Closed Plays


RIG & ROST were closed.


Play Updates


Allergan Inc. - AGN - close: 83.66

Comments:
12/17 update: AGN managed to eke out a small gain for the week. Shares have spent two weeks consolidating sideways in the $82-85 zone. I would wait for AGN to close over $85.50 or $86.00 before considering new bullish positions. However, given the wide spreads for AGN's options I'd probably avoid launching new plays and look elsewhere in our portfolio.

Earlier Comments:
Option spreads are wide for these LEAPS. We want to keep our position size pretty small to limit our risk.

- Suggested Positions -
OCT 17, 2011 - entry price on AGN @ 85.46, option @ 5.10
symbol: AGN1319A100 2013 JAN $100 call - current bid/ask $ 2.35/ 4.40

12/10/11 spreads on our 2013 calls are getting wider!
11/19/11 Taking an aggressive stance on our stop loss and moving it down to $77.45
10/22/11 Earnings are coming up. Readers might want to consider raising their stop loss. We are keeping ours at $79.45.

Current Target: $99.00
Current Stop loss: 77.45
Play Entered on: 10/17/11
Originally listed on the Watch List: 09/24/11


Bank of America - BAC - close: 5.20

Comments:
12/17 update: Ouch! BAC lost -9% for the week. The Fitch ratings agency downgraded several banks on Friday and BAC was one of them. This news helped push BAC toward the bottom of its $5.20-5.40 trading range. The late November lows are in the $5.13-5.03 area. Odds are good we're going to see BAC retest this area. Investors can use a dip or a bounce near the $5.10-5.00 zone as a new entry point. We're not using a stop loss on current positions but more conservative traders may want to place a stop in the $4.90-4.80 area.

Earlier Comments:
A few weeks ago there was a report from Reuters suggesting that S&P was going to change the way they rate the credit ratings of banks. Bank of America, Citigroup (C) and Morgan Stanley (MS) might all see their credit rating downgraded by S&P after they implement this new rating process. That will likely send shares of BAC lower.

- Suggested Positions -
AUG 29, 2011 - entry price on BAC @ 8.10, option @ 0.57
symbol: BAC1221A10 2012 JAN $10 call - current bid/ask $ 0.01/ 0.02
(no stop loss on this position)

- or -

AUG 29, 2011 - entry price on BAC @ 8.10, option @ 1.50
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.28/ 0.29
(No stop loss on this position)

(2nd Position, bought the dip at $5.15)

NOV 23, 2011 - entry price on BAC @ 5.15, option @ 0.35
symbol: BAC1319A10 2013 JAN $10 call - current bid/ask $ 0.28/ 0.29
(no stop loss on this position)

12/17/11 expect BAC to retest the $5.10-5.00 zone.
11/23/11 BAC hits new trigger @ 5.15 to buy calls.
11/19/11 New trigger to buy calls @ $5.15 (see 2nd position)
10/03/11 Sept. 26th position stopped out at $5.75.
2012 Jan. $7.50 call @ 0.48 (-27.2%)
2013 Jan. $10 call @ 0.74 (-26%)
10/01 raising our stop loss on the Sep. 26th position to $5.75
09/24 adding 2nd position, stop loss at $5.40
09/03 no stop loss on this trade at this time.

Current Target: $12.00-to-$15.00
Current Stop loss: see details above
Play Entered on: 08/29/11
Originally listed in the New Plays 08/27/11


Bristol Meyers Squibb - BMY - close: 34.22

Comments:
12/17 update: Investors were in the mood to buy safe-haven stocks last week. Shares of BMY rallied to new multi-year highs. The stock hit $34.50 at its high on Friday, which was our previous exit target but a week ago we raised our target to $37.50 instead. More conservative trades may want to go ahead and lock in profits now.

BMY does look overbought given the big bounce off its November lows. I am not suggesting new positions at this time.

- Suggested Positions -
SEP 19, 2011 - entry price on BMY @ 30.53, option @ 1.20
symbol: BMY1319A35 2013 JAN $35 call - current bid/ask $ 2.28/ 2.35

12/16/11 BMY hit our previous exit target at $34.50, more conservative traders may want to take profits now and exit early.
12/10/11 adjust exit target to $37.50
12/03/11 reduce our two exit targets to just one at $34.50
10/22/11 BMY is due to report earnings this week on Oct. 27th. Readers may want to take profits now or prior to the report.
10/08/11 new stop loss @ 29.40
09/16 Friday's close at $30.53 is our trigger to buy calls. Our entry will be Monday morning.

