Twenty-four hours from now the market is likely to make a major move. We will not know the direction until midnight Tuesday.

The equity markets traded sideways on Monday as traders trimmed positions and raised a little cash ahead of the president's speech to a joint session of congress at 9:PM ET on Tuesday evening. This is going to be a pivotal event. This is where the rubber meets the road in the life of a president. With an expected 80 million viewers both live, streamed and recorded, the market impact cannot be understated.

After two months in transition and five weeks in office and innumerable problems with misstatements and restatements and tweets, the president will have to be presidential in the Tuesday speech. There is no do over this time around. The tone, content and delivery will be of utmost importance.

Investors are going to be looking for specific details, dates and expectations to confirm their current optimist outlook in the market. Goldman Sachs said we have reached a point of "maximum optimism" and the most likely outcome is market weakness.

Unfortunately, the president is not an accomplished public speaker. His performance on the world stage, and this is a global event, will be measured against President Obama, one of the greatest speakers in our time. While a lot of people did not like what he said, he was a master orator. That is a tough pair of shoes to fill.

If the speech is all about attacking the main stream media and not explaining how the tax cut proposal is going to work, it will be market negative. If the speech is another campaign style event rather than an explanation of how the Obamacare replacement will work, it will be market negative. I could go on but you get the picture.

The Dow and S&P both closed at new highs today but only barely. The Dow gained 15 points and the S&P gained 2 points. The market was very heavy and I am surprised it closed positive. If the Dow can close positive one more time it will be the longest streak of record closes in history at 13.

The S&P closed at 2,369 with initial support at 2,350. A 3% decline from here would take us back to the 2,300 and a level that should be decent support. We normally get about three of those 3% declines a year and we have not had one since October with a 4% decline to the low on November 4th. We are due for another very soon.


The new target for the Dow is 21,000 and we closed only 163 points below that level. The odds are slim it will happen on Tuesday but a favorable performance with the speech could send us into overdrive and see that level by the end of the week.

The last two days have been record closes for the Dow but Friday's 11 point gain did not happen until the last 30 seconds of trading and the Dow was in danger of ending negative on Monday right up until the close before escaping with a 15 point gain.


The Nasdaq indexes made new highs last Tuesday and then slipped back on some decent short-term profit taking. They have yet to return to the highs with the Nasdaq Composite gaining 16 points but the Nasdaq 100 only 4 points on Monday. This suggests the big cap tech stocks may have found a temporary top ahead of the speech. There is a lot of imbedded profit in those stocks and I would not be surprised to see some more profit taking on Tuesday.

The Composite Index has initial support at 5,800 and it would take a significant decline to break below that level in a single day.



The Russell 2000 was the biggest surprise on Monday with a 1% gain that lifted it back over 1,400. The Russell was the weakest index last week and Friday's intraday low was a two-week low. Suddenly, today the small caps caught fire. If this were to continue post speech and the Russell broke out to a new high on decent volume, it would trigger an entirely new leg higher for the broader markets.


The earnings calendar is highlighted by Salesforce.com, Broadcom, Best Buy, Costco, Sears and Staples. Wednesday should get the most attention, assuming the market is not in a steep decline.


Ahead of the speech the Richmond Manufacturing report is the most important. The GDP is a revision and is not expected to show much movement. After the speech, the ISM Manufacturing is the most important followed by the Fed Beige Book.


President Trump's speech could be remembered in the history books for decades and could be a potential turning point in his administration. Since you can never predict what Trump will do and you should never count him out, there is the potential for him to pull a miracle out of his teleprompter and reenergize the investing public and the markets with detailed promises of things to come. We can always hope for a successful event.

Obviously, these pivotal moments can always produce a sell the news event even if it is a success. Buy the rumor, sell the news, is a saying that has been around for a hundred years. This will be news and there will be a thousand different interpretations. Hopefully investors will be tuned into the glass half full part of the speech.

We had a bad week with TWLO and NVDIA stopped out almost immediately after the positions were entered. The big gap down in the Nasdaq on Friday was the culprit.

I added two new positions but there is no harm in waiting until Wednesday morning to enter them. We could have an entirely different market on Wednesday and patience could be rewarded. If we did get a sell the news event, I expect it to be bought but probably not on the first day. If you wait until Wednesday to enter and the market is down, be patient and wait for calmer waters before jumping into the adult swim.

