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Play Updates

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Call Updates

Mosaic - MOS - close: 44.21 change: +7.81 stop: 39.75*new*

It was another volatile day for MOS. The stock gapped open higher at $40.25, dipped back to $38.16 (our stop was 37.90) and then MOS rallied to a new multi-day high near $45.00. One of our suggested entry points was to buy calls on a breakout at $42.15. The play is now open. We're adjusting the stop loss to $39.75. If you don't want to chase MOS here, and we wouldn't, look for a dip back toward the $41-40 zone. Our first target is $49.00. Our second target is $59.00.

Picked on October 13 at $ 42.15 *triggered
Change since picked: + 2.06
Earnings Date 01/06/08 (unconfirmed)
Average Daily Volume = 10.5 million
 

Put Updates

Volatility Index - VIX - cls: 54.99 chg: -14.96 stop: n/a

The volatility index finally let off some steam. The "fear gauge" plunged more than 21% from all-time highs. We're not suggesting new positions at this time.

Note: The VIX options, which are European style options, have a unique expiration date. October VIX options expire on October 22nd, 2008. November VIX options expire on November 19th, 2008. The last day of trading for these options is the Tuesday before expiration. For more information check this link.

Our September 16th put position (suggested entry at 30.30) has a 25.50 target. In all honesty this position may be dead. We still have plenty of time with these next two. The September 29th position (suggested entry at 46.72) has two targets at 36.00 and 31.00. Our October 8th position (entry 57.53) has two targets at 40.00 and 35.00.

Picked on September 16 at = 30.30 first position
Change since picked: +24.69
Picked again Sept. 29 at = 46.72 second position
Changed since picked: + 8.27
Picked again Octo. 08 at = 57.53 third position
Changed since picked: - 2.54
Earnings Date 00/00/00
Average Daily Volume = --- 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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CBOE Volatility Index - VIX - cls: 54.99 chg: -14.96 stop: n/a

Our new spread play on the VIX is off to a good start. The VIX opened around 70 and hit a high of 71.42 before collapsing to a 21% loss. Our strategy here was to sell some deep in the money calls to collect the premium and buy a much higher call as a partial hedge should the VIX stay elevated. The sharp drop in volatility did impact the prices we could have sold and purchased options at this morning but we are still in a good position. We don't have to hold these to expiration. If we want to we can always buy back our naked position whenever we want to exit. Please see the CBOE website or our Sunday play description for details on margin requires for selling VIX options.

Note: VIX options are European style options that settle for cash at expiration. Furthermore VIX options have unique expiration dates. October options expire on Wednesday, October 22, 2008 and will stop trading on Tuesday, Oct. 21. November options expire on Wednesday, November 19, 2008 and will stop trading on Tuesday, November 18th.

We are listing two different plays.

VIX spread #1 with October options:

We wanted to SELL the October 40 calls (the opening price Monday morning was $13.00) and BUY the October 60 (open was $2.90) as a hedge against the VIX remaining elevated.

Here is the strategy in another format:
SELL CALL OCT 40.00 VIX-JH. This option opened at $13.00, traded to a high of $15.16, and settled at $11.00 on 10/13/08.

-and-
BUY CALL OCT 60.00 VIX-JN. This option opened at $2.90, traded to an intraday high of $3.70, and finally closed at $1.80 on 10/13/08.

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VIX spread #2 with November options:

We wanted to SELL the November 30 calls (opening price was $ 8.60) and BUY the November 50 (opening price was $1.61) as a hedge against the VIX remaining elevated.

In a different format the play is:

SELL CALL NOV 30.00 VIX-KF. This option opened at $8.60, traded to 9.80 intraday, and closed at 8.40 on 10/13/08.

-and-
BUY CALL NOV 50.00 VIX-KJ. This option opened at $1.61, traded to 2.10 intraday, and closed at 1.50 on 10/13/08.

Picked on October 12 at $ 69.95
Change since picked: -14.96
Earnings Date 00/00/00
Average Daily Volume = ---
 

Dropped Calls

DIAMONDS Trust - DIA - close: 95.03 change: +11.28 stop: n/a

Targets achieved - both of them. It was a day for the record books. The Dow Jones Industrials posted its best day ever with an 11% gain. The DIA actually rallied more than 13%. This ETF gapped open at $88.04 and hit $95.03 this afternoon. We had two targets. Our first target was $89.50. Our second target was $95.00.

Picked on October 09 at $ 85.55/82.39open
Change since picked: + 9.48 /1st & 2nd target achieved.
Earnings Date 00/00/00
Average Daily Volume = 26 million

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PowerShares QQQ - QQQQ - close: 35.13 change: +3.81 stop: n/a

Target exceeded. The NASDAQ composite managed to out perform the other large averages with an 11.8% gain. The QQQQ, based on the NASDAQ-100 index, did even better with a 12.1% gain. Our target was $35.00 and the Qs hit $35.25 today. This was a risky bet on a bounce before October options expired and this time it paid off.

Picked on October 09 at $ 31.52/gap open 30.52
Change since picked: + 3.61
Earnings Date 00/00/00
Average Daily Volume = 195 million
 

Dropped Puts

ITT Educational Servc - ESI - cls: 73.49 chg: +4.39 stop: 73.30

ESI was caught up in the short covering rally just as a rising tide lifts all boats. The stock hit our adjusted stop loss at $73.30 closing the play. Shares had previous hit our first target at $67.50 a few days ago.

Picked on October 06 at $ 73.30 *triggered/gap down
Change since picked: + 0.19 /1st target hit 67.50
Earnings Date 10/23/08 (unconfirmed)
Average Daily Volume = 957 thousand
 

Dropped Strangles

None
 

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