Option Investor
Newsletter

Daily Newsletter, Tuesday, 3/18/2014

Table of Contents

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

Market Wrap

Flight to Quality

by Jim Brown

Click here to email Jim Brown

As the questionable sanctions begin to take effect the U.S. markets became a safe haven for investors.

Market Statistics

Multiple events surrounding Crimea provided a lift to the U.S. markets. First in an hour long speech Putin said he has no interest in continuing his aggression into the Ukraine. He is content to annex Crimea and solidify his access to the Black Sea naval port. He said as long as Russians living in the Ukraine were not in danger everything would remains as it is now. While there is always the threat of Russian forces pouring over the Ukraine border the danger to the rest of Ukraine appears to have passed. The comments caused a "Putin rally" in the S&P futures before the market opened.

Pathetically weak sanctions from the U.S., EU and Japan went into effect and now we wait to see how Russia responds and whether they cut back on energy supplies to Europe. That is Putin's big stick in this confrontation. Russia sells about $160 billion a year of gas and oil to Europe. If the sanctions against Russia begin to hurt he may start making noises about restricting the flow of natural gas. I view this as an empty threat since Russia depends as much on that $160 billion in revenue as Europe depends on the gas.

However, when backed into a corner you never know what people like Putin will do. While the risk of a military confrontation has lessened significantly we are moving into another chapter where an economic war will be waged and with Russia's weak economy that may be the most effective campaign. Russia is seen as a third world nation with a first world military even though their military equipment is old and in a general state of disrepair. They still have a lot of equipment with 850,000 soldiers to back it up.

The second factor supporting the market was the FOMC announcement on Wednesday. Aunt Janet, the Empress of the Doves, will hold her first press conference Wednesday afternoon at 2:30 and so far every time Janet Yellen has been speaking on TV the market has gone up. Her constant assurance that rates will stay low and the potential for a guidance change at this meeting helped to encourage investors.

The economics were mixed again with no clear direction. The Consumer Price Index (CPI) rose only +0.1% and below estimates for a +0.2% gain. It would have been even lower but a +0.4% gain in food prices helped push the headline number higher. The energy component declined -0.5% despite the sharp spike in natural gas prices. The headline number has averaged a +0.1% monthly gain since August.

The core rate, ex food and energy, also rose +0.1% with goods prices declining -0.1% and services rising +0.2%. The core rate for the trailing 12 months is +1.6% and the headline rate +1.1%.

The energy sub index declined -0.5% thanks to a -1.7% decline in gasoline that offset a +4.1% increase in fuel oil and +3.6% increase in utility bills as a result of rising gas prices.

The tame inflation in consumer prices should allow the Fed to continue to maintain an accommodative monetary policy for a long time. The Fed has said they would like to see inflation in the 2.0-2.5% range in order to boost employment. They have a long way to go.

New residential construction declined from an annual pace of 909,000 to 907,000 for February. Expectations were for a rise to 910,000. The pace has been flat for the last two months after hitting 1.1 million in November and 1.02 million in December. On the plus side building permits rose +7.7% to a pace of 1.018 million and suggesting there was going to be a boom in construction in the weeks ahead. That pace is approaching the October 2013 post recession high. Of course analysts blamed weather for the lull in construction.

Confirming the weather impact, starts in the Northeast declined -38% with starts rising in the Midwest and South. Completions rose +4.4% to 886,000 annualized. That is 21.9% higher than the same period in 2013.

Treasury fund flows actually rose in January by +$7.3 billion after declining -$45.9 billion in December. Foreign private investors were net buyers of U.S. Treasuries. We can expect that to rise sharply in February and March as a result of the Ukraine situation.

The economic calendar for Wednesday is highlighted by the FOMC announcement and the Yellen press conference. Nothing else will matter to the market unless fighting were to breakout in the Ukraine. Yellen is expected to continue the taper with another $10 billion a month cut to QE. She is also expected to change the guidance to remove the 6.5% unemployment rate threshold they have already said numerous times would be ignored. The market should react positively as long as there are no negative surprises.


