Option Investor
Play Updates

Exiting Bearish Plays

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CALL Play Updates

*Currently we do not have any call play updates*


PUT Play Updates

*Currently we do not have any put play updates*

Almost all of our recent put plays hit our target in just the last couple of days.


Strangle & Spread Play Updates

SPDR GOLD Trust - GLD - close: 78.85 change: +5.40 stop: n/a

Gold was a huge out performer on Friday. The yellow metal surged more than $40 an ounce and the GLD rallied more than 7.3% to breakout from its recent trading range. No one seemed to have any real data on why gold was rising so fast. There was some speculation of a short squeeze in gold while other accounts were suggesting it was safe-haven buying. The safe-haven comments would have made more sense on Thursday when stocks were plunging. The U.S. dollar wasn't crashing so we can't blame the move in gold on the dollar.

Whatever the cause we were happy to see the move. Until Friday our aggressive November strangle was dead. The sudden surge sent the November $75 calls (GVD-KW) to a high of $4.00 and the ask was trading at $4.40. This allowed us to exit with a minor gain. The November strangle involved the Nov.$75 call (GVD-KW) and the Nov. $70 put (GVD-WR) at an estimated cost of $3.10.

We are not suggesting new strangle positions at this time. Our remaining strangle involves 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.

-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.

Annotated Chart:
GLD

Picked on November 09 at $ 72.50
Change since picked:      + 6.35
Earnings Date           00/00/00
Average Daily Volume =      19.3 million  


Ultra S&P500 ProShares - SSO - close: 21.21 change: +2.20 stop: n/a

Short-covering at the end of option expiration week sent the S&P sharply higher on Friday afternoon and the SSO ended the day up 11.5%. The trend is still down but a lot of folks are hoping for a bottom.

We're not suggesting new positions at this time. We warned readers that a snapback rally was going to happen sooner rather than later. The question now is will there be any follow through?

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.

Annotated Chart:
SSO

Picked on November 12 at $ 24.84
Change since picked:      - 3.63
Earnings Date           00/00/00
Average Daily Volume =       126 million  


CLOSED BEARISH PLAYS

Bard CR - BCR - close: 81.01 change: +3.52 stop: 81.51

Target achieved. BCR hit both our adjusted target at $76.55 and our previous target at $75.50 on Friday. The stock sold off to $75.33 before bouncing back and bounce back it did! Shares soared to $81.01 producing a big bullish engulfing candlestick on above average volume. The stock could be poised for a rally back toward $85 or its 50-dma.

Chart:
BCR

Picked on November 15 at $ 82.91 /target hit 76.55
Change since picked:      - 1.90
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       1.0 million  


ConocoPhillips - COP - close: 46.84 chg: +5.04 stop: 50.05

Correction: We added COP as a new put play on Monday night but failed to update it. Shares of COP saw an intraday spike above resistance at $50.00 on Wednesday, Nov. 19th and the stock hit our stop loss at $50.05 closing the play. The move on Wednesday eventually turned south and COP plunged to new multi-year lows of $41.27 on Thursday but we had been aiming for the $41.00 level. Friday's big short-covering bounce is worrisome if you're bearish and I would expect it to bounce back toward the $50.00 level. I might be tempted to enter new bearish plays if COP produced another failed rally at $50.00 but until then I would wait. A breakout over $50.00 would be short-term bullish and the stock could rally toward technical resistance at its 50-dma (currently 57.73).

Chart:
COP

Picked on November 17 at $ 46.76 /stopped out 50.05 on 11/19/08
Change since picked:      + 0.08
Earnings Date           01/22/09 (unconfirmed)
Average Daily Volume =      18.1 million  


Kohl's Corp. - KSS - close: 26.15 change: +1.17 stop: 28.71

We are suggesting that readers exit any bearish positions in KSS. The stock hit our first target at $25.50 on Thursday's decline. Shares slipped to $24.28 on Friday afternoon and bounced back sharply when the market turned around. I suspect that KSS will continue to stage an oversold bounce this week. Watch for resistance near $30.00. Our secondary target we had been aiming for was $22.00.

Chart:
KSS

Picked on November 15 at $ 29.09 /1st target hit 25.50
Change since picked:      - 2.94
Earnings Date           02/26/09 (unconfirmed)
Average Daily Volume =       8.4 million  


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