Jim Brown

Send Jim an email



NEW DIRECTIONAL CALL PLAY

SWKS - Skyworks Solutions - Company Profile

Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets proprietary semiconductor products, including intellectual property worldwide. Its product portfolio includes amplifiers, attenuators, circulators/isolators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase shifters, phase locked loops, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, voltage controlled oscillators/synthesizers, and voltage regulators. The company provides its products for automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet, and wearable applications. Company description from FinViz.com

Skyworks is major supplier for Apple and will benefit greatly from the sales of the updated iPhone 7 models expected to be announced in March and the iPhone 8 expected to be announced in September. This is going to be a very strong year for Apple and its suppliers.

For Q4, the company reported earnings of $1.61 compared to estimates for $1.58. Revenue of $914.3 million beat estimates for $902.7 million. The company said the soaring demand for IoT products fueled the growth and was expected to continue for the rest of the decade. Gartner Group said there were 6 billion internet devices today and that would expand to more than 20 billion by 2020. Every device needs a communications chip.

Skyworks also announced a new $500 million share buyback program. The prior program had $95 million remaining and was replaced with the new program.

Skyworks is expecting revenue growth or 8% to $840 million in the current quarter with earnings of $1.40. Analysts were expecting $818 million and $1.24.

Earnings April 20th.

Buy May $100 call, currently $3.90, initial stop loss $91.25.



NTCT - Net Scout - Company Profile

NetScout Systems, Inc. provides real-time operational intelligence and performance analytics for service assurance, and cyber security solutions in the United States, Europe, Asia, and internationally. The company offers nGeniusONE management software that enables customers to predict, preempt, and resolve network and service delivery problems, as well as facilitate the optimization and capacity planning of their network infrastructures; and specialized platforms and analytic modules that enable its customers to analyze and troubleshoot traffic in radio access and Wi-Fi networks, as well as gain timely insight into services, applications, and systems. It also provides Intelligent Data Sources under the Infinistream brand name that provide real-time collection and analysis of data from the network; network monitoring fabric switching solutions that deliver targeted network traffic access to an increasing number of monitoring systems; and a suite of test access points that enable non-disruptive access to network traffic with multiple link type and speed options. In addition, the company offers portable network analysis and troubleshooting tools, which help customers identify key issues that impact network and application performance. Further, it provides security solutions that enable service providers and enterprises to protect their networks against DDoS attacks; and threat detection solutions that enable enterprises to identify and investigate advanced threat campaigns that present tangible risks to the integrity of their networks. Company description from FinViz.com

Jeff Ubben at ValueAct added NetScout as a new position with 1,645,000 shares. Ken Fisher of Fisher Asset Management owned 3.6% at the end of Q4.

The company specializes in network assurance and network performance management.

They reported earnings of 60 cents compared to estimates for 55 cents. Revenue of $311.4 million also beat the street's estimate for $310 million. They guided for full year earnings in the range of $1.87-$1.90 on revenue of $1.2 billion.

Earnings May 2nd.

Shares exploded out of the earnings report and moved to a new 52-week high at $38. They paused there for the last week but closed at a new high by a few cents on Monday. I believe a breakout is about to appear.

Buy June $40 call, currently $2.30, initial stop loss $35.25.


If there is a trade you would like me to consider or you have comments on this newsletter please click the email link below.

Jim Brown

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Current Portfolio


Open Positions

Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline. Any items shaded in blue were previously closed.




Current Position Changes


TWLO - Twilio Inc

The long call position was stopped at $31.50 on Tuesday.

IWM Russell 2000 ETF

The long call recommendation remains unopened until a trade at $135.00.

NVDA - Nvidia

The long call recommendation was entered at the open on Tuesday and stopped out on Friday.

ZEN - Zendesk

The long call position was entered at the open on Tuesday.

CAH - Cardinal Health

The long call position was entered at the open on Tuesday.


Original Play Recommendations (Alpha by Symbol)


CAH - Cardinal Health - Company Profile

Comments:

No specific news. There is an ongoing battle with Navidea over the cancer diagnostic drug Lymphoseek. That should take a giant step towards resolution on March 3rd with Cardinal paying $60 million for rights to the drug in a complicated 6-way settlement of the initial argument. Shares are rising on the potential for this to happen successfully.

