Current Portfolio:

CALL Play Updates

Cisco Systems - CSCO - close 23.16 change -0.12 stop 22.20

Target(s): 23.55, 24.20
Key Support/Resistance Areas: 23.65, 22.55
Time Frame: 1 to 2 weeks

I am hoping to get filled on CSCO in the coming days at $22.85. Monday would actually be best but let's wait for the set-up and see what the market gives us. The stock hit a low of $23.05 today which I mentioned as a good entry for more aggressive traders yesterday. My comments remain the same from the play release. CSCO has been building a nice base for the past 3 to 4 weeks and is trading in a $1 range (4.5%) between $22.55 and $23.55. $22.50 is key pivot level for the stock dating back to 2006. It appears the stock may want to break higher out of this base, but we don't necessarily need that to happen for a profitable trade. CSCO looks stable here with a lot of support and I suggest we take advantage of the reliable price pattern that is being built. I would like to use $22.85 as a trigger to enter long positions. If triggered readers should be able to purchase July $22.00 calls for about $1.30 (current ask is $1.49). If CSCO then proceeds to rally to the top of its base at $23.55 we should make about 55 cents on the position for a +40% gain. If CSCO breaks out it could rally to fill a gap which is up near our more aggressive 2nd target of $24.40 and below the stock's 200-day SMA. Another entry could be considered at $23.05. Our stop will be $22.20. NOTE: I view this trade as potentially being quick.

Suggested Position: Buy July $22.00 CALL if CSCO trades down near $22.85, current ask $1.49, estimated ask at entry $1.30

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 69 million
Listed on 6/16/10

Ormat Technologies - ORA - close 29.61 change -0.18 stop 27.25

Target(s): 30.45, 31.80
Key Support/Resistance Areas: 32.00, 30.60, 29.00, 27.50
Current Gain/Loss: +5%
Time Frame: Several weeks
New Positions: Yes

ORA closed above its 50-day SMA and made a new daily high again, however, the stock sold off during the morning weakness and closed down 18 cents. For options traders, if we get a move up to $30.45 (which is our first target) next week our options should be worth about $1.45. This will represent a nice profit and is a good place to take profits or tighten stops. If you are only trading the stock I think ORA can make it up to the $31.80 area but it may take some time depending on the overall market direction. The fact that ORA is making daily highs is good and as the sellers wane I am confident we will hit our targets.

Current Position: July $30.00 CALL, entry was at $1.00

Entry on June 16, 2010
Earnings Date 8/4/10 (unconfirmed)
Average Daily Volume: 345,000
Listed on 6/15/10


Direct TV - DTV - close 37.79 change -1.54 stop 35.70

Target(s): 38.20, 38.50, 39.50, 41.50
Key Support/Resistance Areas: 38.60, 37.00, 36.30
Current Gain/Loss: N/A
Time Frame: Several weeks
New Positions: Dropped

Wells Fargo downgraded DTV to Market Perform from Outperform with a price target of $38-40. This sent DTV down -4% today. This is enough for me to drop the play as there could be latecomers to the selling party that may have missed it today. And if the market reverses lower DTV could get hit as well so its simply not worth the risk. I'll keep an eye on the stock and may consider re-listing it at some point in the future. For now, we have dropped the play.

Suggested Position: Buy July $37.00 CALL if DTV trades down near $37.20 which is just above its 50-day SMA, current ask $2.78, estimated ask at entry $1.40

Annotated chart:

Entry on June xx
Earnings Date 8/5/10 (unconfirmed)
Average Daily Volume: 12.3 million
Listed on 6/5/10


Freeport McMoRan Copper & Gold - FCX - close 65.81 change -1.22 stop 68.80

Target(s): 65.15, 64.50, 63.10, 61.50, 58.30
Key Support/Resistance Areas: 66.00, 65.00, 64.00, 58.00, 55.00, 52.00
Current Gain/Loss: -24.37%
Time Frame: 1 week
New Positions: Closed

FCX broke the 50-period SMA on its 30 minute chart this morning and sold off hard. We got the big move lower I was looking for to exit the position at our adjusted target of $65.15. So we are flat the PUTS at $1.80. With the weekend coming up and OPEX tomorrow I believe it was best to exit the position, preserve capital, and look for better opportunities. For readers who have positions I urge you to protect capital. I do not suggest holding positions hoping the stock will decline from here. FCX just isn't giving it up like I expected and if the market moves higher from here time decay will eat away further at the option premium. The stock may be also be forming a bull flag so the longer it stays at these levels the greater the chance for a move higher. If FCX declines from here I would be looking for strategic exit points and trail stops down if possible. I'll leave some of my comments from last night. On the intraday charts FCX has been in an uptrend the past 5 days and on the 30 minute chart FCX has bounced off of the 50-period SMA (currently $66.66) as support on the way up. This level needs to break convincingly to get the stock moving lower, and if it does I think we could see $65.00 relatively quick. Fundamentally, demand for copper should be weakening as evidenced by housing starts in the US and other countries like Australia, which came in overnight at 4.3% Q/Q compared to estimates of 7.0%. This has been a frustrating trade and I think it is prudent to consider exiting positions to preserve capital. As such, I have added $65.15 and $64.50 as additional targets. The estimated price of our options at these targets is about $1.75 and $1.90, respectively. These are good levels to either take profits or tighten stops to see if we can get more out of the trade. When FCX gets moving the moves tend to be big. On the daily charts, the stock remains in a downtrend and has made a series of lower highs and lower lows, but it has also stubbornly refused to give up any of the recent gains. Readers may want to consider placing a sell limit order based on the option (as opposed to the stock price) to simply exit positions. I view this trade as aggressive and quick so proper position size should be used to limit risk. I am also choosing an out of the money option to limit capital at risk.

Closed Position: July $60.00 PUT at $1.80, entry was at $2.38

Annotated chart:

Entry on June 11, 2010
Earnings 7/21/2010 (unconfirmed)
Average Daily Volume: 19 million
Listed on June 10, 2010