Option Investor
Newsletter

Daily Newsletter, Thursday, 3/26/2015

Table of Contents

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

Market Wrap

Seeking Support

by Thomas Hughes

Click here to email Thomas Hughes
The market may have found a bottom.

Introduction

The market may have found a bottom but with so much data due it may also be too soon to know for sure. Tomorrow is the 3rd estimate of 4th quarter GDP and Michigan Sentiment, next week is the monthly bundle of jobs data and over a dozen other potentially market moving economic releases.

The pre-opening session was marked by a surprise drop in weekly jobless claims, positive earnings surprises and weakness in global equities markets. Asian and European indices were mostly in the red led by declines in the Nikkei and DAX indices. Headlines impacting global trading include yesterday's US equities sell-off, mounting conflict in Yemen, the ongoing possibility of Greece exiting the EU and the details of the Germanwing airplane crash.

Market Statistics

The morning started out pretty bad, futures were indicating an open about a half percent below yesterday's closing prices. Better than expected earnings and jobs data helped to lift the indices but not much. After the opening bell the indices fell pretty hard and looked as if they might match yesterday's declines. Today's bottom was reached around 10:15AM with an average loss near 0.75%. At that point the bulls stepped back onto the scene and began to bid the market back up. By 2PM the indices had reached break even and began to move into the green.

Economic Calendar

The Economy

Initial claims was reported as 282,000, a drop of 9,000 from last weeks unrevised figures. Analysts ha been expecting claims to hold steady around 290,000. The four week moving average also fell, dropping further below 300,000. On a not adjusted basis claims fell by -5% versus the -1.7% projected by seasonal factors. On a state by state basis the largest increases were in Tennessee (+2,976), California (+1,020), Michigan (+457), Mississippi (+355), and Arkansas (+315), while the largest decreases were in Pennsylvania (-2,265), New York (-2,201), Georgia (-1,969), Illinois (-1,961), and Texas (-1,773). Claims remains low after hitting a peak last month, in line with current trends and indicative of a healthy labor market.


Continuing Claims also fell, by -6,000 from an upward revision of 5,000. Continuing claims are now 2.416 million, little changed from last week and stable around the 2.4 million mark. Claims have been stable around 2.4 million for almost two months and also reflect a healthy if not strong labor market.

Total claims for unemployment also fell, by -74,194, to 2.784. This is an 11 week low but also relatively stable relative to the past 8 weeks. This figure, as well as the rest of the jobless claims data, suggest that the labor market is healthy and may have reached a point of equilibrium between job losses and jobs creation.


The Oil Index

Oil prices jumped more than 4% on the news of Saudi air strikes into Yemen and an impending land assault by a coalition including the Saudis and Egypt. This conflict, which includes the Iranians, could spark a larger war in the Middle East but as yet is not impacting production or supply. Elsewhere in the Middle East we've upped our involvement in Iraq by launching our air strikes in support of the Iraqi fight to clear Tikrit of ISIS. Fundamentally there is no sign of oversupply issues easing.

The Oil Index jumped in early trading and made a small gap at the open. From that point on the sector sold off resulting in a net loss for the day. The index only fell about -0.1% and was able to remain above the short term 30 day moving average. The index appears to be moving higher after bouncing from the long term trend line but the move is weak. The indicators are in line with this bounce but are also weak. Prices are currently trapped between the support of the moving average and resistance at a major Fibonacci Retracement level that has acted as support/resistance in the past. This index could go either way, most likely dependent on oil prices, but a break of support or resistance is needed with about a 50 point move expected either way before meeting the next potential target.


The Gold Index

Gold prices continue to climb and may go higher. Today gold gained more than 1% on an intraday basis and climbed above $1,200 for the first time since dropping beneath it at the start of this month. Gold is getting a boost from the weakened dollar, physical buyers and flight-to-safety stimulated by the Yemen crisis. Today's action created a potentially bearish shooting star type candle that could indicate resistance or a top. However, with prices closing above $1200, I reserve judgment on that until later.