Original Trade Description: February 20th

Cardinal Health, Inc. operates as a healthcare services and products company worldwide. The company's Pharmaceutical segment distributes branded and generic pharmaceutical, over-the-counter healthcare, specialty pharmaceutical, and consumer products to retailers, hospitals, and other healthcare providers. It offers distribution, inventory management, data reporting, new product launch support, and contract pricing and chargeback administration services to pharmaceutical manufacturers; pharmacy and medication therapy management, and patient outcomes services to hospitals, other healthcare providers, and payers; consulting, patient support, and other services to pharmaceutical manufacturers and healthcare providers. This segment also operates nuclear pharmacies and cyclotron facilities that manufacture, prepare, and deliver radiopharmaceuticals, as well as operates direct-to-patient specialty pharmacies; offers logistics, marketing, and other services; and repackages generic pharmaceuticals and over-the-counter healthcare products. The company's Medical segment distributes a range of medical, surgical, and laboratory products and services to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers, as well as to patients in the home. This segment also develops, manufactures, and sources medical and surgical products comprising surgical drapes, and gowns and apparel; exam and surgical gloves; fluid suction and collection systems; cardiovascular and endovascular products; and wound care and orthopedic products, as well as assembles and offers sterile and non-sterile procedure kits. In addition, it offers supply chain services, including spend, distribution, and inventory management services to healthcare providers; and post-acute care management, and transition services and software to hospitals, other healthcare providers, and payers. Company description from FinViz.com

Cardinal reported earnings of $1.34 compared to estimates for $1.24. Revenue of $33.1 billion just missed estimates for $33.4 billion. Pharmaceutical revenues rose 5% to $29.7 billion. Medical segment revenues rose 8% to $3.4 billion. Pharmaceutical segment profits fell 14% to $537 million because of the loss of a major customer. They expect this to be made up in future quarters by the solid performance of Red Oak Sourcing. Medical segment profits rose 50% to $159 million thanks to a higher contribution from Cardinal Health Branded products.

They guided for full year earnings of $5.35-$5.50 and growth of about 4%.

Earnings May 9th.

Analysts believe Cardinal guided conservatively and will beat guidance because of the growth in their own branded products. Shares spiked on the earnings, faded for three days and are now surging. We are going to target resistance at $85 for an exit.

Position 2/21/17:

Long Jun $82.50 calls @ $2.85, see portfolio graphic for stop loss, target $85 to exit.



IWM - Russell 2000 ETF (LONG CALL)- ETF Profile

Comments:

The Russell was the weakest index again last week but it took a sudden turn for the better on Monday with a 1% gain and the strongest index for the day. I am going to leave this recommendation open for one more week. If President Trump becomes afflicted with foot in mouth disease in his speech on Tuesday night we could see a material market dip.

If we do have a sharp decline, the average is about 3%. That would drop the IWM to about $135. Our entry target is $135.

Original Trade Description: Jan 3rd

The Russell ETF mimics the movements of the Russell 2000 Index with a 1:10 ratio.

The Russell 2000 has failed to break support but it was the strongest gainer in the post election rally. At one point, the Russell was up 20.1%. That suggests in a market decline it could also be the fastest decliner.

Analysts are in agreement that the markets will finish 2017 significantly higher with estimates as high as 25,000 for the Dow and 2,500 for the S&P. If the regulations currently stifling small business are removed and the tax rates changed to 15% as Trump has promised, this sector will show a major boom in earnings and could be the largest gainer in 2017.

I considered buying calls on the SPY, DIA, QQQ and IWM. I decided to use the IWM for the reasons stated above.

I am going to use a dip trigger on this position to enter the play. We already have a put position on the ISM and we will exit it at the same time this position is triggered. I am putting the trigger at $126 but there is no guarantee we will reach that level. The IWM traded at $115 just before the election.

I am using the August calls because they were only $1 more than the June strikes and we get two extra months. I do not expect to hold the position that long since the summer months are normally weak for the market. We can sell them in June with a lot of time premium left.