In stock news Adobe (ADBE) reported earnings of 30 cents compared to estimates of 25 cents. The company raised guidance as a result of strong acceptance of the cloud based Creative Suite. The company said it added 405,000 paid subscribers to the Creative Suite, which includes Photoshop, Illustrator and Flash. That pushes the total subscription base to1.84 million as of the end of February. Adobe is trying to phase out the boxed versions of software and convert everyone to the subscription model.

Adobe forecast earnings of 26-32% for Q1 compared to estimates of 26 cents. Revenue is forecast at $1.0-$1.05 billion compared to analyst estimates of $990.4 million. The company said it expected to exceed the prior full year forecast.

Earnings were accidentally released on the website during the day and were confirmed by Adobe later. This caught investors off guard and shares were flat after the close.


Oracle (ORCL) reported earnings after the bell that disappointed on all metrics. Oracle reported earnings of 68 cents compared to estimates of 70 cents. Revenue of $9.3 billion missed estimates of $9.4 billion. New license revenue of $2.4 billion missed estimates of $2.5 billion. Shares fell sharply to $37 after the release. Analysts claim Oracle is facing serious transition issues from their legacy business to a cloud business model. Oracle has been buying a lot of new companies with a cloud focus but those acquisitions have yet to move the needle for Oracle. Oracle and SAP are in a race to see who can consume the most cloud companies to both help their business model but also to prevent the other from acquiring that technology.


Goldman Sachs went out on a limb and raised their price target on Tesla (TSLA) from $170 to $200. With TSLA trading at $240 today does that mean they can now put a sell on the company saying their revised target was reached? That new target assumes a -15% decline in the stock price. The consensus target from all analysts is $229.

However, that is not the entire story. Patrick Archambault projected the growth through 2022 when he expects volume to rise to 500,000 cars per year. Tesla expects that volume in 2020. The analyst said the risk is for Tesla to blow up the existing automobile business and become the Apple of the automobile industry. He expects the electric car market to hit 6 million units by 2025 with Tesla having a 55% market share. The analyst said under the Musk is Steve Jobs to the auto industry the stock could surge to $504 in 2017 and then decline from there as the business became more conventional. Archambault qualified his projections by giving multiple alternate scenarios.


Shares of Penn Virginia (PVA) soared +15% after Soros Fund Management disclosed a 9.18% stake in the company. Soros Fund said they believe the company should explore strategic alternatives. The fund said PVA should explore potential acquirers and the fund could seek to interact with the board including putting representatives on the board in conjunction with other investors. PVA was named the top takeover candidate for 2014 by SunTurst Robinson. I would say PVA is headed in that direction regardless of whether they want to or not.


Microsoft (MSFT) shares spiked +4% after saying they were releasing Microsoft Office for the iPad. That 4.4 earthquake in Los Angeles today was actually Steve Jobs rolling over in his grave at the thought of Office on the iPad. CEO Satya Nadella said Microsoft would unveil the app on March 27th. The +1.50 spike in the stock price added $15 billion to Microsoft's market cap. Analysts said if only 10% of the iPad install base subscribed to Office it would add 15 million subscribers and generate up to $1.5 billion in Office revenue per year. iPad's have 36% market share in the tablet market. The last time Microsoft traded at $40 was in July 2000.


The next geopolitical event is likely to come from Venezuela. Air Canada said today it was suspending flights to Venezuela because it could no longer ensure the safety of its operations. At least 29 people have been killed and hundreds injured in the clashes between demonstrators and security forces. In addition the ability to convert Venezuelan bolivars to dollars was becoming increasingly difficult with inflation surging and the official exchange rate only a fraction of the black market exchange rate. Venezuela immediately cancelled Air Canada's ability to operate in the country. Avianca Holdings, Columbia's biggest airline cut service to Venezuela last week. Germany's Lufthansa said it had taken "double digit million euro" losses from payment and currency issues in Venezuela.

The government sent more than 1,000 security personnel and troops in riot gear into opposition strongholds in an effort to stamp out anti government demonstrations. President Maduro claims the demonstrations are funded by the U.S. in an effort to take over the country.