The gold miners got a little boost from the rise in gold prices but were not able to hold the gains. The gold miners ETF GDX opened higher but like the Oil Index sold off during the day. The ETF lost over 2% and fell below the short term 30 day moving average but not below the rising support line drawn from the Nov/Dec bottoming action. The indicators are bullish but reflect near term weakness with declining momentum. Today's decline is a little surprising in light of the rise in gold prices but as yet not overly bearish. The ETF still appears to be moving higher from a bottom but could be range bound in the near term while earnings and outlook remain cloudy. Support is along the rising trend line near $18.50-$19 and below that at the long term low near $16.50. Resistance is near $21.


In The News, Story Stocks and Earnings

Sandisk warned on revenue and profits this morning. The chip maker says "it expects its revenue for the first fiscal quarter, which will end on March 29, 2015, to be approximately $1.3 billion, depending on final sell-through results, compared to the previously forecast revenue range of $1.40 billion to $1.45 billion. The change in first quarter revenue estimate is primarily due to certain product qualification delays, lower than expected sales of enterprise products and lower pricing in some areas of the business. The Company expects continued impact to its 2015 financial results from these factors as well as the previously identified supply challenges, and now forecasts 2015 revenue to be lower than the previous guidance. ” The news caused the stock to fall more than 15% and for shareholders to initiate an investigation into executive actions, specifically the announcement and its resulting affect on shareholder value. Sandisk is now trading at a 12 month low.


The Sandisk news caused the entire semiconductor sector to fall but the bulls quickly stepped in. Upon deeper understanding of the news it is apparently not an industry wide phenomenon. The Semiconductor Index fell in the premarket session, as did many of the top chip makers, but quickly regained much of the losses. At the end of the day the index was down about -1.25% but most of the index components were able to make small gains. The index is still above long term support with mixed indicators.


Lululemon was one of today's earnings surprises reporting top and bottom line numbers that beat estimates. The downside is that weak outlook tempered the news but did not stop buyers sending the stock higher. Shares of LULU gained more than 10% on an intraday basis and closed above the short term moving average with a gain of more than 5% . Today's action created a wicked looking upper shadow, indicating bearish activity, but may have help to clear the way for the stock to move higher. It is very possible that, based on the strength in labor markets, LULU will beat earnings later in the year.


ConAgra also posted an earnings surprise but failed to impress investors. The company beat earnings estimates on an adjusted basis and raised guidance but posted an actual loss due to non-cash impairment charges. Shares of the stock tried to moved higher in the pre-opening session but were not able to hold the gains. The stock opened at a recently broken level of support now turned resistance and fell hard from there. Shares of CAG lost about a half percent from yesterday's close but over -4% from the open to the low of the day.


The Indices

Trading was volatile today but volatile in a good way. Today's action took the indices lower but they bounced back and closed with only small losses. The biggest loser was the Dow Jones Industrial Average with a loss of -0.54%. The transports had the additional weight of downgrades aimed at the rail carriers which may have been the cause. Today's action took the index down to the bottom of the 5 month trading range where it bounced. Today's candle has a long lower wick, relative to its body, indicating buyers are present but is not overly strong. The indicators are rolling over but are not strong either and consistent with a range bound index.


The other indices were basically even at the close but exactly. The NASDAQ edged the others out of 2nd place by only a few basis points with a loss of-0.27%. The tech heavy index opened with a loss today, just above support, and after a brief move lower spent the rest of the day moving higher and testing break even levels. The index is now back at support and nearing the long term trend line with indicators setting up for a potential trend following signal. They are indicating near term weakness which could result in further testing of support but unless it and the long term trend line are broken I remain bullish longer term.


