Option Investor
Play Updates

Taking Profits Again

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Play Editor's Note: We are suggesting that readers take profits on most of our bullish plays. Meanwhile we're not suggesting new entries on our current strangle plays. The stock market looks overdue for a dip.


CALL Play Updates

Entergy Corp. - ETR - close: 85.10 change: +1.20 stop: 79.99

ETR is hanging in there. It was a little frustrating to see the stock consolidate while the rest of the market was in rally mode last week but ETR still looks bullish here. Shares digested the breakout from Nov. 21st and bounced from a test of technical support at its 10-dma and 50-dma. The stock should be poised to rally higher from here. More conservative traders may want to use a stop loss under Wednesday's low of $81.36.

The P&F chart is bullish with a $104 target. We're setting two targets. Our first target to take profits is $92.50. Our secondary target is $97.50. Keep a wary eye on possible resistance at the 100-dma and exponential 200-dma overhead.

Annotated Chart:
ETR

Picked on November 22 at $ 85.76
Change since picked:      - 0.66
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       2.3 million  


Intuitive Surgical - ISRG - close: 132.53 change: - 2.14 stop: 119.99

We don't see any changes from our previous comments. ISRG failed to build on Wednesday's gains but the profit taking on Friday was pretty minor. We would still consider taking some profits right here. We're not suggesting new positions at this time but would look for a dip to and bounce from the $125 region as a possible entry point. Our exit target is $139.50. More aggressive traders may want to aim higher but we would expect resistance near $150. Last week the Point & Figure chart produced a new buy signal with a $180 price target. More conservative traders may want to use a stop loss around $125 instead.

Annotated Chart:
ISRG

Picked on November 25 at $120.25 /gap down entry point
Change since picked:      +12.28 /originally listed at $124.39
Earnings Date           01/29/09 (unconfirmed)
Average Daily Volume =       1.4 million  



PUT Play Updates

*Currently we do not have any put play updates*


Strangle & Spread Play Updates

SPDR GOLD Trust - GLD - close: 80.31 change: -0.07 stop: n/a

Gold just marked its biggest monthly gain (+14%) since September 1999. The U.S. dollar has bounced back in the last couple of days and yet gold prices are holding up when normally they would be moving down in reaction to the strong dollar. The GLD has been consolidating under resistance at its 100-dma and exponential 200-dma for the last four days in a row. The short-term trend is up but the GLD looks short-term overbought and due for a dip. We are not suggesting new strangle positions at this time. Readers should note that we only have three weeks left before December options expire.

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:      + 7.81
Earnings Date           00/00/00
Average Daily Volume =      19.3 million  


Ultra S&P500 ProShares - SSO - close: 26.60 change: +0.59 stop: n/a

The S&P 500 just delivered one of its best weekly gain in decades. Can it continue? We think stocks are short-term overbought and due for a dip. Hopefully the up trend can continue for a few more weeks. We have three weeks left before December options expire. Remember, this play is neutral. We really don't care what direction the market goes but we do need it to move!

We're not suggesting new positions at this time.

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:      + 1.76
Earnings Date           00/00/00
Average Daily Volume =       126 million  


CLOSED BULLISH PLAYS

iShares Russell 2000 - IWM - close: 47.34 change: +0.47 stop: 42.49

Target achieved? Not really. Our target to exit was $48.00. Most quote services are going to list the intraday high for the IWM at $48.26. Unfortunately that appears to be a bad tick. The IWM didn't breakout past $47.00 until very late in the day and it didn't trade over $47.51. We're going to call it quits anyway. This smallcap ETF is up about 9.4% since we picked it, which is good enough in our book. We would watch the IWM for another entry point after it has had time to correct and digest this big bounce.

Chart:
IWM

Picked on November 25 at $ 43.27 /gap down entry
Change since picked:      + 4.07 /originally listed at $44.22
Earnings Date           00/00/00
Average Daily Volume =       119 million  


Priceline.com - PCLN - close: 69.00 change: +1.34 stop: 60.95

It's time to take profits in PCLN. After some discussion we are suggesting readers exit our PCLN play early. The stock is up almost 13% since we picked it. Furthermore Friday marked the second day in a row that PCLN came within three cents of our target at $69.90 and just couldn't make it. The breakout pattern over the last couple of weeks is still bullish but we would rather exit now and look for a new entry point after PCLN has had time to correct. The stock could easily dip back to the $62-60 zone before bouncing again. I do think it will break $70 again but not before pulling back first.

Chart:
PCLN

Picked on November 25 at $ 61.10 /gap down entry point
Change since picked:      + 7.90 /originally listed at $62.82
Earnings Date           02/12/09 (unconfirmed)
Average Daily Volume =       1.9 million  


Sears Holding - SHLD - close: 36.25 change: -0.90 stop: 31.58

SHLD almost hit our aggressive, secondary target at $39.50 on Friday. News reports that store traffic was strong on "Black Friday" and that sales may not be quite as bad as expected gave the retailers an early lift. Shares of SHLD hit an intraday high of $39.23 before paring its gains. The stock has already surpassed our early target at $34.90. We are suggesting readers exit completely. Retailers could see some sell-the-news type of move this week. We might be tempted to buy SHLD again if it can bounce somewhere in the $30-33 zone.

Chart:
SHLD

Picked on November 22 at $ 31.58 /gap open higher/1st target hit
Change since picked:      + 4.67 /originally listed @ 30.44
Earnings Date           12/02/08 (confirmed)
Average Daily Volume =       2.2 million  


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