Whatever the reason for the market rally we are not going to complain. The Dow gained +88 points and the S&P +13. The close of 1,872 on the S&P is only -6 points from a new record high. The ugliness of last week's decline has been forgotten and analysts are already talking about 1,900 again instead of 1,740. How quickly sentiment can change.

If the Empress of the Doves says the right things in her press conference Wednesday afternoon we could be at that new high very quickly. A move over 1,878 would immediately have traders targeting 1,900 and the race would be on for stock buyers. Support at 1,840 has been forgotten and the bulls are back.


The Dow continues to lag the broader market in terms of relative strength but a +250 point rebound in two days is nothing to complain about. The Dow only gained .5% today compared to 1.24% on the Nasdaq and 1.4% on the Russell. The Dow has resistance at 16,450, 16,500, 16,550 and the prior high at 16,588. Interim support is 16,320, 16,220, and 16,050. Only three Dow components were negative today and several gained more than one dollar.



The Nasdaq rebounded thanks to the return of the biotechs to the biggest gainers list. After three weeks of declines in biotechs almost the entire top 20 list was biotech stocks. The bog +4% gain in Microsoft helped despite not being in the top 20 list.

The Nasdaq is facing resistance at 4,340 and then 4,350-4,360 before making a new 14 year high. Support would be the level that held up on Monday at 4,280.



The Russell 2000 closed only -4 points below its record closing high at 1,208. The small cap index was the biggest percentage gainer and closed at the high of the day. There was no fear of darkness for the small cap buyers. The odds are very good we will at least see a new intraday high on Wednesday. Support is well back at 1,188.


The question for Wednesday is whether Aunt Janet can say enough to push the markets higher or has the rebound from Friday's lows already priced in her comments. At this point I don't think it makes a lot of difference. The Fed is going to taper unless the economic numbers turn catastrophic. The weather excuse has completely erased earnings as a problem for the market. The Ukraine has turned into a long term economic squeeze that will have no material impact. The Crimean annexation is complete.

About the only thing that could rock the market would be the sudden appearance of the Malaysian airliner in a traffic pattern headed for New York. Stranger things have happened but even the possibility of terrorists stealing the airliner for a later attack has failed to impact the market.

The seasonal pattern for the market is for a gain the last week of March and into April as we head into the Q1 earnings cycle. Without a new disaster that appears to be the path of least resistance.

Enter passively, exit aggressively!

Jim Brown

Send Jim an email

 


New Plays

Wireless Communication

by James Brown

Click here to email James Brown

Editor's Note:

Additional Trading Ideas:

In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these may need to see a break past key support or resistance:

(bullish ideas)
NS, XLNX, CMA, WFC, CCE, USB, GNW, KEY, XON, CRZO, DMND



NEW BULLISH Plays

Sierra Wireless Inc. - SWIR - close: 24.29 change: +0.16

Stop Loss: 23.40
Target(s): 29.75
Current Gain/Loss: unopened

Entry on March -- at $--.--
Listed on March 18, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 857 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
SWIR is a wireless communication company. They offer hardware, software, and services for connected devices and machine-to-machine (M2M) communications. SWIR reported earnings in early February and warned for the first quarter. The stock sold off for a few days but a week late SWIR was bouncing from support near $18.00. The stock is now up four weeks in a row and working on its fifth.

The last week and a half look like a sideways consolidating and SWIR is on the verge of breaking out again. Today's high was $24.36. I see short-term resistance near $24.50. We're suggesting a trigger to open small bullish positions at $24.55. More conservative investors may want to wait for a rally past Monday's high of $24.84 as an alternative entry point. The January highs near $26.35 could be potential resistance but we're aiming for $29.75. The Point & Figure chart for SWIR is bullish with a $42.50 target.

Trigger @ 24.55

Suggested Position: buy SWIR stock @ 24.55

Annotated chart:




In Play Updates and Reviews

Small Caps Lead The Bounce

by James Brown

Click here to email James Brown

Editor's Note:
The small cap Russell 2000 index is leading the market rebound higher as the U.S. stock market quickly recovers last week's losses. Some are calling it the Putin rally as stocks continue to rebound following the Crimea vote on Sunday. Russian President Putin said he has no plans to annex Eastern Ukraine and Wall Street seems to believe him.

