and time decay works against you. Just buy the stock. At $3 it is cheaper than any LEAP.

Position: Stock of FTK @ $3.01

CLNE $6.12 +1.28 - Clean Energy Fuels

VERY NICE week for CLNE with a nice gain to a new 6-week high. No change in play

Clean Energy is the leading provider of natural gas (CNG and LNG) for transportation in North America. It has a broad customer base in the refuse, transit, ports, shuttle, taxi, trucking, airport and municipal fleet markets, fueling more than 14,000 vehicles daily at over 170 strategic locations across the United States and Canada. With the sudden surplus of natural gas it will be easier to convince companies to switch to the cleaner, cheaper fuel. The Clean Truck Program at California's ports is planning to switch out 8,000 diesel trucks for Nat Gas trucks over the next five years. This is just one program and CLNE has a major jump on everyone else.

Options on CLNE cost nearly as much as the stock and time decay works against you. Just buy the stock. At $5 it is cheaper than any LEAP.

Position: Stock of CLNE @ $4.84

CY $4.13 -.58 - Cypress Semiconductor

Gave back most of last week's gain on one day. No change in play.

Options don't make sense on a $4 stock.

Position: Stock in CY @ $4.11

BZH $1.65 -0.05 Beazer Homes

No change in play.

The stock price is so cheap that options don't make sense.

Position: STOCK in BZH @ $2.15

Non-Energy Positions

HPQ $35.40 -.57 Hewlett Packard

Still knocking on the resistance at $36. No change in play.

Breakdown trigger: $33, hit 11/25

Position: 2010 $40 LEAP Call WPW-AH @ $5.60

VIX 44.93 -9.35 - Volatility Index

A new 3-month low on Friday but our time is expiring. I believe we will see some market declines at year-end so I am planning on exiting this play next weekend. Maintain the stop at 70.

Position: JAN $50 PUT VIX-MJ @ $3.90

AAPL $90.00 -8.27 - Apple Inc

I fear there are some problems in Apple's future. Dropping out of MacWorld just a couple weeks before the event is not a good sign. It brings back fears about the health of Steve Jobs. Maintain the stop at $87 and hope Jobs makes a statement about his health.

Breakout trigger: $96, hit 12/03

Position: 2010 $120 LEAP Call WAA-AD $18.40

UWM $19.28 +1.23 - ProShares Ultra Russell 2000 ETF

If it were any other week on the calendar I would be cheering the new 6-week intraday high on Friday. Unfortunately we are getting close and closer to January and I fear there will be a serious give back in the first ten days. Hopefully fund managers will continue window dressing in small caps and push us well over resistance at $20 before next weekend.

Company Info:

Ultra Russell2000 ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the Russell 2000 Index

Breakdown trigger: $16, hit 12/1

Position: April $25 Call ULX-DY $2.55

POT $72.26 +5.71 - Potash

This is definitely a Jekyl and Hyde stock. The prior week they raised some estimates and saw a big pop in the stock price. This week they cut estimates and gave back $12 but still finished with a nice gain. Volatility has NOT left POT.

Breakout trigger: $58, hit 12/09

Position: 2010 $80 LEAP Call WPT-AP @ $17.30

Leaps Trader Update Archives