I was turning more and more bullish as stocks rallied into the closing bell. Then the surprise move by the Federal Reserve after hours to raise the discount rate to banks has sent stocks lower overnight. Investors might be worried that if the Fed is raising the discount rate then raising interest rates may not be that far behind. I suspect we might only see a short-term move lower before traders buy the dip but be careful!
NEW DIRECTIONAL CALL PLAYS
Sina Corp. - SINA - close: 38.05 change: +0.02 stop: 34.95
Why We Like It:
SINA has formed a bottom near $35.00 and its 200-dma over the last couple of weeks. If stocks see a short-term dip we want to be ready to grab SINA near support. I'm suggesting readers buy calls with a trigger to open positions at $36.50. More aggressive traders may want to jump in at $37.00. We'll use a stop under support at $34.95. If triggered our first target to take profits is at $39.95.
FYI: If SINA gaps open under $35.00 we will not open positions.
I am suggesting the March $37.50 or $40 calls.
BUY CALL MAR 37.50 (NOQ1020C37.5) open interest=1143 current ask $2.25
BUY CALL MAR 40.00 (NOQ1020C40) open interest=3916 current ask $1.10
Entry on February xx at $ xx.xx <-- TRIGGER @ 36.50
Change since picked: + 0.00
Earnings Date 03/15/10 (unconfirmed)
Average Daily Volume = 1.4 million
Listed on February 18, 2010