The S&P 500 is next up with a loss of only -0.24%. The broad market is now sitting on support at 2,050 but just below the top of the January trading range. This top may prove to be resistance but for now appears to be part of a potential support range. Today's action created both upper and lower shadows with a small body, indicating active buying and selling with a near balance between the too. The indicators are mixed but indicating near term weakness. Momentum is still very weak and the set up is consistent with a possible upcoming trend following entry so any tests of support are likely to be entry points.


The Dow Jones Industrial Average made the smallest loss today, -0.22%. The blue chips also created a candle with long lower shadow and tested support. Today's action brought it down to the 17,600 level before it bounced and set a new one month intra-day low. The indicators are mixed but weak, indicating a possible further testing of support, but also consistent with a trading range. The bottom could be near 17,600 but if this does not hold next target is near 17,250.


The markets have sold off on end of month and end of quarter portfolio shuffling, earnings fears and geopolitics. At least two of these reasons are fleeting and likely not to reverse the market; end of quarter portfolio shuffling and geopolitics. The third, earnings fears, may be unfounded, particularly if earnings trends can be believed, and may be setting us up for another season or two of positive surprises.

There is no doubt that the energy companies are going to see earnings declines but others may not see the weakness they are expecting. According to the data more and more Americans are working all the time. They may not be getting rich or working in the field in which they earned a degree but they are earning money and that's what counts. This is expected to help lead the market back to earnings growth later in the year and why I am still bullish. I'm still keeping a sharp eye on the labor data more than anything else and eagerly awaiting next weeks reports.

Until then, remember the trend!

Thomas Hughes


New Plays

Ignoring Market Weakness

by James Brown

Click here to email James Brown


NEW BULLISH Plays

Providence Service Corp. - PRSC - close: 51.50 change: -0.15

Stop Loss: 49.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on March -- at $---.--
Listed on March 26, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 136 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
PRSC is a small cap momentum stock. Shares are outperforming the broader market with a +40% gain in 2015. The stock has done a pretty good job ignoring the market's recent weakness.

PRSC is in the healthcare sector. According to their marketing materials, "Providence is a Tucson, Arizona-based company that provides and manages government sponsored human services, innovative global employment services, in-home health assessment and care management services, and non-emergency transportation services."

"Providence is unique in that it provides and manages its human services primarily in the client's own home or in community based settings, rather than in hospitals or treatment facilities and provides its non-emergency transportation services clients through local transportation providers rather than an owned fleet of vehicles. The Company provides a range of services through its direct entities to approximately 57,400 and 232,000 human services and workforce development services clients, respectively, with approximately 20.7 million individuals eligible to receive the Company's non-emergency transportation services. Its workforce development services include nearly 180 delivery sites spanning 10 countries and its health assessments are performed by over 700 nurse practitioners in 33 states."

The company is not afraid of acquisitions. In the last year they have purchased Matrix Medical Network and Ingeus.

PRSC's most recent quarterly report was March 16th. Analysts were expecting Q4 earnings of $0.29 a share on revenues of $416 million. PRSC delivered $0.45 a share, which is up +87.5% from a year ago. Q4 revenues were up +63.8% to $453.6 million, significantly above estimates. If you exclude the recent acquisitions PRSC's Q4 revenues were up +21.4%. The company's full-year 2014 sales hit $1.5 billion, up +32% from the prior year.

The stock rallied on this better than expected earnings report. The $48-50 area was significant resistance and PRSC has broken out above this zone. As previously mentioned the stock has been able to resist the market's recent sell-off. The point & figure chart is bullish and forecasting a long-term target of $68.00.

Tonight PRSC looks like it's about to breakout from its recent consolidation in the $50-52 area. Last week's highs are around $52.30. We are suggesting a trigger to open small bullish positions at $52.50. I'm suggesting small positions because PRSC does not trade a lot of volume and we want to limit our risk.

