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Call Updates

Adobe Systems - ADBE - close: 45.15 chg: +1.93 stop: 41.50*new*

ADBE displayed some impressive relative strength on Friday with a strong rally out of the gate. The stock added more than 4.4% and closed above potential resistance at the $45.00 mark. Volume was above average on the move, which is a good sign. Broken resistance near $42.00 should be new support so we're inching up our stop loss to $41.50. Our target is the $47.50-50.00 zone. If the NASDAQ can keep its rally alive then ADBE should be in good shape. If not then ADBE will be a target for profit taking. The Point & Figure chart is positive with a $71 target.

Suggested Options:
We are not suggesting new positions at this time but a dip or a bounce near $42.50 might be a new entry point.

Picked on August 05 at $ 43.34
Change since picked: - 0.12
Earnings Date 09/16/08 (unconfirmed)
Average Daily Volume = 6.5 million

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Research In Motion - RIMM - cls: 133.75 chg: +6.50 stop: 122.50*new*

Target exceeded! RIMM out performed the market with a strong 5% gain on Friday. Volume was just barely above the norm. The rise above resistance in the $129-130 zone is a big positive. Shares hit $133.89 intraday. Our first target was $129.00. We suggest readers take some money off the table. We're adjusting the stop loss to $122.50. More conservative traders may want to move their stop closer to $125, which should be short-term support that is underpinned by the rising 100-dma. We are not suggesting new positions at this time but a dip or bounce near $127-125 might be another entry point. Our secondary target is $137.00.

Suggested Options:
We are not suggesting new call positions at this time. See the play details above for a potential entry point.

Picked on July 31 at $120.50 /1st target exceeded
Change since picked: +13.25
Earnings Date 09/25/08 (unconfirmed)
Average Daily Volume = 18.6 million

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CBOE Volatility Index - VIX - close: 20.66 chg: -0.49 stop: n/a

The VIX is struggling and you'd be tempted to think that with a 300+ move on the DJIA and a 2.4% rise in the S&P on Friday that the VIX would breakdown under the 20 level. It did not break 20, not even on an intraday basis. The short-term trend is still lower. If you recall our original play description outlined our thinking on the VIX. We're moving into the two worst months of the year. The short covering in the financials was running out of steam. Banks were borrowing from the Fed at record levels because they won't lend to each other. Most everyone believes we are approaching the half-way point in the credit crisis. The housing market is still struggling. Experts are predicting that the U.S. government will have to take over FNM and FRE before they go under. The U.S. consumer is still struggling. The country is losing jobs, although not yet at a recession level pace. By buying September calls on the VIX we were betting that the stock market would have another plunge lower and the VIX would spike to 30 and beyond. The stock market is still in a bear market and it's common to see a 10% bounce in a bear market. The current bounce in stocks has not yet hit 10%.

At this point I would look for two things. Wait to buy calls on the VIX until we see the S&P 500 back under the 1260 level. Or wait for a very clear, can't be denied, sort of failed rally/bearish reversal pattern in the major indices. If you are looking for new positions I'd buy October calls instead of Septembers. Our exit target is 29.75 on the VIX.

Suggested Options:
If we do see another entry point (see details above) we would buy the October calls. The 27.50 or 30.00 calls should work.

Picked on August 03 at $ 22.57
Change since picked: - 1.91
Earnings Date 00/00/00
Average Daily Volume = x million
 

Put Updates

Bank of Amer. - BAC - cls: 32.25 change: +0.73 stop: 34.15

We added BAC on Thursday night after what appeared to be a failure in BAC's oversold bounce. The stock had been struggling at significant resistance. Friday's big bounce in the market definitely throws a stumbling block in our progress. Yet the financials did not rally to a new relative high like other sectors in the market. The bounce in banking stocks was impressive but they still look vulnerable. We're still tempted to buy puts here at current levels or, considering the market's big rally on Friday, you can wait for a new decline under $32.00 or $31.50 to initiate positions. We have two targets. Our first target is $28.00. Our second target is $25.50.

Suggested Options:
We are suggesting the September puts.