Current Target: $37.50
Current Stop loss: 29.40
Play Entered on: 09/19/11
Originally listed on the Watch List: 09/10/11


Beazer Homes - BZH - close: 2.24

Comments:
12/17 update: BZH saw a sharp decline toward technical support at its 50-dma before paring its losses. The 50-dma has held as support the last three days in a row. If you were looking for a new entry point this could work although you may want to use a higher stop loss.

- Suggested Positions -

(stock position)
OCT 28, 2011 - entry price on BZH @ $2.12

(option position)
OCT 28, 2011 - entry price on BZH @ 2.12, option @ 0.70
symbol: BZH1319A2.5 2013 JAN $2.50 call - current bid/ask $ 0.70/ 0.80

12/03/11 new stop loss @ 1.85
11/26/11 new stop loss at $1.75
11/15/11 BZH reports a loss of 57 cents a share, worse than expected
11/12 BZH has seen a big bounce. Cautious investors may want to take profits now before BZH reports earnings on Nov. 15th. (BZH +13.2%, option +21.4%)
10/28 trade begins: BZH opens @ $2.12
10/27 BZH meets our entry point requirement with a close over $2.05

Current Target: $3.70
Current Stop loss: 1.85
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/22/11


Cisco Systems - CSCO - close: 17.94

Comments:
12/17 update: The action in CSCO this past week looks bearish The bounce on Friday failed near short-term resistance at $18.50. CSCO has a new short-term bearish trend of lower highs and lower lows. You could argue that CSCO has created a bearish double top with the peaks in November and December. If the market continues to pull back then CSCO will likely test the $17.50-17.00 zone. I am not suggesting new positions at this time.

- Suggested Positions -
OCT 28, 2011 - entry price on CSCO @ 18.28, option @ 1.68
symbol: CSCO1319A20 2013 JAN $20 call - current bid/ask $1.57/1.60

10/29/11 new stop loss @ 16.40
10/28/11 stock opens at $18.28
10/27/11 CSCO meets our entry requirement: close at $18.44
10/22/11 Added entry to buy a close over $17.75
10/15/11 We are adjusting our entry point. Wait for a dip to $16.65
10/14/11 CSCO hit our entry point requirement for a close over $17.50.

Current Target: $21.75
Current Stop loss: 16.40
Play Entered on: 10/28/11
Originally listed on the Watch List: 10/08/11


CSX Corp. - CSX - close: 20.41

Comments:
12/17 update: Our CSX trade was almost stopped out this past week. Shares have fallen from the $22.25 area to support near $20.00 in the past two weeks. Thursday saw an intraday dip to $19.87. We have a stop loss at $19.75. The $20 level should be support so investors can use this pull back as a new entry point to buy calls.

Earlier Comments:
I do see potential resistance at the $24.00 level and the $26.75-27.00 zone. Yet the Point & Figure chart for CSX is bullish with a $33.50 target.

- Suggested Positions -
NOV 14, 2011 - entry price on CSX @ 22.59, option @ 2.24
symbol: CSX1319A25 2013 JAN $25 call - current bid/ask $ 1.23/ 1.28

- or -

NOV 14, 2011 - entry price on CSX @ 22.59, option @ 3.30
symbol: CSX1418A25 2014 JAN $25 call - current bid/ask $ 2.13/ 2.28

12/17/11 CSX is starting to bounce from support near $20. This can be used as a new entry point
11/26/11 I had cautioned readers to expect a potential dip to $20.00. CSX hit this level on Friday.

Current Target: $29.75
Current Stop loss: 19.75
Play Entered on: 11/14/11
Originally listed in the New Plays 11/12/11


Enterprise Products Partners - EPD - close: 44.80

Comments:
12/17 update: EPD lost about 70 cents for the week. The stock is churning sideways between $45.75 (10-dma) and the $44.50 level (50-dma). I don't see any changes from my prior comments. Readers can look for dips near $44.00 or wait for a close over $46.50 as a new bullish entry point. Just remember that EPD doesn't move very fast.

Earlier Comments:
Our long-term target is $59.00. FYI: The Point & Figure chart for EPD is bullish with a $60 target. I am listing the 2013 calls but there are also 2014s available (with a much wider spread).

- Suggested Positions -
Nov 21, 2011 - entry price on EPD @ 45.17, option @ 1.45
symbol: EPD1319A50 2013 JAN $50 call - current bid/ask $ 0.75/ 1.10

12/08/11 EPD gapped down on news of a 9 million share secondary price at $44.68.

