We like Bank of America on the hopes that the financial rescue plan bill will pass the house today. Buy the Bank of America October 40 calls. The stock is currently at $38.03 and the 40 calls are $1.46 and asking $1.51. If there is a rally, we would look for over a 100% gain over the next couple trading days.

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Tags: Bank of America

The market seems to be headed up today, so we will hold off buying those puts on the Ultra S&P 500 Proshares (SSO) that we recommended in an earlier post. Let’s wait until after this bear market rally, see how things shake out today and maybe tomorrow, then we can enter the trade.

For today, lets instead look at calls on Salesforce.com (CRM). The stock was added to the S&P 500 after the close of trading on Wednesday 09/10, replacing Freddie Mac (FRE). The stock is now trading below the level it did after it popped on the news. We are looking for a move up to those levels at the very least, if we have a couple days of rallies.

The stock closed at $53.32 yesterday 09/17. We like the October 55 calls. Those last closed at 3.10. Enter at current prices up to $3.60 if the underlying stock looks to move up with the markets.

Once in, consider taking profits if the options are up 15-20% from where you entered, unless stocks are exceptionally bullish, in which case, try to squeeze out a few extra percentage points. Do however, remember we are in a bear market, so take early profits on long positions.
 

Tags: S&P 500  Trading Day  Trading Idea  Options

On Wednesday September 3rd on the Navivest blog, we recommended that traders buy the Boeing (BA) September 65 put options. The rational behind the trade was that one of Boeing’s unions which covers aircraft assembly employees, was set to vote on whether to accept or reject an employment contract that Boeing (BA) had offered the employees.

If the union rejects the contract, Boeing’s (BA) shares would see some pull back causing the put options to rise. We entered into the trade paying $1.30 for the put options. At the close of the stock market on Friday, those puts were quoted with a bid price of $3.10, a 138% gain.

When the union voted to reject the contract, the government got them to agree to postpone a strike for 48 hours while negotiations continued. Those negotiations failed Friday evening and the aircraft assembly workers are going on strike over the weekend. As a result, we should see further price decline in Boeing (BA) shares and should that happen, we will probably see another 100% rise minimum in the put options.

Subscribers to our Options Capitalist trade advisory are out of the trade, but readers of the blog should still be in it. These are September options, which expire on the 19th, plus the risks to Boeing (BA) are huge, so they may do what is necessary to bring an end to the strike ASAP which could send Boeing (BA) shares soaring. On that basis, we recommend that our readers be happy with a triple digit gain in a week, and exit the trade on Monday.

Tags: Boeing  Options trading

Stocks are tanking today, with the Down down over 300 points on more of the same as unemployment data and retail sales numbers released today, showed that the economy is weak.

With the carnage on Wall Street today, we are looking for a temporary rebound tomorrow/Monday and traders should position themselves ahead of that move. Here are a couple trading ideas:

IBM (IBM) September 115 calls.

Amazon (AMZN) September 80 calls.

Tags: Options

Yesterday, we recommended that readers of the Navivest blog buy the Boeing (BA) September 65 puts because a Boeing (BA) employees union was going to be voting on whether to accept a contract that Boeing (BA) had offered.

The union voted to reject the deal and the stock is dropping today, currently off $1.65 to $64.42. The September 65 puts which we entered into at $1.50 are now up about 26%.

We will be getting crude inventories report today at 11 AM. If those numbers are bullish for oil prices and stocks continue to drop on the day, we suggest those that missed on the Boeing September 65 puts options trade yesterday get in, as we could see further decline in Boeing tomorrow. However, those in the trade, need to be out by close of markets on Friday, as Boeing (BA) might come back with an offer that the union accepts.

Tags: Boeing

On August 1st, we issued an alert to put in a limit order to sell the Dynamic Materials (BOOM) call options. You should be out now for a minimum gain of $400 or 22%. If you have not exited the trade yet, lock in profits. With current bid prices at $2.70 for the calls, those exiting now can lock in profits of $900 or 50%.

 dynamic materials

We are looking to exit the Dynamic Materials (BOOM) trade by Monday. Put in a limit order now to sell the calls at $2.40. We will be watching the price action and posting addditional updates as warranted.

Genentech (DNA) is coming out with earnings after the close of the market. We don’t know whether they’ll beat or not, so we’ve had to specially structure an options trade to play on the earnings. We are slightly leaning towards Genentech (DNA) stock dropping tomorrow but even if the stock moves up on good earnings, we make money.

Here’s the trade as we are doing it - Buy 30 July 75 calls and75 July 75 puts.

As structured, using current prices, the trade will cost $15,375. You can ammend the amount but make sure you maintain the ratio of puts to calls. For every 10 calls we buy, we are buying 25 puts. 

The calls are trading at $2.50 and the puts at $1.05. Again, for every 10 July 75 calls you buy, purchase 25 July 75 puts.  If you only wanted to spend $5,000, you’d buy 10 calls and 25 puts for a total of $5,125 before commissions.

This is not one to just watch, unless the stocks stays the same or moves less than $1.50 and even with just a $1.5 move we clear our commissions. We make more on downward moves and if the stock moves just $2 either way, we begin to make good money either side on a one day percentage basis. So get in on the trade.

Avid Technologies is moving up over 12% on no apparent news and unimpressive volume. This is rather bullish as there might be early smart money moving into the stock on news they anticipate? Someone(s) also just increased the open interest on the July 20 calls by buying 225 contracts. Keep it on the watch list.

Reasearch In Motion (RIMM) will be releasing its earnings after the close of the stock market today. The company has in the past, done a good job of beating Wall Street estimates and the stock subsequently rewards its holders well the next day.

We expect more of the same and are recommending traders buy Research In Motion (RIMM) call options. We are hedging the trade with some puts to offer some protection against a downside. Wall Street is sometimes insatiable and (RIMM) could come out with phenomal earnings and the street might still deem them to be inadequate, although with the launch of new products recently as well as continued wider adoption of the company’s products, we would be very suprised if the company puts out negative earnings related news.  

The Trade: Buy the Research In Motion July $145 calls. For every three contracts bought, buy 1 Research In Motion 135 puts. We are recommending a trade of at least 6 call contracts and 2 put contracts. This will be slighty over $5,500. For those that can’t swing this, but would like to enter the trade, if you have risk capital of $700-$1400, you can buy 1 or two call contracts. These will not be hedged for downside protection, but again, there is a bigger chance of the company beating than not.

Notes: Watch this space and or subscribe to this blog is you have not already done so, we will be tracking (RIMM) all day and if can adjust the position to take some profits even before the earnings, we post accordingly.

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