BUY PUT SEP 32.50 BAC-UZ open interest=21770 current ask $2.87
BUY PUT SEP 30.00 BAC-UF open interest=55723 current ask $1.83
BUY PUT SEP 27.50 BAC-UA open interest=46729 current ask $1.12

Picked on August 07 at $ 31.52
Change since picked: + 0.73
Earnings Date 10/16/08 (unconfirmed)
Average Daily Volume = 90.4 million

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Freddie Mac - FRE - close: 5.90 change: +0.01 stop: n/a

A disappointing earnings report sent FRE's sister company FNM down 9% on Friday. Shares of FRE did not react much and closed almost unchanged after a spike to $5.43. The trend is still lower and investors remain worried that the U.S. government may have to step in and save FRE and in the process wipe out the stock holders. Negative comments from industry experts that they don't see FRE and FNM surviving certainly don't help. We are not suggesting new put positions at this time but if you think FRE is going to fall toward $2.50 or lower then you may want to consider a speculative position. We still consider this a very high-risk play. The stock has been extremely volatile and we're not using a stop loss. More conservative traders may want to take some money off the table now. We consider this a lottery-ticket style of play. The put option is our ticket. If we win, we should win big. If we lose, we lose it all. Our short-term target would be a move back to $5.00. More aggressive traders may want to aim lower.

Suggested Options:
We are not suggesting new positions. However, if you are considering new bearish strategies we'd look at October puts. We had suggested the October $7.50, $6.00 and $5.00 puts.

Picked on July 20 at $ 9.18
Change since picked: - 3.28
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 45.5 million

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Legg Mason - LM - close: 42.29 chng: +3.04 stop: 43.51

The 300-point rally on Friday was unexpected. The broker-dealers out performed the market with a 4% gain in the XBD index. Shares of LM out did its peers with a 7.7 gain, which almost completely erased Thursday's losses. We added LM as a put play on Thursday night because Thursday's drop appeared to be a breakdown from a bear wedge pattern. The short covering on Friday lifted LM right back to its recent highs. More conservative traders may want to abandon the position now or tighten their stops toward $43.00. This was an aggressive play and we're to stick to our wide stop at $43.51. Consider waiting for a new decline under $41.00 or $40.00 before buying puts again. We have two targets. Our first target is $35.75. Our second target is $32.50.

Suggested Options:
If LM provides a new entry point we would suggest the September $40 or September $35 puts.

Picked on August 07 at $ 39.25
Change since picked: + 3.04
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 3.7 million
 

Strangle Updates

(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.)

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Apple Inc. - AAPL - close: 169.55 chg: +5.98 stop: n/a

It was an incredible week for AAPL. The stock traded under $153 on Monday and by Friday's closing bell shares had rallied 10%. AAPL has rebounded back through resistance near $164-165 and through technical resistance at its 200-dma. The next hurdle for the bulls is the two-month trendline of lower highs. We are down to our last five days before August options expire. Due to our dwindling time frame we are adjusting our exit target to $4.50-5.00 in an attempt to recoup some of our capital. Unfortunately, stocks start to hover around major psychological support &resistance as we near options expiration so we're not expecting any big moves this week, which does not bode well for our strangle. We are not suggesting new strangle positions. The options we suggested were the August $180 calls (APV-HP) and the August $150 puts (APV-TJ). Our estimated cost is $8.90.

Suggested Options:
We are not suggesting new strangles in AAPL.

Picked on July 20 at $165.15
Change since picked: + 4.40
Earnings Date 07/21/08 (confirmed)
Average Daily Volume = 31.7 million

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Popular Inc. - BPOP - close: 7.48 change: +0.36 stop: n/a

BPOP has rallied right to resistance near $7.50 and its descending 50-dma. This could be a really tough level for the bulls to crack. We are adjusting our suggested exit target to $0.95-1.00, down from $1.45. We need to be more conservative with just five trading days left for August options. If stocks continue to rally then BPOP has a good chance of rising to a new relative high. Once over $7.50 the call will start building intrinsic value. More conservative traders may want to adjust their target to $0.50-0.65 in an attempt to recoup their capital. Just about any significant decline from here will slash our chances of exiting. We are not suggesting new strangle plays on BPOP. The options we listed were the August $7.50 calls (BQW-HU) and the August $5.00 puts (BQW-TA). Our estimated cost was $0.65.