Current Target: $59.00
Current Stop loss: 41.75
Play Entered on: 11/21/11
Originally listed in the New Plays 11/19/11


Hewlett-Packard - HPQ - close: 25.84

Comments:
12/17 update: It was a rough week for tech stocks. Monday's news that semiconductor giant Intel (INTC) issued an earnings warning due to the impact of hard drive supplies from Thailand flooding hit the entire tech sector. HPQ gapped open lower under the bottom of its $28.50-27.50 trading range. The sell-off has continued. HPQ is now under its 50-dma and headed for round-number support near $25.00. We have a stop loss at $24.75. Nimble traders can use a dip or a bounce near $25.00 as a new entry point.

- Suggested (SMALL) Positions -
Longer-term Trade
Sep 26, 2011 - entry price on HPQ @ 22.59, option @ 3.75
symbol: HPQ1319A25 2013 JAN $25 call - current bid/ask $ 4.85/ 4.90
Stop Loss @ 24.75

12/03/11 new stop loss @ 24.75
11/19/11 Readers need to decide: Take profits now (+76%) or hold on and expect some volatility following HPQ's earnings report on Nov. 21st
10/31/11 scheduled exit for the remainder of our 2012 calls @ the open. Options opened at $5.40 (+100%), plus we sold half of our 2013 $25 calls, which opened at $5.70 (+52%).
10/29/11 new stop loss on 2013 calls at $23.90
10/29/11 prepare to exit remainder of 2012 position on Monday @ open
prepare to sell 1/2 (half) of 2013 position on Monday at open
10/17/11 Planned exit, sell 1/2 of 2012 position, bid @ 4.10 (+52.4%)
10/15/11 new stop loss for the 2012 position @ 22.85
10/15/11 Plan to sell 1/2 of 2012 calls on Monday
10/08/11 new stop loss (both positions) at $21.40

Current Target: 2013 call target: 32.50
Play Entered on: 09/26/11
Originally listed in New Plays: 09/24/11


KB Home - KBH - close: 7.22

Comments:
12/17 update: It was a painful week for KBH. The stock fell from $8.10 a week ago to $6.87 at Wednesday's lows (-15%). We knew this was going to be a volatile stock to trade. Shares have since bounced but the rebound failed near resistance at $7.50 on Friday morning. I am not suggesting new positions at this time. More conservative traders might want to raise their stop loss, especially before KBH reports earnings.

NOTE: The company is due to report earnings on Wednesday, December 21st before the opening bell. Wall Street expects a profit of 3 cents a share. If you want to try and protect yourself from any post-earnings volatility you'll have to make preparations by Tuesday's closing bell. The newsletter is going to hold over the announcement.

Earlier Comments:
KBH can be a volatile stock. There is no need to chase it. If there is a breakout the stock could see a short squeeze. The most recent data listed short interest at 52% of the 65 million-share float.

- Suggested Positions -
(Stock Position)
Oct 19, 2011 - entry price on KBH @ 7.17

- or -

(Option Position)
Oct 19, 2011 - entry price on KBH @ 7.17, option @ 1.25
symbol: KBH1319A10 2013 JAN $10 call - current bid/ask $ 0.85/ 0.92

12/03/11 new stop loss @ 6.38
10/19/11 Trade opens. KBH opens @ 7.17, option @ 1.25
10/18/11 KBH meets our entry requirement with a close above $7.00
price check: 12/14/11 KBH closed at 6.92 2013 jan 10 call: 0.75/0.84

Current Target: $9.90
Current Stop loss: 6.38
Play Entered on: 10/19/11
Originally listed on the Watch List: 10/15/11


Kraft Foods Inc. - KFT - close: 36.49

Comments:
12/17 update: KFT lost 21 cents for the week. The stock is consolidating sideways in the $36-37 zone and has been stuck in this range for over two weeks. I am not suggesting new positions at this time. Our final target is $40.00.

Earlier Comments:
NOTE: KFT is normally a very slow moving stock. It will take months to make any progress. Once a position is open readers may want to turn these into calendar spreads (a.k.a. vertical spreads).

- Suggested (SMALL) Positions -
Sep 22, 2011 - entry price on KFT @ 32.71, option @ 2.35
symbol: KFT1319A35 2013 JAN $35 call - current bid/ask $ 3.40/ 3.55

12/03/11 new stop loss @ 33.85, adjusted exit target to $40.00
11/12/11 new stop loss @ 32.40

Current Target: $40.00
Current Stop loss: 33.85
Play Entered on: 09/22/11
Originally listed on the Watch List: 09/17/11


Kimberly-Clark Corp. - KMB - close: 71.28

Comments:
12/17 update: KMB displayed some relative strength with a gain for the week. Shares are now testing resistance in the $71.50 area. I am almost tempted to buy calls on a close over $72.00 but KMB has long-term resistance near $73.00.