With an IWM trade at $135.00

Buy August $140 call, estimated premium $5, no initial stop loss.



NVDA - Nvidia - Company Profile

Comments:

No specific news. I was a week early on the Nvidia entry. Shares were crushed on Thursday when the stock was downgraded by two analysts to a sell. Shares crashed $15 in two days to stop us out at $95.85 on Friday.

Original Trade Description: February 13th

NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for deep learning, accelerated computing, and general purpose computing; and GRID for cloud-based streaming on gaming devices. The Tegra Processor segment provides processors that integrate a computer onto a single chip under the Tegra brand name; DRIVE automotive computers, which offer supercomputing capabilities; and tablet and portable devices for mobile gaming under the SHIELD name. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors.

Nvidia's Graphics Processing Units or GPUs have become more than just video chips. They have become supercomputing processors and can be packaged in large groups to parallel process monster datasets and computations that would have taken weeks with conventional chips. They are truly revolutionizing the processor industry.

The focus on Artificial Intelligence or AI, a lot of companies like Google and Amazon are turning to GPUs to handle the monster amounts of data they collect every day. Facebook already uses Nvidia M40 GPU accelerators to power its Big Sur machine learning computers. Those NVIDIA GPUs were specifically designes to train deep neural networks for enterprise data centers, and the company says they are 10-20 times faster than other network computers. Nvidia said their GPD powered machine learning computers can help train networks new things in just a few hours that would take days or weeks with less powerful systems.

The new P100 GPU is 12 times faster than the prior version and can provide more performance than "several hundred computer nodes" and up to eight P100s can be interconnected to provide previously unheard of computing power. The chips in the GPUs contain more than 15.3 billion transistors each and the largest chip ever built at 16 nanometer technology. That is twice as many as on Intel's biggest chips. The P100 delivers more than 10 teraflops of performance. One teraflop can process one trillion floating-point instructions per second and the P100 can do 10 teraflops or 10 trillion calculations per second.

The COSMOS weather forecasting application runs faster on the P100 than the 27 servers, running twin multicore processors each that were previously tasked with the project. Intel makes commodity processors for the millions of PCs and servers in the world. Nvidia is light years ahead of Intel in technology. Nvidia's data center revenue increased 63% in Q1.

Nvidia announced a new chip code-named Xavier that is specifically designed for self driving cars. The chip has (8) 64-bit ARM cores, a 512-core graphics processor based on the new Volta graphics architecture, two video processors capable of handling 8K video and a specialized computer vision accelerator. The chip has more than seven billion transistors and more than twice the new Apple A9X processor. All of that capability is on one chip.

Nvidia announced a new class of supercomputing workstations with breakthrough design features. The new Quadro products provide more than twice the performance of their prior league leading technology and offer ultra-fast memory to further enhance the speed. The new GP100 GPUs provide more than 20 TFLOPS of 16-bit floating point precision computing. In English that means they are faster than the human brain can even comprehend. One TFLOP is executing one trillion floating-point calculations in one second. This workstation can do 20 TFLOPS. The Quadro GPUs can render photorealistic images more than 18 times faster than a CPU.

Nvidia posted blowout Q4 earnings of 99 cents on $2.2 billion in revenue. Analysts were expecting 83 cents on $2.1 billion. They guided for Q1 revenue of $1.9 billion and analysts were expecting 1.88 billion. The company said margins could shrink slightly from 57% because of product mix. They have so many new products there is a range of margins depending on the products and the configurations.

Despite the record earnings for the quarter and the year and 55% revenue growth in Q4, shares are declining simply because they have risen so much over the last year. Historically buying Nvidia on a dip to the 50-day average was a winning trade. That is $104.81 today. Also there is strong support at $100.

I am recommending we target a dip to $104 and buy a June $110 call. The premium should be in the $7 range if we get the entry we want.

Earnings May 11th.

Position 2/21/17:

Closed 2/24/17: Long June $110 call @ $9.30, exit $4.38, -4.92 loss.



QQQ - Nasdaq 100 ETF - ETF Profile

Comments:

The Nasdaq 100 closed at a new high on Tuesday. The rest of the week was negative and today's rebound failed to make a new high. I did raised the stop loss again just in case the president's speech causes a sell the news event.