Suggested Options:
We are not suggesting new strangles on BPOP.

Picked on July 16 at $ 5.82
Change since picked: + 1.66
Earnings Date 07/18/08 (confirmed)
Average Daily Volume = 3.4 million

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DIAMONDS - DIA - close: 116.95 chg: +2.36 stop: n/a

The Dow Jones Industrial Average's rally on Friday pushed the DIA to a new six-week high and above technical resistance at its 50-dma. Volume was strong for the DIA. Unfortunately we're down to our last five trading days for August options. More aggressive traders may want to keep their targets where they are at. The August $115 call did hit $2.95 on Friday. We are lowering our exit target to $4.00-4.35 in an attempt to recoup our capital. We're not suggesting new strangle positions at this time. The options we suggested were the August $115 calls (DIA-HK) and the August $109 puts (DIA-TE). Our estimated cost is $4.35.

Suggested Options:
We are not suggesting new strangles on the DIA.

Picked on July 07 at $112.21
Change since picked: + 4.74
Earnings Date 00/00/00
Average Daily Volume = 15.5 million

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iShares Brazil - EWZ - cls: 74.61 chg: -1.30 stop: n/a

The Brazilian Bovespa index continues to decline and the EWZ sank to a new relative low on Friday. The August $75 puts are technically in the money but not by much. A sudden rally from here would slash our chances of success. We only have a few days left before August options expire so we're lowering our exit just under breakeven. Our new suggested exit is $3.50-4.00. We're not suggesting new positions at this time. The options we suggested back in early July were the August $90 calls (EWZ-HR) and the August $75 puts (EWZ-TO). Our estimated cost is $3.95.

Suggested Options:
We are not suggesting new strangles on the EWZ.

Picked on July 03 at $ 83.06
Change since picked: - 8.45
Earnings Date 00/00/00
Average Daily Volume = 13.6 million

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FosterWheeler - FWLT - close: 51.96 chg: -2.83 stop: n/a

The post-earnings bounce in FWLT has already failed. The stock plunged 5% on Friday and looks poised to retest the $50 zone soon. We have five days left for August options. We're adjusting our exit to $2.50, just under breakeven, in an attempt to recoup our cost. We are not suggesting new strangle positions in FWLT at this time. The options we suggested were the August $70 calls (UFB-HN) and the August $50 puts (UFB-TJ). Our estimated cost was $2.60.

Suggested Options:
We are not suggesting new strangles in FWLT.

Picked on July 15 at $ 61.24
Change since picked: - 9.28
Earnings Date 08/06/08 (confirmed)
Average Daily Volume = 2.5 million

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Corning Inc. - GLW - close: 20.68 chg: +0.87 stop: n/a

The back and forth in shares of GLW will make you seasick. The stock hasn't gone anywhere for about five weeks. Now that we're nearing options expiration we definitely don't expect GLW to break out of its trading range. If by some slim chance that GLW does rally or plunge enough to push our options in the money we would exit. Our new targets to exit are $0.40 in an attempt to recoup some capital. We are not suggesting new strangle positions. The options we suggested were the August $22.50 calls (GLW-HX) and the August $17.50 puts (GLW-TW). Our estimated cost is $0.75.

Suggested Options:
We are not suggesting new strangles in GLW.

Picked on July 10 at $ 20.16
Change since picked: + 0.52
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 15.9 million

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Google Inc. - GOOG - close: 495.01 chg: +15.89 stop: n/a

When GOOG reported earnings last month the results disappointed investor expectations and the stock plunged to one of its biggest one-day losses in history. Yet the drop was not enough to hit our profit target. The play did turn profitable a few times (July 22nd, Aug. 1st, and Aug. 4th) but we were looking for a bigger reward. Now after last week's big bounce we are looking at a potential loss. GOOG has rallied back toward resistance near $500. With only five days left on August options odds are not good for our strangle's success. We are lowering our exit target to $10 in an attempt to recoup some of our capital. We're not suggesting new strangle positions in GOOG at this time. The options we listed were the August $590 calls (GOO-HR) and the August $480 puts (GOP-TI). Our estimated cost was $19.10.

Suggested Options:
We are not suggesting new strangles on GOOG.

