Autozone - AZO - cls: 120.16 change: +1.49 stop: 122.26
AZO dipped to $117 this morning before bouncing back. The stock mimicked the market's rebound. The question now is where will the oversold bounce stall? We would look for the $121.00-122.00 zone to be short-term overhead resistance. Wait for the rally to roll over or show weakness before considering new bearish put positions. We do have a relatively tight stop loss on this play and more aggressive traders may want to give AZO more room to maneuver. Our target is the $112.00-110.00 range. FYI: The P&F chart is still bullish for now.
Picked on October 21 at $118.67
Chipotle Mexican Grill - CMG - cls: 124.94 chg: +1.54 stop: 128.26
Volatile shares of CMG also rebounded with the market on Monday. Traders bought the dip at $121 but the rally stalled near its 10-dma still overhead. Wait for the rally to fail/rollover before considering new bearish positions. More conservative traders may want to wait for a breakdown under $120 first before initiating positions. Our target is the $112.00-110.00 range, near its rising 50-dma. We do not want to hold over the October 30th earnings report so this will be a quick play. FYI: This should be considered an aggressive play since we're suggesting puts on a stock that still has a relatively bullish trend. Plus, the options are looking a little expensive.
Picked on October 21 at $123.40
Garmin Ltd. - GRMN - cls: 115.18 change: +5.08 stop: 117.01
Bears are in trouble with GRMN. The stock completely erased Friday's losses thanks to the stock being upgraded to an "out perform" this morning. The close over $115.00 is another bullish sign although GRMN still has short-term resistance in the $116-117 region. Unfortunately, if there is any market follow through on the rebound today odds are good that GRMN will hit our stop loss at $117 tomorrow. We are not suggesting new put positions at this time. We do not want to hold over the October 31st earnings report.
Picked on October 21 at $110.10
Tsakos Energy - TNP - cls: 67.58 change: -2.04 stop: 72.16
European stocks sold off following Friday's decline on Wall Street. The Athens stock exchange gapped lower. Shares of TNP, while based in Greece, are not traded on the Athens exchange. However, the stock did gap open lower at $67.67. We were suggesting a trigger to buy puts at $69.40. This morning's gap open is a bad entry point for us but it's an entry point. At this point we would expect a bounce back for TNP to "fill the gap". We would wait and watch for the rebound to struggle and roll over in the $69.50-70.00 zone as a new entry point for puts. Our target is the $65.10-63.65 zone. Almost all of its technical indicators on both the daily and weekly charts are bearish or they are turning bearish.
Picked on October 22 at $ 67.67 *gap down
Sepracor Inc. - SEPR - cls: 23.01 change: -0.70 stop: 25.05*new*
Monday was an unlucky day for us. SEPR also gapped down providing a less than ideal entry point for our put play. Shares opened at $22.91 after UBS downgraded the stock to a "sell" before the opening bell. SEPR did bounce back but the rebound was fading into the afternoon. We're adjusting our stop loss to $25.05. Our target is the $20.25-20.00 zone. We do not want to hold over the October 30th earnings report.
Picked on October 21 at $ 22.91 *gap down
Wynn Resorts - WYNN - cls: 154.24 chg: +4.21 stop: 157.55
We got another bad fill/entry point with WYNN. The stock gapped open lower at $147.53. We were suggesting a trigger to buy puts at $149.00. Traders stepped in to buy the dip at $147.00 and WYNN proceeded to rally back and close up 2.8%. We warned readers that this was a volatile stock. If the market sees a big rally tomorrow (possibly on the positive AAPL earnings news) then WYNN could easily hit our stop loss at $157.55. We're not suggesting new positions at this time.
Picked on October 22 at $147.53 *gap down
(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.)
Amazon.com - AMZN - cls: 91.29 chg: +1.53 stop: n/a
AMZN displayed some volatility this morning with a spike to $89 and then a bounce back to $91.69 before mellowing out. Shares still posted a 1.7% gain. Tomorrow is our last day to open strangle positions ahead of earnings tomorrow night. If you're looking for another entry point the closer to $90.00 the better. Unfortunately, the positive AAPL earnings tonight could lift AMZN ahead of its own report. Expectations for AMZN seem to be pretty high, which raises the chances of a disappointment. The options we suggested for a November strangle were the November $100 calls (ZQN-KY) and the November $80 puts (ZQN-WP). Our estimated cost was $5.51. We want to sell if either option hits $8.50 or higher. We would double check your option symbols. Normally a November $100 call would end with -KT but the CBOE is listing it as -KY.
Picked on October 21 at $ 89.76
Express Scripts - ESRX - cls: 58.91 chg: -0.74 stop: n/a
We were a little surprised to see ESRX's under performance. The stock dipped toward its rising 10-dma before bouncing late this afternoon. We still have two days left to open strangle positions. ESRX is due to report earnings on October 24th after the closing bell. The $59.00-61.00 zone is where we would want to open positions. The options we suggested for a November strangle were the November $65 calls (XTQ-KM) and the November $55 puts (XTQ-WK). Our estimated cost was $1.95. We want to sell if either option hits $3.50 or higher.
Picked on October 21 at $ 59.65
Google Inc. - GOOG - cls: 650.75 chg: + 6.04 stop: n/a
The reaction to GOOG's recent earnings news has been a breakout to new highs. Traders quickly bought the dip near $636 this morning. Shares continue to trade with a bullish trend of higher lows. While the stock is extremely overbought and due for a correction we're just not seeing any exhaustion yet. It looked like GOOG may have been topping out around October 11th through the 16th, especially with the bearish reversal candlestick on the 15th but there was no follow through and the stock did not break its rising trend. We hate to say it but the best move here might be to close your put positions and buy calls. Bear in mind that nothing goes up forever and GOOG will eventually see another correction. Will shares top out at $660? 675? 700? 750? We can't say. Bear in mind that the stock is up about 150 points (about 30%) without much of a slow down. We're going to keep the put play open for now. We're not suggesting new put positions. Shares of GOOG were trading up near $658 in after hours tonight. FYI: Google Analyst Day will be Oct. 24th and the investors can listen into the conference call at 1:00 p.m. ET.
Previously Suggested Options:
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: 113.37 chg: +1.09 stop: n/a
IBM bounced back with the major market indices. The stock hit $110.96 this morning and closed up less than 1%. We are not suggesting new strangle positions at this time. 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