Trigger @ $52.50 *use small positions to limit risk*

- Suggested Positions -

Buy PRSC stock @ (trigger)

Daily Chart:

Intraday Chart:



In Play Updates and Reviews

Selling Continues Across The Major Indices

by James Brown

Click here to email James Brown

Editor's Note:
Equities across Europe and the U.S. remain weak. The S&P 500 delivered its fourth decline in a row. The euro faded lower, which gave the dollar a lift but commodities rallied in spite of the greenback's move.

BSFT and THRM have been stopped out.


Current Portfolio:


BULLISH Play Updates

Prestige Brands Holdings - PBH - close: 41.37 change: -0.30

Stop Loss: 40.35
Target(s): To Be Determined
Current Option Gain/Loss: -2.3%
Entry on March 20 at $42.35
Listed on March 19, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 342 thousand
New Positions: see below

Comments:
03/26/15: PBH attempted to rally intraday but gains faded. Shares settled with a -0.7% decline and a close below its 10-dma. If the market continues to sink tomorrow we might see PBH hit our stop at $40.35.

I'm not suggesting new positions at this time.

Trade Description: March 19, 2015:
Shares of PBH are outperforming the broader market. The relative strength has lifted the stock to new all-time highs and a +20% gain in 2015.

PBH is part of the services sector. According to the company, PBH "markets and distributes brand name over-the-counter and household cleaning products throughout the U.S. and Canada, and in certain international markets. Core brands include Monistat® women's health products, Nix® lice treatment, Chloraseptic® sore throat treatments, Clear Eyes® eye care products, Compound W® wart treatments, The Doctor's® NightGuard® dental protector, the Little Remedies® and PediaCare® lines of pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, Dramamine® motion sickness treatment, BC® and Goody's® pain relievers, Beano® gas prevention, Debrox® earwax remover, and Gaviscon® antacid in Canada."

The company's most recent earnings report was noteworthy. Analysts were expecting a profit f $0.40 a share on revenues of $190.2 million. PBH delivered $0.48 a share, which is a +60% improvement from a year ago. Revenues were up +36.4% to $197.6 million, another beat. PBH's OTC products saw +37.2% sales growth in North America and +107.8% growth internationally.

Matthew M. Mannelly, President and CEO of PBH commented on his company's performance, "In light of our excellent year to date and third quarter results, we are updating our previously provided outlook for fiscal year 2015. We are tightening our expected adjusted EPS range from $1.75 to $1.85 per share to $1.82 to $1.85 per share, and anticipate revenue growth at the high end of our previously provided outlook of 15-18%. The update is driven by anticipated organic growth in the legacy business during the fourth quarter."

Wall Street analysts are forecasting 2015 Q1 (PBH's Q4) results to see +29% EPS growth and +30% revenue growth.

It's also worth noting that PBH is a potential buyout target. They have been targeted before. Back in 2012 Genomma Lab offered $834 million in cash but PBH rejected the offer, calling it too low.

The better than expected earnings in early February launched PBH above major resistance in the $37.00 area. Shares spent four weeks digesting those gains and now they're back in rally mode. The point & figure chart is bullish and forecasting at $54.00 target. Tonight we are suggesting a trigger to launch bullish positions at $42.35.

- Suggested Positions -

Long PBH stock @ $42.35

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

Long JUL $45 CALL (PBH150717C45) entry $1.55

03/21/15 new stop @ 40.35
03/20/15 triggered @ 42.35
Option Format: symbol-year-month-day-call-strike


Steel Dynamics Inc. - STLD - close: 20.01 change: -0.33

Stop Loss: 19.20
Target(s): To Be Determined
Current Option Gain/Loss: -3.8%
Entry on March 24 at $20.81
Listed on March 21, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 3.6 million
New Positions: see below

Comments:
03/26/15: STLD traded down to $19.84 before bouncing off its simple 100-dma. Unfortunately the bounce struggled at its 200-dma.

I'm not suggesting new positions at this time.