Picked on July 16 at $535.60
Change since picked: -40.59
Earnings Date 07/17/08 (confirmed)
Average Daily Volume = 4.5 million

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Internet Holders - HHH - cls: 51.28 change: +1.50 stop: n/a

The market's rally on Friday lifted the HHH to a 3% gain but our strangle remains terminally ill. We are not suggesting new positions at this time. The options we suggested were the August $55 calls (HHH-HK) and the August $45 puts (HHH-TI). Our estimated cost is $1.65. Note: We're adjusting our exit target to $0.75-0.80.

Suggested Options:
We are not suggesting new strangle plays on the HHH.

Picked on July 03 at $ 50.50
Change since picked: + 0.78
Earnings Date 00/00/00
Average Daily Volume = 132 thousand

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Lehman Brothers - LEH - close: 18.62 chg: +0.95 stop: n/a

LEH's short-term bullish trend of higher lows is being tested again. A breakdown from here could herald a new leg lower. We have six weeks left before September options expire and need to see LEH significantly above $24.00 or under $10.00. We're not suggesting new positions at this time. The options we suggested were the September $24.00 calls (LYH-IR) and the September $10.00 puts (LYH-UB). Our estimated cost is $2.15. We want to sell if either option hits $3.50 or higher.

Suggested Options:
We are not suggesting new positions at this time.

Picked on July 27 at $ 17.05
Change since picked: + 1.57
Earnings Date 09/18/08 (unconfirmed)
Average Daily Volume = 63 million

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Legg Mason - LM - close: 42.29 chg: +3.04 stop: n/a

Last Thursday LM appeared to breakdown from its consolidation pattern but Friday's rally pushed it right back to its recent highs. We only have five trading days left for August options so we are adjusting our exit price to $2.00 in an attempt to recoup some capital. We are not suggesting new strangles at this time. The options we listed were the August $45 calls (LM-HW) and the August $35 puts (LM-TG). Our estimated cost was $3.15.

Suggested Options:
We are not suggesting new strangles on LM.

Picked on July 23 at $ 40.20
Change since picked: + 2.09
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 3.1 million

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MarketVectors Agribusiness- MOO - close: 51.27 chg: +0.37 stop: n/a

The MOO has fallen to round-number support at $50. A bounce from here will crush our odds of exiting this play with any money. We only have five days left on August options so we're adjusting our exit price to $2.00. More aggressive trades may want to risk it and keep their target higher. We're not suggesting new positions at this time. The options we suggested were the August $62 calls (MYV-HJ) and the August $50 puts (MOO-TX). Our estimated cost is $2.10.

Suggested Options:
We are not suggesting new strangles on MOO.

Picked on July 03 at $ 57.25
Change since picked: - 5.98
Earnings Date 00/00/00
Average Daily Volume = 745 thousand

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Netflix - NFLX - close: 31.05 change: +0.59 stop: n/a

NFLX rallied to a new relative high and tagged technical resistance at its 100-dma directly overhead. The short-term trend is up but it looks like NFLX wants to dip and retest $30 again before moving. We don't have much time left so we're adjusting our exit price to $1.00. We're not suggesting new strangles at this time. The options we suggested were the August $32.50 calls (QNQ-HT) and the August $22.50 puts (QNQ-TX). Our estimated cost is $1.20.

Suggested Options:
We are not suggesting new strangles on NFLX.

Picked on July 23 at $ 27.98
Change since picked: + 3.07
Earnings Date 07/25/08 (confirmed)
Average Daily Volume = 1.3 million

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PowerShares QQQ - QQQQ - cls: 47.32 chg: +1.05 stop: n/a

Wow! The NDX delivered a strong weekly performance and the Qs broke through resistance at the top of its trading range, and through resistance at several moving averages including the simple 200-dma. The August $47 calls are just barely in the money and any sort of correction is going to crush our chances to exit with any capital. We are adjusting our exit price to $1.50-1.80. We are not suggesting new strangles and more conservative traders will want to consider closing this play. The options we suggested were the August $47 calls (QQQ-HU) and the August $43 puts (QQQ-TQ). Our estimated cost is $1.80.

Suggested Options:
We are not suggesting new strangles in the QQQQ.