We want to exit our AA trade tomorrow morning.


Current Portfolio:


BULLISH Play Updates

Alcoa Inc. - AA - close: 12.00 change: +0.10

Stop Loss: 11.59
Target(s): 12.95
Current Gain/Loss: + 3.9%

Entry on February 19 at $11.55
Listed on February 11, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 39 million
New Positions: see below

Comments:
03/18/14: The upward momentum in AA seems to be slowing down. Shares still have a bullish trend of higher lows but dip buying seems to be slowing down. I am suggesting we exit positions tomorrow morning to lock in any potential gains.

current Position: Long AA stock @ $11.55

- (or for more adventurous traders, try this option) -

Long APR $12 call (AA1419D12) entry $0.47

03/18/14 prepare to exit tomorrow morning (03/19/14)
03/17/14 new stop loss @ 11.59
03/05/14 new stop loss @ 11.55
02/26/14 new stop loss @ 11.45
02/22/14 new stop loss @ 11.25
02/19/14 triggered at $11.55



AVG Technologies - AVG - close: 20.86 change: -0.04

Stop Loss: 19.95
Target(s): 24.75
Current Gain/Loss: -1.1%

Entry on March 13 at $21.10
Listed on March 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 716 thousand
New Positions: see below

Comments:
03/18/14: Hmm... AVG did not participate in the market's bounce today. Traders bought the dip at its 10-dma again but AVG didn't make it very far. I see this as an early warning signal to turn more defensive. Investors may want to adjust their stops higher. I am not suggesting new positions at the moment.

FYI: The Point & Figure chart for AVG is bullish with a $32.50 target.

current Position: Long AVG stock @ $21.10

03/13/14 triggered @ 21.10



Dunkin' Brands Group - DNKN - close: 52.67 change: +0.20

Stop Loss: 50.65
Target(s): 57.50
Current Gain/Loss: + 4.0%

Entry on February 19 at $50.65
Listed on February 18, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.1 million
New Positions: see below

Comments:
03/18/14: DNKN is still consolidating sideways below resistance at the $53.00 level. If you were looking for a new bullish entry point then a breakout past $53.00 would qualify.

In last night's newsletter we decided to exit our March calls if DNKN could trade at $53.00. The stock hit $52.96 today. Now we only have three days left on our March calls. I am suggesting we exit these calls tomorrow at the closing bell (Wednesday, March 19th).

Earlier Comments:
FYI: The Point & Figure chart for DNKN is bullish with a $60.00 target.

current Position: long DNKN stock @ $50.65

- (or for more adventurous traders, try this option) -

Long MAR $50 call (DNKN1422C50) entry $1.50*

03/18/14 plan to exit our March calls tomorrow at the closing bell
03/15/14 only five days left on our March options
03/04/14 new stop @ 50.65
02/25/14 new stop @ 49.75
02/19/14 triggered @ 50.65
*option entry price is an estimate since the option did not trade at the time our play was opened.



Electronic Arts - EA - close: 30.24 change: +0.14

Stop Loss: 28.45
Target(s): 34.00
Current Gain/Loss: + 4.8%

Entry on March 04 at $28.85
Listed on March 01, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 5.0 million
New Positions: see below

Comments:
03/18/14: EA shares received bullish analyst comments today. Yet the stock underperformed the broader market with a +0.4% gain. Shares do look poised to breakout past short-term resistance at $30.50 but EA also looks overbought with the stock up several weeks in a row. I am not suggesting new positions at this time.

Earlier Comments:
We want to keep our position size small to limit our risk. Our multi-week target is $34.00. The Point & Figure chart for EA is bullish with a $43.00 target.

*small positions*

current Position: Long EA stock @ $28.85

03/15/14 new stop @ 28.45
03/11/14 new stop @ 27.90
03/04/14 new stop @ 27.60
03/04/14 triggered @ 28.85



Flotek Industries - FTK - close: 27.37 change: +0.34

Stop Loss: 25.70
Target(s): 29.50
Current Gain/Loss: + 8.8%

Entry on February 24 at $25.15
Listed on February 18, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 976 thousand
New Positions: see below

Comments:
03/18/14: FTK continues to show relative strength with a +1.25% gain on Tuesday. The stock closed just below resistance at its March highs near $27.50. A breakout would mark new six-year highs. I am adjusting our exit target from $29.00 to $29.50. I am not suggesting new positions at this time.