Trade Description: March 21, 2015:
The bad news in the steel industry might be priced in and some are forecasting another turnaround in the second half of 2015. STLD looks like a bullish candidate as shares are outperforming its peers: U.S. Steel (X), Nucor (NUE), and AK Steel (AKS).

STLD is in the basic materials sector. The company describes itself as "Steel Dynamics, Inc. is one of the largest domestic steel producers and metals recyclers in the United States based on estimated annual steelmaking and metals recycling capability, with annual sales of $8.8 billion in 2014, over 7,700 employees, and manufacturing facilities primarily located throughout the United States (including six steel mills, eight steel coating facilities, two iron production facilities, over 90 metals recycling locations and six steel fabrication plants)."

This past week had a lot of bad news for the steel industry. Three companies issued bearish earnings guidance. STLD, NUE, and AKS all lowered their forecasts. CNBC suggested this industry is on the front lines of the currency war. All three companies blamed a surge in steel imports for hurting results. The rising U.S. dollar makes foreign products cheaper and steel imports into the U.S. rose +38% in 2014. Combine that with a glut of steel from domestic producers and both sales and margins have been hammered lower. The price of rolled steel is already down -20% in 2015. Many analysts are forecasting another tough year for the industry.

On March 18th, 2014, STLD lowered its Q1 guidance into the $0.12-0.16 range compared to Wall Street's estimate of $0.23. This also compares to $0.17 a year ago and $0.40 in the fourth quarter. However, the stock rallied. In addition to its lowered guidance the company offered a positive outlook for the second half of 2015.

Here's an excerpt from the company's press release on March 18th:

"During the first quarter of 2015, two important industry developments occurred:

− Domestic steel product pricing declined to levels that are now globally competitive, which the company believes will result in reduced steel import levels beginning in the second quarter 2015. Despite continued solid domestic steel consumption, product pricing decreased meaningfully due to delayed customer orders caused by the volatility in scrap prices and inventory buildup related to excessive fourth quarter 2014 steel imports. The company believes the surplus inventory can be right-sized in the April and May 2015 timeframe, which coupled with continued demand, should result in increased domestic steel mill utilization.

− Ferrous scrap pricing declined between 25% and 30% during February, which the company believes will benefit metal margin. Ferrous scrap pricing disconnected from iron ore pricing during 2014, as iron ore prices declined dramatically, while scrap prices remained relatively unchanged. Historically these commodities are highly correlated; therefore, a sharp decline in scrap prices was not unexpected.

The company believes these events, coupled with continued strength in domestic steel consumption from the automotive, manufacturing and construction sectors, should support a stronger second quarter, and second half 2015, based on the expectation of reduced domestic steel import levels, reduced raw material costs, and increased orders as customer inventory levels decline. Historically, the construction industry has been the largest single domestic steel consuming sector. The construction market grew during 2014, improving meaningfully from the lows experienced in 2009 and 2010. Despite the first quarter of each year being historically weaker for the construction industry due to seasonality, the company's fabrication operations are expected to achieve solid first quarter 2015 financial results. These results could approach those achieved in the third quarter 2014, which is traditionally the strongest construction quarter of a calendar year. The company believes this is evidence of the continued growth in non-residential construction.

Shares of STLD surged on this outlook and shares are now hovering just below technical resistance at its 200-dma. A breakout here could signal the next leg higher. Currently the point & figure chart is still bearish but a move above $21.00 would generate a new buy signal. Tonight we are suggesting a trigger to open bullish positions at $20.75.

FYI: The stock will begin trading ex-dividend on March 27th. The quarterly cash dividend should be $0.1375 a share.

