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Play Updates

Target Achieved! Hope you cashed out.

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Play Editor's Note: The market's crash to new multi-year lows sent most of our put plays right past our exit targets. We are strongly suggesting readers take profits even on the two remaining put plays. This is not the time to be opening a lot of new bearish positions. We're overdue for a snapback bear-market rally but that doesn't mean we won't see new lows first.


CALL Play Updates

*Currently we do not have any call play updates*


PUT Play Updates

Bard CR - BCR - close: 77.49 change: -1.59 stop: 81.51 *new*

BCR did hit new relative lows but the decline (-2%) was a lot less than the 6.7% plunge in the S&P 500 index. This sort of relative strength makes me think that when the market turns around BCR might out perform to the upside.

We are strongly suggesting readers exit here and take profits in BCR. Officially the newsletter will drop the stop loss to $81.51 and adjust the exit target to $76.55. We're not suggesting new positions.

Picked on November 15 at $ 82.91
Change since picked:      - 5.42
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       1.0 million  


Kohl's Corp. - KSS - close: 24.98 change: -1.41 stop: 28.71 *new*

Target achieved. It was a rocky day for KSS. The stock dropped early this morning and hit our first target at $25.50. It then quickly reversed and bounced back to $28.68 only to reverse again and plunge to a new relative low under round-number support at $25.00. We are not suggesting new positions. Readers should have taken some money off the table at our first target. We're lowering the stop loss to $28.71, just above today's high. Our secondary target is $22.00.

Chart:
KSS

Picked on November 15 at $ 29.09 /1st target hit 25.50
Change since picked:      - 2.70
Earnings Date           02/26/09 (unconfirmed)
Average Daily Volume =       8.4 million  


Strangle & Spread Play Updates

SPDR GOLD Trust - GLD - close: 73.45 change: +1.19 stop: n/a

Gold prices ignored the strength in the U.S. dollar today. Analysts are claiming it was a rush into the yellow metal as a "safe haven" play. If 1.6% is the best it can do it doesn't look very safe. GLD is still struggling with overhead resistance. We're not suggesting new strangle positions at this time. November options expire after tomorrow.

We listed two strangles back on Nov. 9th to take advantage of what appeared to be an imminent breakout, up or down, in gold prices.

The first strangle uses November options, which expire this week. Thus it's much more risky. The second strangle uses December options.

What is a strangle?
A strangle involves buying both an out-of-the-money call and an out-of-the-money put. We don't care what direction the stock goes as long as it moves one direction. If the stock moves far enough one side of our trade will rise in value and pay for the entire trade and make a profit.

-November Strangle-

Summary:
We suggested readers buy the November $75 call (GVD-KW) and the November $70 puts (GVD-WR). Our estimated cost was $3.10. We want to sell if either option hits $5.25. There are only two weeks left before November options expire.

-December Strangle-

Summary:
We suggested readers buy the December $75 call (GVD-LW) and the December $70 puts (GVD-XR). Our estimated cost was $6.30. We want to sell if either option hits $12.00.

Picked on November 09 at $ 72.50
Change since picked:      + 0.95
Earnings Date           00/00/00
Average Daily Volume =      19.3 million  


Ultra S&P500 ProShares - SSO - close: 19.01 change: -3.17 stop: n/a

The S&P 500 index broke down past its 2002 lows in a very ominous decline today. This pushed the SSO to a 14.3% drop. The December $20 puts are now in the money. I was a little surprised these puts didn't see a higher price today. The intraday high was $3.70 and the ask is currently at $3.90. Traders may want to exit this strangle if the SSO hits $16.00 intraday no matter what the puts are trading at.

We're not suggesting new positions at this time. Odds of an extremely sharp snapback rally are growing quickly. If you get a 25% gain or better you may want to start taking some money off the table. A move to $5.00 in the Dec. 20 put would be a 33% gain.

Note: The SSO is an ultra-long ETF that typically moves twice the daily performance of the S&P 500 index.

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.

-December Strangle Details-
We suggested readers buy the December $30.00 call (SOJ-LD) and the December $20.00 put (SOJ-XT). Our estimated cost is $3.75. We want to sell if either option hits $6.00.

Picked on November 12 at $ 24.84
Change since picked:      - 5.83
Earnings Date           00/00/00
Average Daily Volume =       126 million  


CLOSED BEARISH PLAYS

Capital One Financial - COF - close: 25.19 change: -1.31 stop: 31.31

Target exceeded. COF dropped to an intraday low of $24.85 this morning. Our target to exit was $25.50. Shares managed an intraday bounce to almost $29.00 and then gave it all back to close under our target again.

Chart:
COF

Picked on November 15 at $ 31.19 /target hit 25.50
Change since picked:      - 6.00
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =      12.5 million  


iShares Brazil - EWZ - close: 26.89 change: -3.31 stop: 34.55

Target exceeded. The Brazil ETF crashed to a new low of $26.64 before the day was over. Our target to exit was $29.50.

Chart:
EWZ

Picked on November 15 at $ 34.55 /target hit 29.50
Change since picked:      - 7.66
Earnings Date           00/00/00
Average Daily Volume =      25.7 million  


Intl. Business Machines - IBM - cls: 71.74 change: -4.23 stop: 81.26

Targets achieved - both of them! IBM first fell toward the $75.00 level and hit our first exit target at $75.50. Then this afternoon, when the sell-off intensified, IBM slipped to $70.51. Our secondary target to exit was the $71.00 mark.

Chart:
IBM

Picked on November 15 at $ 80.33 /1st & 2nd targets achieved
Change since picked:      - 8.59
Earnings Date           01/15/09 (unconfirmed)
Average Daily Volume =      11.9 million  


iShares Russell 2000 - IWM - close: 38.53 change: -2.83 stop: 46.01

The crash in small caps continued. The IWM fell 6.8% and hit an intraday low of $38.44. Our target to exit was $41.00.

Chart:
IWM

Picked on November 15 at $ 45.64 /target hit 41.00
Change since picked:      - 7.11
Earnings Date           00/00/00
Average Daily Volume =       121 million  


L-3 Communications - LLL- close: 59.32 change: -5.84 stop: 70.05

Second target exceeded! Yesterday LLL hit our first target at $65.25. Today the sell-off really picked up speed as LLL lost almost 9% and hit an intraday low of $58.74. Our secondary target to exit was $61.00.

Chart:
LLL

Picked on November 15 at $ 69.33 /1st target hit 65.25 on 11/19/08
Change since picked:      -10.01 /2nd target hit 61.00
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       1.2 million  


Potash Corp. - POT - close: 55.46 change: -8.56 stop: 70.01

Target exceeded - by a lot! It looks like we were too conservative with our target at $61.50. Shares of POT actually gapped open lower at $61.65 and eventually crashed to $54.80 at its worst levels this afternoon. The close under what should have been support at $60.00 is very bearish.

Chart:
POT

Picked on November 15 at $ 69.81 /1st target hit 61.50/low 54.80
Change since picked:      -14.35
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =      20.3 million  


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