Editor's Note

Both of these stocks are just over the closest call strike and we have to reach out a couple dollars and a few months but the options are cheap.


New positions are only added on Wednesday and Saturday except in special circumstances.


KTOS - Kratos Defense - Company Description

Kratos Defense & Security Solutions, Inc. provides mission critical products, solutions, and services in the United States. The company operates through three segments: Kratos Government Solutions, Unmanned Systems, and Public Safety & Security. The Kratos Government Solutions segment offers microwave electronic products, satellite communications, training systems, modular systems, and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial systems, and unmanned ground and seaborne systems. The Public Safety & Security segment designs, engineers, deploys, operates, integrates, maintains, and operates security and surveillance solutions for homeland security, public safety, critical infrastructure, government, and commercial customers. The company serves national security related agencies, the department of defense, intelligence agencies, and classified agencies, as well as international government agencies and domestic and international commercial customers. Kratos Defense & Security Solutions, Inc. was founded in 1994 and is headquartered in San Diego, California. Company description from FinViz.com.

We have played this company before with varied success. Sometimes solid uptrends hit a wall and sometimes they continued. This time the shares have left their five months of consolidation and are a day away from making a new 9-month high.

Kratos has found a niche and its programs are starting to come to fruition. They just began delivering on a $37 million sea skimming drone contract for the Navy. The BQM-177A simulates a sea skimming missile attack to test readiness for missile defense aboard Navy ships.

They were also awarded a contract last week for a "Chemical, Biological, Radiological, High-Yield Nuclear Explosive (CBRNE) program. The project is classified and no details were given.

The point here is that Kratos is moving up in the world of defense contractors. The stock gained 10% over the last six days as realization has hit investors.

Earnings are August 9th.

The company wil exhibit at the giant Farnborough International Airshow on July 16th -22nd. This will increase their visibility and the potential for new business.

The stock is $12.70 and just over the $12.50 option strike. I am going to recommend an option only long shot with a $15 call for 50 cents. We have four months if needed and our risk is very low.

Buy Nov $15 call, currently 50 cents, no initial stop loss.

BB - BlackBerry - Company Description

BlackBerry Limited operates as an enterprise software and services company focused on securing and managing endpoints in the Internet of Things. It offers BlackBerry Enterprise Mobility Suite, which combines and integrates mobile security, management, productivity, and collaboration solutions, such as BlackBerry UEM, BlackBerry Dynamics, and BlackBerry Workspaces; BlackBerry AtHoc, a secure and networked crisis communications solution; SecuSUITE for Government, a voice encryption software solution; BlackBerry Enterprise Consulting and BlackBerry Cybersecurity Consulting; and BBM Enterprise, an enterprise-grade secure instant messaging solution, as well as Communications Platform as a Service. The company also provides BlackBerry QNX, a software for automotive electronics; BlackBerry Jarvis, a cloud-based static binary code-scanning solution; Certicom that offers software components and end-to-end security solutions targeted at bandwidth and resource-constrained applications; Paratek, which offers adaptive radio frequency antenna tuning technology; BlackBerry Radar, an asset tracking and telematics product. In addition, it offers intellectual property and licensing; mobility licensing; other licensing programs; and develops legacy BlackBerry 10 platform, and delivers BlackBerry productivity applications to Android smartphone. Further, the company engages in the development and licensing of secure device software and the outsourcing to partners of design, manufacturing, sales, and customer support for BlackBerry-branded handsets; and provision of Android smartphones, smartphone accessories, and non-warranty repair services. Additionally, it is involved in the operations related to subscribers using mobile devices with its legacy BlackBerry 7 and prior operating systems. The company was formerly known as Research In Motion Limited and changed its name to BlackBerry Limited in July 2013. BlackBerry Limited was founded in 1984 and is headquartered in Waterloo, Canada. Company description from FinViz.com.

Earnigns September 21st.

Blackberry reported earnings that disappointed because they are shifting to a subscription model rather than a onetime license model. We know of multiple companies that have done this and the first year is always rough but then the revenue levels out into a steady growth model. Adobe Systems, Autodesk, Microsoft Office, etc. All suffered in the first year.

Shares crashed on the news but are starting to rebound. With the stock at $10.20 it is just over the $10 strike. I am recommending we buy the December $12.50 strike for 40 cents and hold for a rebound. At that price we can afford to hold over the next earnings report.

Buy Dec $12.50 call, currently 40 cents, no initial stop loss.


No New Bearish Plays