Earlier Comments:

FYI: The Point & Figure chart for FTK is bullish with a $31.00 target.

*small positions*

current Position: long FTK stock @ $25.15

- (or for more adventurous traders, try this option) -

Mar $25 call (FTK1422C25) entry $0.90* exit $2.50++ (+177.7%)

03/18/14 adjust the exit target from $29.00 to $29.50
03/13/14 new stop loss @ 25.70
03/11/14 new stop loss @ 25.45
03/07/14 planned exit for the March $25 calls
++option exit price is an estimate since the option did not trade at the time our play was closed.
03/06/14 new stop loss @ 25.25, adjust target to 29.00
prepare to exit our March $25 calls Friday morning.
03/04/14 new stop loss @ 24.90, adjust target to $29.50
03/03/14 new stop loss @ 24.40
02/24/14 triggered @ $25.15
*option entry price is an estimate since the option did not trade at the time our play was opened.



LogMeln - LOGM - close: 46.99 change: +1.04

Stop Loss: 43.60
Target(s): 52.50
Current Gain/Loss: + 1.8%

Entry on March 17 at $46.15
Listed on March 15, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 490 thousand
New Positions: see below

Comments:
03/18/14: LOGM continues to push higher and outperformed the broader market with a +2.2% gain today. The stock is testing major resistance in the $47.00-47.50 zone from the 2010-2011 time frame. If shares can breakout to new highs we expect LOGM to run. We're adjusting our exit target from $49.85 to $52.50.

Earlier Comments:
We want to keep our position size small to limit our risk since LOGM does have potential resistance in the $47-48 zone dating back to 2010. Our short-term target is $49.85. More aggressive investors may want to aim higher since the Point & Figure chart for LOGM is bullish with a $68.50 target.

*small positions*

current Position: long LOGM stock @ $46.15

03/18/14 adjust exit target from $49.85 to $52.50
03/17/14 triggered @ 46.15



Quanta Services, Inc. - PWR - close: 36.15 change: +0.32

Stop Loss: 34.85
Target(s): 39.85
Current Gain/Loss: + 0.3%

Entry on March 06 at $36.05
Listed on March 04, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 2.0 million
New Positions: see below

Comments:
03/18/14: The rebound in PWR continues with shares up three days in a row. The close above $36.00 and its 10-dma is short-term bullish. Investors may want to use today's move as a new entry point.

current Position: Long PWR stock @ $36.05

- (or for more adventurous traders, try this option) -

Long Apr $35 call (PWR1419D35) entry $1.70*

03/13/14 new stop loss @ 34.85
03/06/14 triggered @ 36.05
*option entry price is an estimate since the option did not trade at the time our play was opened.



Tyson Foods, Inc. - TSN - close: 42.33 change: +0.66

Stop Loss: 39.90
Target(s): 46.50
Current Gain/Loss: + 5.4%

Entry on March 05 at $40.15
Listed on March 01, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.3 million
New Positions: see below

Comments:
03/18/14: The rally in TSN seems to be gaining momentum. The stock added another +1.5% today. We are adjusting our exit target from $44.50 to $46.50. I am moving our stop loss to $39.90.

*small positions*

current Position: Long TSN stock @ $40.15

03/18/14 new stop @ 39.90, adjust exit target from $44.50 to $46.50
03/15/14 new stop @ 39.45
03/12/14 new stop @ 38.95
03/05/14 triggered @ 40.15



BEARISH Play Updates

CH Robinson Worldwide Inc. - CHRW - close: 50.96 change: -0.11

Stop Loss: 52.35
Target(s): 40.75
Current Gain/Loss: unopened

Entry on March -- at $--.--
Listed on March 15, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 1.6 million
New Positions: Yes, see below

Comments:
03/18/14: CHRW is still underperforming the market but losses were mild today. We are still on the sidelines waiting for a breakdown under support at $50.00. I am suggesting a trigger to launch bearish positions at $49.75. Tonight we are adjusting our exit target from $45.00 to $40.75.