Earlier Comments:
KMB does have long-term resistance in the $73.00-73.50 area. Therefore we will only start with small (half-sized) positions. When KMB closes above $74.00 we'll reconsider adding new positions to this play. Our long-term target is $79.75 but we'll readjust it as the play progresses. The Point & Figure chart is currently suggesting a long-term target of $98.00. NOTE: KMB does not move very fast. Investors may want to try and maximize their returns by changing this into a vertical (a.k.a. calendar) spread.

- Suggested Positions -
(half sized position)
Nov 07, 2011 - entry price on KMB @ 69.50, option @ 2.05
symbol: KMB1319A75 2013 JAN $75 call - current bid/ask $ 2.40/ 2.55

Current Target: $79.75
Current Stop loss: 65.75
Play Entered on: 11/07/11
Originally listed in the New Plays 11/05/11


Limited Brands, Inc. - LTD - close: 38.40

Comments:
12/17 update: It was another rough week for LTD. Shares faded from $40 toward its November lows and technical support at its 200-dma. If the sell-off continues then LTD could hit our stop loss at $37.90. Should LTD manage a bounce I would be tempted to buy calls on a close over $40.00 again.

The mystery over LTD's missing option quotes is solved. The company is giving back $600 million with a special $2 dividend. The dividend is payable on December 23rd, 2011 but the stock began trading ex-dividend on December 8th. Our 2013 Jan $50 calls are now $48 calls.

Earlier Comments:
The plan was to keep our position size small

- Suggested (SMALL) Positions -
Oct 25, 2011 - entry price on LTD @ 43.70, option @ 4.25
symbol: LTD1319A50 2013 JAN $48 call - current bid/ask $ 2.05/ 2.20

(originally these were listed at $50 strike price calls, but LTD began trading ex-dividend on Dec. 8th, 2011, for a special $2.00 dividend)

12/08/11 LTD begins trading ex-dividend for a special $2 dividend
11/16/11 LTD reports earnings one cent above estimates
10/25/11 trade begins when LTD opens at $43.70
10/24/11 closed at $43.79, meets our entry point requirement
10/15/11 New Strategy: buy a close over $43.50, stop 37.90
10/01/11 adjusted stop loss to $32.90, if triggered
09/24/11 new trigger @ 35.50, updated 2013 option strike
09/17/11 new trigger @ 37.50, updated option strikes.

Current Target: $54.00
Current Stop loss: 37.90
Play Entered on: 10/25/11
Originally listed on the Watch List: 08/27/11


QUALCOMM Inc. - QCOM - close: 52.61

Comments:
12/17 update: I am growing concerned over the trading action in QCOM. The stock has broken down from its sideways consolidating in the $54-56 zone. Shares are on the verge of breaking down below a bullish trendline of higher lows.

I am not suggesting new positions at this time.

Earlier Comments:
QCOM reported much better than expected earnings, beating both the top and bottom line estimates. Management raised their guidance looking ahead. The company is reaping the benefits from the booming smartphone market. The CEO said there is over 300 new devices in development that will use QCOM electronics inside. That sounds like there is a lot of potential for growth.

- Suggested (SMALL) Positions -
NOV 23, 2011 - entry price on QCOM @ 52.50, option @ 4.90
symbol: QCOM1319A60 2013 JAN $60 call - current bid/ask $ 4.05/ 4.20

11/23/11 QCOM hits our trigger @ 52.50

Current Target: $74.50
Current Stop loss: 49.40
Play Entered on: 11/23/11
Originally listed on the Watch List: 11/05/11


Reynolds American Inc. - RAI - close: 40.66

Comments:
12/17 update: In spite of the Friday morning sell-off RAI still managed to post a gain for the week. Traders can use dips to support near $40.00 as a new entry point to launch positions. However, the market looks vulnerable here. Readers may want to wait for a new close over $41.00 instead (or wait for the S&P 500 to close over its 200-dma).