- Suggested Positions -

Long STLD stock @ $20.81

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

Long MAY $20 CALL (STLD150515C20) entry $1.80

03/24/15 triggered on gap higher at $20.81, trigger was $20.75
Option Format: symbol-year-month-day-call-strike




BEARISH Play Updates

Albermarle Corp. - ALB - close: 51.00 change: -0.18

Stop Loss: 53.45
Target(s): To Be Determined
Current Option Gain/Loss: +4.2%
Entry on March 12 at $53.25
Listed on March 11, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 1.7 million
New Positions: see below

Comments:
03/26/15: ALB continues to sink and closed at a new relative low. After the closing bell the company announced they were raising prices on some of their bromine-related products. I don't see any reaction in the stock after hours.

I am not suggesting new positions at this time.

Trade Description: March 11, 2015:
There's a bear market in this specialty chemical stock. The company has a history of paying a dividend and they just raised their dividend for the 21st year in a row. Unfortunately, that's not drawing much investor attention. High-dividend stocks could become less attractive with the Federal Reserve poised to raise interest rates.

Officially the company describes itself as, "Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a premier specialty chemicals company with leading positions in attractive end markets around the world. With a broad customer reach and diverse end markets, Albemarle develops, manufactures and markets technologically advanced and high value added products, including lithium and lithium compounds, bromine and derivatives, catalysts and surface treatment chemistries used in a wide range of applications including consumer electronics, flame retardants, metal processing, plastics, contemporary and alternative transportation vehicles, refining, pharmaceuticals, agriculture, construction and custom chemistry services."

They are in the final stages of its acquisition of Rockwood Holdings. They announced the $6 billion deal last July and it's expected to close in the first quarter of 2015. Bulls will argue this deal is positive for ALB due to the expected demand for lithium batteries. Rockwood has one of the of the biggest lithium producing operations in North America. On a short-term basis we're not seeing any impact in the stock.

ALB most recent earnings report was January 28th. Wall Street was expecting ALB's Q4 results to be $1.02 a share on revenues of $637 million. The company disappointed with a profit of $0.99 as revenues dropped -6.4% to $598.5 million. Management offered lackluster guidance. Multiple analyst firms have downgraded the stock and started lowering their earnings estimates.

You can see the huge sell-off on the earnings report in late January. During the market's big rally in February ALB slowly climbed back to where it was trading just before the earnings announcement. Now ALB is rolling over again. This conforms to the stock's larger bearish trend (seen on the weekly chart). The point & figure chart is forecasting at $45.00 target.

Tonight I'm suggesting a trigger to open bearish positions at $53.25.

- Suggested Positions -

Short ALB stock @ $53.25

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

Long JUN $50 PUT (ALB150619P50) entry $1.75

03/19/15 new stop @ 53.45
03/17/15 new stop @ 54.65
03/12/15 triggered @ $53.25
Option Format: symbol-year-month-day-call-strike


Hornbeck Offshore Services, Inc. - HOS - close: 19.76 change: +0.06

Stop Loss: 20.55
Target(s): To Be Determined
Current Option Gain/Loss: -8.6%
Entry on March 24 at $18.20
Listed on March 21, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 851 thousand
New Positions: see below

Comments:
03/26/15: Both the dollar and oil posted gains today. Normally strength in the U.S. dollar pushes commodity prices (including oil) lower. However, all the headlines today about fighting in Yemen and a potential proxy war between Iran and Saudi Arabia in Yemen generated some geopolitical risk premium in oil prices.

Crude oil is up five days in a row and this has produced a bounce in HOS. The stock traded up toward last week's high before gains faded. The intraday high was $20.50 and our stop loss is at $20.55.

I am not suggesting new positions at this time.

Trade Description: March 23, 2015:
The price of crude oil and its crash over the last several months has been a major story for the financial media. Energy stocks have naturally followed the price of oil lower. One company getting crushed by the oil's fall and its impact on the industry is oil services company HOS.

HOS describes itself as "Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore support vessels primarily in the Gulf of Mexico and Latin America. Hornbeck Offshore currently owns a fleet of 65 vessels primarily serving the energy industry and has eight additional high-spec Upstream vessels under construction for delivery through 2016."