Picked on July 07 at $ 44.90
Change since picked: + 2.42
Earnings Date 00/00/00
Average Daily Volume = 148 million

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Starbucks - SBUX - close: 15.12 change: +0.60 stop: n/a

Currently the August $14 call is trading around $1.20. More conservative traders will want to consider an early exit right here to minimize their losses. If SBUX can continue to rally then great, we have a chance to score a profit. If SBUX reverses lower that call option is going to crumble to nothing very easily. We are adjusting our exit price to $1.90 instead of $2.10. We are not suggesting new strangles. The options we suggested for the strangle were the August $14.00 calls (SQX-HK) and the August $13.00 puts (SQX-TJ). Our estimated cost was $1.38.

Suggested Options:
We are not suggesting new strangles on SBUX.

Picked on July 15 at $ 13.58
Change since picked: + 1.54
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 14 million

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UBS Ag - UBS - close: 21.15 change: +0.75 stop: n/a

UBS was caught in the Auction Rate Securities (ARS) fiasco. This past week Citigroup and Merrill Lynch announced they would buy back billions in ARS that they had sold to individual investors under the impression they were extremely liquid and almost as good as cash. Unfortunately, when the credit crisis began to worsen the ARS market froze (see tonight's wrap for more details). On Friday UBS announced they would buy back almost $19 billion in ARS and the stock actually rallied on the news. Shares hit $21.51 before struggling with its simple 50-dma. We don't have much time left. August options expire in five days. We're adjusting our exit targets in an attempt to recoup our cost.

Suggested Options:
We are not suggesting new strangles on UBS.

UBS Strangle #1) This uses the August $22.50 calls (UBS-HX) and $17.50 puts (UBS-TW). Our estimated cost was $1.90. Our new exit target is $0.95.

UBS Strangle #2) This uses the August $25.00 calls (UBS-HE) and $15.00 puts (UBS-TC). Our estimated cost was $0.90. Our new exit target is $0.40.

Picked on July 13 at $19.49
Change since picked: + 1.66
Earnings Date 08/12/08 (unconfirmed)
Average Daily Volume: 7.3 million

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Valero Energy - VLO - close: 34.72 chg: +1.78 stop: n/a

The oil refiner stock have been cursed. Investors sold them as oil climbed higher and investors refused to buy them as old sold off. VLO has been trying to form a bottom for the last four weeks and still has a bearish trend of lower highs. We had suggested an early exit as soon as VLO failed to see any big post-earnings move. Now we're down to our last five trading days. We're adjusting our suggested exit price to $0.80. We are not suggesting new strangle positions. The options we suggested were the August $37.50 calls (VLO-HU) and the August $27.50 puts (VLO-TS). Our estimated cost is $1.38.

Suggested Options:
We are not suggesting new strangles at this time.

Picked on July 27 at $ 31.88
Change since picked: + 2.84
Earnings Date 07/29/08 (confirmed)
Average Daily Volume = 12.7 million

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Washington Mutual - WM - close: 4.58 chg: -0.39 stop: n/a

The trend in WM is down but it looks like we're going to run out of time before the stock challenges the July lows. August options expire soon so we're adjusting our suggested exit price to $0.40 in an attempt to recoup some capital. We are not suggesting new positions at this time. The options we suggested were the August $8.00 calls (WM-HV) and the August $4.00 puts (WM-TH). Our estimated cost is $0.72.

Suggested Options:
We are not suggesting new strangles at this time.

Picked on July 20 at $ 5.92
Change since picked: - 1.34
Earnings Date 07/22/08 (confirmed)
Average Daily Volume = 57 million
 

Dropped Calls

None
 

Dropped Puts

VISA Inc. - V - close: 72.60 change: +3.10 stop: 72.55

The sharp market rally on Friday fueled some short covering in V and the stock surged more than 4.4%. Shares hit our stop loss at $72.55 closing the play. The overall trend remains negative and we would keep V on your watch list for another bearish entry point until it breaks out over the 50-dma.

Picked on August 07 at $ 69.45 */stopped out 72.55
Change since picked: + 3.15
Earnings Date 07/30/08 (confirmed)
Average Daily Volume = 14 million
 

Dropped Strangles

None

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