- Suggested Positions -
Nov 18, 2011 - entry price on RAI @ 40.02, option @ 2.00
symbol: RAI1319A42.5 2013 JAN $42.50 call - current bid/ask $ 1.90/ 2.10

Current Target: $49.00
Current Stop loss: 37.85
Play Entered on: 11/18/11
Originally listed on the Watch List: 10/22/11


Red Hat Inc. - RHT - close: 47.64

Comments:
12/17 update: RHT displayed some relative strength on Friday with a +3.0% gain. Is this traders positioning themselves for the earnings report on Monday? It was encouraging to see RHT bounce off support near $45.00 but the bounce has stalled near its 50-dma. Earnings are due after the closing bell on Monday (Dec. 19th). Wall Street is expecting a profit of 26 cents a share. If RHT disappoints we could see it gap open lower on Tuesday morning. I am not suggesting new positions at this time. More conservative traders may want to consider buying some sort of hedge prior to the close that Monday or raise their stop loss on this position to limit your risk.

- Suggested Positions -
Nov 01, 2011 - entry price on RHT @ 47.70, option @ 4.75
symbol: RHT1319A60 2013 JAN $60 call - current bid/ask $ 3.70/ 4.50

12/17/11 look for RHT to report earnings on Monday (12/19)
11/12/11 new stop loss @ 44.75

Current Target: $59.75
Current Stop loss: 44.75
Play Entered on: 11/01/11

Originally listed on the Watch List: 10/29/11


U.S. Steel Corp. - X - close: 25.87

Comments:
12/17 update: Material names like X have continued to struggle. Although on a positive note it looks like the two-week consolidation lower in X has found support near $25.00 and its 50-dma. The simple 100-dma near $26.75 could be resistance. Readers may want to wait for X to close above this level before considering new bullish positions.

More conservative traders may want to up their stop loss toward the $24 area.

Earlier Comments:
This is an aggressive trade because X can be volatile and we have a wide stop loss. That's why we're using small positions to limit our risk.

- Suggested (SMALL) Positions -
Nov 09, 2011 - entry price on X @ 25.50, option @ 5.00
symbol: X1319A30 2013 JAN $30 call - current bid/ask $ 4.65/ 4.80

12/03/11 new stop loss at $21.90
11/09/11 Trade opened at $25.50 (small positions)

Current Target: $37.50
Current Stop loss: 21.90
Play Entered on: 11/09/11
Originally listed on the Watch List: 11/05/11


CLOSED Plays


Transocean Ltd. - RIG - close: 43.26

Comments:
12/17 update: It was another rough week for RIG. A sell-off in crude oil prices weighed heavily on the oil and oil service stocks. RIG broke down below key support in the $41.00 area and then continued to fall and broke round-number support at $40.00. Shares hit our stop loss at $39.45 on December 15th. The action this week is extremely bearish with RIG closing at new seven-year lows.

- Suggested SMALL Positions -
Nov 29, 2011 - entry price on RIG @ 42.25, option @ 4.65
symbol: RIG1319A50 2013 JAN $50 call - exit $3.45 (-25.8%)

12/15/11 stopped out at $39.45. option bid @ 3.45

Chart of RIG:

Current Target: $59.00
Current Stop loss: 39.45
Play Entered on: 11/29/11
Originally listed on the Watch List: 11/26/11


Ross Stores Inc. - ROST - close: 47.00 (post 2-for-1 split)

Comments:
12/17 update: Our plan was to exit positions on Wednesday, December 14th at the close to avoid holding over ROST's 2-for-1 split. The stock closed at $92.83. The 2013 Jan $100 call closed with a bid of $7.60.

- Suggested Positions -
Oct 11, 2011 - entry price on ROST @ 84.36, option @ 5.30
symbol: ROST1319A100 2013 JAN $100 call - exit $7.60 (+43.3%)

12/14/11 planned exit. ROST closed @ 92.83. Option bid @ $7.60
12/10/11 Prepare to exit on Weds. Dec. 14th at the closing bell to avoid holding over the stock split.
12/10/11 new stop loss @ 89.00
12/03/11 new stop loss @ 83.90
11/17/11 ROST reported earnings that were in-line and announced a 2-for-1 stock split set for Dec. 16th
11/12/11 Cautious investors may want to take profits early. Option has a bid of $6.70 (+26.4%)
11/05/11 new stop loss @ 81.75
10/22/11 new stop loss @ 79.25
10/15/11 adjusted stop loss to $77.00
10/11/11 ROST opened at $84.36
10/10/11 ROST closed above $83, our requirement to open the trade
10/08/11 adjusted option strike to 2013 Jan. $100 call
10/01/11 new strategy: buy a close over $83.00
09/24/11 new trigger at $73.00, stop 69.50
09/17/11 new trigger at $76.50, stop @ 71.40, new strikes.

Chart of ROST

Current Target: $99.00
Current Stop loss: 89.00
Play Entered on: 10/11/11
Originally listed on the Watch List: 09/10/11