Earnings have taken a dramatic turn for the worse. Last year HOS' Q2 earnings were $0.85 a share. That was 36 cents above estimates with revenues up +24% from a year ago. Their Q3 numbers saw business fade. Earnings were $0.72 a share, which was only one cent above estimates. Q3 revenues did rise +25% but they came in below analysts' estimates. The slowdown really took hold in the fourth quarter. HOS reported earnings of $0.51, which missed estimates by 8 cents. Revenues only rose +10% and again missed expectations.

The problem is low oil prices. The U.S. oil industry has been shutting down oil and gas rigs. Many locations need oil above $60, $70 or even $80 a barrel to make the operation profitable. With oil in the $40 range companies are just shutting down rigs. The number of active rigs has fallen 15 weeks in a row and down -45% from its September 2014 high. Offshore rigs, which really impacts HOS, saw 11 rigs closed down leaving a total of 37. That's a -23% decline in a week.

Wall Street has taken note of falling rig count and analysts have been lowering their earnings expectations for HOS. Traders have noticed as well and the most recent data listed short interest at 16% of the very small 20.4 million share float. That does pose a risk since an unexpected rise could spark a potential short squeeze.

Technically the path of least resistance in shares of HOS has been lower for the last several months. Investors continue to sell the rallies. The bearish trend of lower highs is about to push the stock below key support in the $18.50-19.00 zone. Tonight we're suggesting a trigger to launch bearish positions at $18.20. You may want to use options to limit your risk.

- Suggested Positions -

Short HOS stock @ $18.20

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

Long JUN $17 PUT (HOS150619P17) entry $1.50

Option Format: symbol-year-month-day-call-strike



CLOSED BULLISH PLAYS

BroadSoft, Inc. - BSFT - close: 33.06 change: -0.56

Stop Loss: 33.45
Target(s): To Be Determined
Current Option Gain/Loss: -6.3%
Entry on March 20 at $35.20
Listed on March 17, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 286 thousand
New Positions: see below

Comments:
03/26/15: Stocks continued to sink on Thursday but BSFT underperformed the broader market with a -1.6% decline. The stock should have hit our stop loss at $33.45 on today's weakness. Unfortunately the stock gapped down from $33.91 to $33.00 at 09:30:02 a.m. this morning. It immediately traded back to $33.81 but we would have been stopped out.

*small positions to limit risk* - Suggested Positions -

Long BSFT stock @ $35.20 exit $33.00 (-6.3%)

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

MAY $35 CALL (BSFT150515C35) entry $2.78 exit $1.55 (-44.2%)

03/26/15 stopped out, intraday gap down to $33.00
03/25/15 BSFT looks like it could hit our stop tomorrow
03/21/15 new stop @ 33.45
03/20/15 triggered at $35.20, suggested entry was $35.15
Option Format: symbol-year-month-day-call-strike

chart:


Gentherm Inc. - THRM - close: 47.47 change: +0.40

Stop Loss: 46.85
Target(s): To Be Determined
Current Option Gain/Loss: -2.2%
Entry on March 06 at $47.48
Listed on March 05, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 456 thousand
New Positions: see below

Comments:
03/26/15: The last couple of days have been volatile for shares of THRM. After yesterday's big drop the stock saw another big swing today. THRM gapped open lower at $46.45, dipped to $46.25 and then rallied up to $48.60 before reversing again.

Our suggested stop loss was $46.85 but the gap down closed this trade early.

- Suggested Positions -

Long THRM stock @ $47.48 exit $46.45 (-2.2%)

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

Jun $50 CALL (THRM150619C50) entry $2.98 exit $1.55 (-48.0%)

03/26/15 stopped out on gap down at $46.45
03/21/15 new stop @ 46.85
03/06/15 triggered on gap higher at $47.48, trigger was $47.30
Option Format: symbol-year-month-day-call-strike

chart: