Cummins Inc. - CMI - cls: 137.78 change: -0.16 stop: 135.85
The markets closed relatively unchanged on Thursday and shares of CMI followed suit. The stock churned sideways in the same $136-140 range. At this time we would wait for a new breakout over $140 before considering new bullish positions. Before you consider new positions consider your time frame. We do not want to hold over the October 25th earnings report. Our target is the $149.50-150.00 range.
Picked on October 11 at $140.85
(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call and an OTM put on the same stock. The strategy is neutral. You do not care what direction the stock moves as long as the move is big enough to make your investment profitable.)
Google Inc. - GOOG - cls: 639.62 chg: + 6.14 stop: n/a
Shares of GOOG continued to trade higher ahead of its earnings report. The stock posted a 0.95% gain and closed near short-term resistance at $640. After the bell GOOG reported earnings that were better than expected but investors are worried about rising costs and the company's recent hiring spree. After hours the stock traded between $620 and $660 and is currently trading around $642. The question now is whether or not this after hours strength will hold into tomorrow or will GOOG see some profit taking. We're not suggesting new positions.
Our first strategy was the speculative put play. Our suggested strike was the November $550 put (GOP-WY). Our estimated cost was $7.00.
Our second strategy was the speculative put spread. We suggested buying the November $580 put (GOO-WP) and selling the November $530 put (GOP-WW).
*This isn't a strangle play but given the spread in strategy number two we decided to stick it in the strangles section of the newsletter.
Picked on October 16 at $616.00
Intl. Bus. Mach. - IBM - cls: 114.80 chg: -0.98 stop: n/a
IBM continues to under perform the market. The stock lost another 1% and closed under what should have been support near $115 and its 50-dma. This is bearish and shares look poised to keep falling. We need to see some serious movement tomorrow or the October options are finished. We're not suggesting new positions. Our aggressive October strangle suggested the October $125 call (IBM-JE) and the October $110 put (IBM-VB). These expire at the end of this week. Our estimated cost was $1.20. We wanted to sell if either option hit $2.40. Our November strangle suggested the November $125 call (IBM-KE) and the November $110 put (IBM-WB). Our estimated cost was $3.00. We wanted to sell if either option hits $6.00.
Picked on October 15 at $118.03
NASDAQ 100 trust - QQQQ - cls: 53.78 chg: +0.23 stop: n/a
The Qs have not seen as much volatility as we expected this week. The trend is still bullish and the Qs look ready to breakout over resistance near $54.00. We are not suggesting new positions. This is an aggressive play with October options that expire in three days. The options we suggested in our October strangle were the October $54 calls (QQQ-JB) and the October $53 puts (QQQ-VA). Our estimated cost was $0.76. Since the QQQQ has not cooperated we are adjusting our target to $0.50-0.76 in an effort to try and recoup some capital.
Picked on October 14 at $ 53.53
Diamond Offshore - DO - cls: 116.41 chg: +1.17 stop: 112.45
Crude oil soared more than $2 to a new high near $90 a barrel. Yet shares of DO experienced some volatility this morning and the stock traded in a $4.50 range. The bad news is that shares spiked to $112.38 this morning, which was enough to hit our stop loss at $112.45. The play has been closed but we would keep an eye on DO. Today's intraday rebound could be a new bullish entry point for call positions.
Picked on October 14 at $117.20
Dow Jones Industrial Avg. - DJX - cls: 138.89 chg: -0.04 stop: n/a
Time has run out on our DJX strangle play. It looked like the call side was going to hit our target back in mid October around the 9th through the 11th when the DJIA was hitting new highs. Unfortunately, the rally ran out of steam. We've been very defensive on this play the last several days suggesting early exits. The options listed for our October strangle were the October $137 calls (DJY-JG) and the October $132 puts (DJW-VB) with an estimated cost of $4.75.
Picked on September 16 at $134.43