Original Trade Description: February 6th

PowerShares QQQ, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock", is an exchange-traded fund based on the Nasdaq-100 Index. The Fund will, under most circumstances, consist of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The Fund and the Index are rebalanced quarterly and reconstituted annually.

The Nasdaq 100 big cap index has been leading the charge higher. The Nasdaq 100 and Nasdaq Composite may have been alternating days in the lead but the big cap index has seen the least volatility. The index bounced off uptrend resistance the prior week but it is back knocking on the door again today. The NDX was the only broad market index to post a gain on Monday and it closed only one point from a new high.

I believe the NDX is going to break through that resistance at 5,200 and that should trigger a new leg higher on short covering and price chasing by portfolio managers. They are currently holding cash back to buy the dips but the dips are very shallow. A breakout could convince them they are going to be left behind if they do not act.

I could just as easily predict a failure at resistance but every analyst prediction for a market failure in 2017 has proven wrong. I would rather invest $2.50 in a call option than try to bet against the trend.

Position 2/7/17:

Long May $128 Call @ $2.52, see portfolio graphic for stop loss.



QRVO - Qorvo Inc - Company Profile

Comments:

No specific news. Big intraday drop on Friday but it was erased with Monday's gains.

Original Trade Description: February 13th.

Qorvo, Inc. provides technologies and radio frequency (RF) solutions for mobile, infrastructure, and defense and aerospace applications worldwide. It operates through Mobile Products (MP) and Infrastructure and Defense Products (IDP) segments. The MP segment offers RF front end modules that combine high-performance filters, power amplifiers (PA), low noise amplifiers and switches, PA modules, transmit modules, antenna control solutions, antenna switch modules, diversity receive modules, and envelope tracking power management devices. This segment supplies its RF solutions into mobile devices, including smartphones, notebook computers, wearables, tablets, and cellular-based applications for the Internet of things. The IDP segment provides high power gallium arsenide, gallium nitride power amplifiers, low noise amplifiers, switches, radio frequency filter solutions, CMOS system-on-a-chip solutions, fixed frequency and voltage-controlled oscillators, filters, attenuators, modulators, driver and transimpedance amplifiers, and various multichip and hybrid assemblies. This segment supplies its RF solutions to wireless network infrastructure, defense, and aerospace markets; and connectivity applications for commercial, consumer, industrial, and automotive markets. Company description from FinViz.com

Triquint Semiconductor (TQNT) and RF Micro Devices (RFMD) merged in January 2015 and Qorvo was born.

Qorvo is a major Apple supplier. They will have outstanding Q3/Q4 earnings but they guided slightly lower for Q1. They blew out Q4 earnings at $1.35 compared to estimates for $1.26. Revenue of $826 million also beat estimates for $821 million.

They guided for the current quarter for earnings of 80 cents on revenue of $630 million. They said they were forecasting a decline in earnings because two China customers Oppo and Vivo along with Samsung, had postponed the launch date of their next smartphone models. Qorvo is still supplying the chips but the revenue will be delayed a quarter until those delayed launches begin to occur.

The stock dipped for about 30 minutes on the news and then began to rise again. Shares closed at a new 52-week high on Monday.

I believe this is an opportunity to get an Apple supplier well in advance of the iPhone 8 and the earnings from the other three manufacturers as well.

I am recommending an option to get us past the next earnings report where they should guide higher. Depending on our gains at the time we may hold over the report.

Earnings May 3rd.

Position 2/14/17:

Long May $70 call @ $3.59, see portfolio graphic for stop loss.



TWLO - Twilio Inc - Company Profile

Comments:

No specific news. The big drop by the Nasdaq at the open on Friday stopped us out of the position for a minor loss. I considered a reentry but twice burned in two weeks has made me wary.

Original Trade Description: January 23rd.

Twilio Inc. provides cloud communications platform that enables developers to build, scale, and operate communications within software applications through the cloud as a pay-as-you-go service in the United States and internationally. It offers programmable communications cloud software that enables developers to embed voice, messaging, video, and authentication capabilities into their applications through application programming interfaces. The company also provides use case products, such as a two-factor authentication solution. Company description from FinViz.com

Twilio is a cloud communications platform. That does not tell us very much but some if its biggest customers are Uber, AirBnB, WhatsApp and Messenger. Twilio has an application that matches phone numbers and internet addresses to usernames. When you send an instant message to somebody on Facebook, the Twilio app links your Facebook account to your mobile phone number and does the same thing on the other side of the conversation to your contact.

Twilio is a communications platform for new applications that do not want to reinvent the wheel and have to not only program all those linkages but build the databases necessary to connect with everyone.

Twilio had 88% revenue growth in 2015 and is expected to post 62% for all of 2016. Obviously as each year progresses and the revenue numbers soar it is harder to continue the growth when you first started and had almost no revenue. Still, 62% is outstanding.

Given its integration into numerous major applications in addition to the ones I listed above, they are a prime acquisition target. Amazon increased its stake in Twilio in December. Facebook recently increased integration of Twilio services in Messenger so it is not going to compete with the service but could decide to acquire it. With a market cap of $2 billion, pocket change to the big boys, and a dominant place in the existing technology, they are an excellent acquisition candidate.

Shares retreated from the post IPO highs of $70 to trade at $26 three weeks ago. Shares are testing resistance at $29 ahead of earnings on Feb 7th. A William Blair analyst expects the company to beat on both earnings and revenue. The analyst said "Twilio dominates the developer community, often benefitting from a first mover advantage while providing the best quality and performance in the market, particularly for its voice product of dual channel call recording capabilities."

We are in the Q4 earnings cycle so anything we add this week is going to be challenged by an earnings report over the next several weeks. On Twilio, the options are cheap and we can afford to hold over the February 7th report and we could be well rewarded.

Position 2/14/17:

Closed 2/24/17: Long Apr $38 call @ $1.71, exit .80, -91 cent loss.

Previously Closed 2/7/17: Long Feb $29 call @ $1.09. exit $3.60, +1.62 gain.



ZEN - Zendesk Inc - Company Profile

Comments:

Zendesk announced the expansion of its Chat Development Centre in Singapore to accommodate more than 120 workers. Shares are holding the prior week's gains.

Original Trade Description: Feebruary 20th.

Zendesk, Inc., a software development company, provides software as a service customer service platform for organizations. It provides single customer service interface to organizations to manage all their one-on-one customer interactions; track and predict common questions; and provide a seamless path to answers. The company's platform also enables organizations to gather customer data and engage with customers based on the insights the data provides; and offers tools for organizations to understand their customers and track the efficiency and effectiveness of their customer service. It also provides live chat software that enables the organizations to communicate in real-time with their customers through online chat; and analytics software, which enable organizations to analyze and visualize data from a diverse set of applications. The company operates in 150 countries and territories, and provides service through customer service platform in approximately 40 languages. Company description from FinViz.com

Zendesk reported a lower than expected loss of 4 cents compared to estimates for 6 cents. Revenue of $88.6 million beat estimates for $87.3 million. For the current quarter, they guided to a loss of $6-$7 million on revenue of $92 million. Analysts were expecting -$5.4 million on revenue of $91.9 million.

ZEN is tracking well with analyst estimates and the business is rapidly growing. Revenue in Q4 rose 41% and earnings for this relatively new company are heading for positive territory.

Earnings May 10th.

The company builds software for better customer relationships. They service more than 94,000 corporations in 150 countries and 40 languages. The provide all types of customer support including help centers, chat, telephone, instant message and email. Their products connect to most common database products to enable personal support based on the customers history and current needs.

Zendesk is rapidly attacking the startup market since new companies cannot spend a lot of money on an in house support staff. They are rapidly growing with guidance for full year 2017 revenue rising 35% to $420 million compared to analyst estimates for $410 million.

They reorganized internally in 2016 and the changes caused a slight disruption in Q3 and the stock fell from $31 to $20. Shares have recovered to $28 after a $4 spike post earnings. After three days of post earnings depression, they are moving up again.

Position 2/21/17:

Long July $30 call @ $2.05, see portfolio graphic for stop loss.



Prices Quoted in Newsletter

At Option Investor, we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.

The prices quoted in the newsletter are the end of day prices in most cases.

When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.

For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time readers are able to get a better fill than the opening print because of market maker bias at the open.

For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.

All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted please let us know.