PUT Play Updates
Costco Wholesale - COST - close 53.61 change -1.48 stop 57.25
Target(s): 53.80, 53.00, 52.25
Key Support/Resistance Areas: 56.80, 55.60, 54.25, 53.40, 51.50
Time Frame: 1 week
7/21: COST tanked -2.69% today has already hit our first target. It's probably wishful thinking that the stock will rally up to our target of $55.80, but if we are patient we might get one of those rally days so I suggest we see how the rest of the week plays out. I will lower the trigger to $55.50 which is near the 20-day SMA and $55.60 resistance area which is where I expect COST to hit a brick wall.
7/20: COST has broken through key support/resistance areas at $56.80 and $55.60 and is below all of its major moving averages which are declining. The stock is rallying to test these areas from below and I suggest readers using a trigger of $55.80 to enter short positions on any further strength COST exhibits in the coming days. This area is near the most recent downtrend line. We'll use a tight stop at $57.25 which is just above the 50-day and 20-day SMA's, the recent downtrend line, and the congestion area overhead. COST has a large gap to be filled down near the $52 level which is near our most aggressive target and could happen if weakness reappears in the broader market. NOTE: September options were just recently released so the open interest is less than other months.
Suggested Position: September $55.00 PUTS, current ask $2.66, estimated ask at entry $1.45
Entry on July xx
Earnings 10/7/10 (unconfirmed)
Average Daily Volume: 3.76 million
Listed on July 20, 2010
PowerShares QQQQ Trust - QQQQ - close 44.64 change -0.62 stop 45.10 *NEW*
Target(s): $45.05 (hit), 44.60 (hit), 44.40 (hit 7/17, 7/20), 44.15, 43.90
Key Support/Resistance Areas: 46.77, 45.25, 44.46, 43.50, 42.50, 41.00
Current gain/loss: -25.00%
Time Frame: 1 week
New Positions: Yes, but expect a quick exit
7/21: QQQQ gapped higher and essentially sold off the remainder of the day. The stock hit our first target of $45.05 and drifted higher to the $45.40 area which is where the real selling began. For intraday traders I've provided an intraday chart to illustrate where protective stops could have been placed to protect against a reversal and to get the most of the price action that was happening (see red lines on the chart). The initial stop could have been placed near the $45.50 level which was above the initial swing high (see small oval). QQQQ then proceeded to sell off hard hitting our targets of $44.85 and then finally $44.60 at the end of the day. Once these targets were hit the stops could have been moved down to the $45.10 area which was above prior intraday support areas of the past few days (which should now act as resistance). This is the ideal way to deal with the current volatility upon us. So now we are ready to lower the stop to $45.10 going into tomorrow. $44.10 is still a valid target just above the 20-day SMA that has been previously hit. This is the area where I suggest tightening stops to see if we can get even more out of the position. If things continue to the downside the immediate next targets are $44.15 and $43.90 with the most aggressive target at $43.40. I know managing a trade like this is difficult for traders who do not trade intraday. A possible solution would be to initiate a trailing stop which will protect you from a hard reversal back to the upside. In this case the trailing stop would be about 45 cents. My goal is to exit this positions this week.
7/20: QQQQ gapped lower and traded to within 11 cents of our $43.75 target. The market looked ugly and after an early bounce and the Q's even retreated to retest its lows. For intraday traders a stop should have place above the first 30 minute high of $44.12 which would have protected small profits in this position. After this level was broken the Q's proceeded to bounce and never looked back, surging +3% from its lows. Will there be follow though? It appears there will be some with AAPL's earnings report which is boosting the NASDAQ 100 futures +0.50% in the aftermarket. This equates to about 23 cents in QQQQ which is below our stop and last week's highs. It is amazing how things changed on a whim this morning which we have seen a lot of lately, and it has helped and hurt our positions. This time it is painful but we have a plan and we need to stay nimble to find a proper exit. So I have listed additional immediate targets above which are intraday support/resistance areas. QQQQ should retrace some of these gains and these are areas where the ETF may find support. They are good areas to tighten stops or exit positions. It wouldn't surprise me to see QQQQ retrace a good portion today's gains and retest its declining 20-day SMA (currently $44.51 and declining). The Q's are also below two downtrend lines and its 200-day and 50-day SMA's. It will be interesting to see how it plays out.
Current Position: August $45.00 PUTS, entry was at $1.85
Entry on July 8, 2010
Earnings N/A (unconfirmed)
Average Daily Volume: 100 million
Listed on July 7, 2010
Wynn Resorts - WYNN - close 81.96 change -1.96 stop 85.10 *NEW*
Target(s): 81.55, 80.50, 79.50, 78.25
Key Support/Resistance Areas: 85.00, 84.00, 76.50, 72.00
Current Gain/Loss: -34%
Time Frame: 1 week
New Positions: Yes
7/21: WYNN came within 2 cents of hitting our revised first target this afternoon so I have raised this 5 cents. The stock prices of WYNN are coiling and it is due for a trip lower. When that happens I suggest readers use the above targets to tighten stops to see how much more we can get out the position. I think WYNN's early strength was more about a prior unfilled gap than true strength. I think we will see $80.50 and probably $79.50 prior to going much higher. I'm going to lower the stop to $85.10 which is above today's high. If WYNN trades up to this level its probably headed towards $88.00 but I like it go lower first.
7/20: Once again WYNN was down -$2 at the open and pulled a complete reversal. Conservative traders may want to consider exiting this position and preserving capital as we have already lost -$1.50 in the option premium. After WYNN broke below key support levels and its 20-day, 50-day and 100-day SMA's the stock has catapulted higher with the broader market. It's time to salvage what we can so I have listed 4 targets above and I suggest readers begin too tighten stops or exit positions at these levels.
NOTE: I view this trade as being aggressive and potentially quick.
Current Position: August $75.00 PUTS, entry was at $3.50
Entry on July xx
Earnings 7/29/10 (unconfirmed)
Average Daily Volume: 2.92 million
Listed on July 17, 2010
CLOSED BULLISH PLAYS
United States Steel - X - close 44.79 change +0.50 stop 43.15
Target(s): 43.25 (hit), 45.25(hit), 46.20 (hit)
Key Support/Resistance Areas: 48.70, 46.25, 50-day SMA, 43.50, 40.80, $40.00
Final Gain/Loss: +89.8%
Time Frame: 1 week
New Positions: Closed
7/21: X gapped open higher, hitting and oscillating around our final target of $46.20 the entire morning. As such, we are flat the position for a much needed +89% gain. The stock gave back most of the morning gains when the broader market selling set in this afternoon. X can probably be bought again but I would like to see it come down to the $43.60 which was its recent break out level. $44.43 is the 50-day SMA so a break below there may bring in more selling. For readers who may still have positions I urge you to protect profits.
7/20: X made a huge turn around today and our position has now gained +26% after looking terrible yesterday. I've adjusted the targets and moved up the stop to $43.15. I suggest readers be smart about protecting profits here but also try to let the position run as far as possible. Our next target of $44.40 should be hit in the morning. This is near today's highs and the 50-day SMA and readers should consider tightening stops or simply taking profits at this level, especially if you can not trade intraday. Our next targets are $45.25 and $46.20 which are at the bottom and top of a congestion area from mid June. There is good a chance X pulls back from its 50-day SMA so caution is urged.
Closed Position: August $46.00 CALLS at $2.62, entry was at $1.38
Entry on July 15, 2010
Earnings Date 7/27/10 (unconfirmed)
Average Daily Volume: 13.5 million
Listed on July 14, 2010