Trigger @ 49.75

Suggested Position: short CHRW stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the Apr $50 PUT (CHRW1419P50)

03/18/14 adjust exit target from $45.00 to $40.75



Pegasystems Inc. - PEGA - close: 38.35 change: +0.92

Stop Loss: 40.30
Target(s): 36.05
Current Gain/Loss: + 3.5%

Entry on March 10 at $39.75
Listed on March 08, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 140 thousand
New Positions: see below

Comments:
03/18/14: PEGA produced an oversold bounce with a +2.4% gain today. Look for resistance at its 10-dma (near 39.00) or the $40.00 level. I am not suggesting new positions at this time.

Earlier Comments:
Readers may want to use the put options to limit their risk. FYI: The Point & Figure chart for PEGA is bearish with a $35.00 target.

current Position: short PEGA stock @ $39.75

- (or for more adventurous traders, try this option) -

Long APR $40 PUT (PEGA1419P40) entry $2.25*

03/15/14 adjust exit target to $36.05 (from 35.25).
03/13/14 new stop @ 40.30
03/12/14 new stop @ 41.10
03/10/14 triggered @ 39.75
*option entry price is an estimate since the option did not trade at the time our play was opened.



Rackspace Hosting - RAX - close: 35.21 change: +0.46

Stop Loss: 36.55
Target(s): 31.10
Current Gain/Loss: + 0.2%

Entry on March 12 at $35.28
Listed on March 10, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 4.7 million
New Positions: see below

Comments:
03/18/14: The bounce in RAX hit $35.74 before starting to fade. I would be tempted to launch positions here or on a bounce closer to the $36.00 level, which should be resistance.

Earlier Comments:
Due to RAX's recent volatility I am suggesting small positions or you may want to buy put options to limit your risk. The Point & Figure chart for RAX is bearish with a $21.00 target.

current Position: short RAX stock @ $35.28

- (or for more adventurous traders, try this option) -

Long Apr $35 PUT (RAX1419P35) entry $1.85*

03/15/14 new stop @ 36.55
03/12/14 triggered on gap down at $35.28. Suggested entry was $35.45
*option entry price is an estimate since the option did not trade at the time our play was opened.



Symantec Corp. - SYMC - close: 20.51 change: +0.21

Stop Loss: 20.75
Target(s): 18.00
Current Gain/Loss: unopened

Entry on March -- at $--.--
Listed on March 13, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 6.9 million
New Positions: Yes, see below

Comments:
03/18/14: Hmm... SYMC is up three days in a row. If shares continue to bounce tomorrow we might drop SYMC as a candidate. Currently we are on the sidelines waiting for a breakdown below $20.00.

I am suggesting a trigger to open bearish positions at $19.85. If triggered our target is the $18.00-17.00 zone.

Trigger @ 19.85

Suggested Position: short SYMC stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the JUL $20 PUT (SYMC1419S20)



Theravance Inc. - THRX - close: 33.78 change: +0.69

Stop Loss: 34.75
Target(s): to be determined
Current Gain/Loss: unopened

Entry on March -- at $--.--
Listed on March 17, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 761 thousand
New Positions: Yes, see below

Comments:
03/18/14: THRX displayed relative strength with a +2.0% bounce. Yet today's move is also an "inside day", which suggests indecision by investors. I don't see any changes from last night's new play description.

Earlier Comments:
I am suggesting a trigger to open small bearish positions at $32.85. I am not setting a target yet but more conservative traders might want to exit near $30.00, which could be round-number support.

I want to remind investors that biotechs can be volatile stocks to trade. You may want to consider buying the put options as a way to limit your risk. THRX does have above average short interest. The most recent data listed short interest at 25% of the 58 million share float. That does raise the risk of a short squeeze.

It's also worth noting that THRX just announced plans to split their company into two listed companies sometime in the second quarter of this year.

FYI: The Point & Figure chart for THRX is bearish with a $25.00 target.

Trigger @ 32.85

Suggested Position: short THRX stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the Apr $30 PUT (THRX1419P30)