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Current Sample Option Picks
Goodyear Tire & Rubber (GT) Hits Fresh 52-Week Peaks
11:25am (EST) Live Market Action!
Last Friday we profiled an option pick for Goodyear Tire & Rubber (GT, $12.89, down $0.16) when shares we just under $13. We mentioned the 52-week high was at $14.65. As you can see, the nearly 15% rally in one week has shares at fresh highs.
We profiled the July 14 calls (GT130720C00014000, $1.03, up $0.42) at 35 cents and said if shares made a run to $15 these options would return 200%. As you can see, the options have triggered $1.05 today and the trade played out as we planned.
We also made this trade an official recommendation for our Daily newsletter and our subscribers couldn’t be happier. We have been on a roll of late and if you are missing this kind of action, we encourage you to sign-up today. Click here to get on board now!
Cisco Systems Call Options Soar Triple-Digits
We wanted to do a live market update on Cisco Systems (CSCO, $$23.75, up $2.54) as shares are up 12% today on better-than-expected earnings. The company beat expectations by 2 pennies and raised guidance for the current quarter that caught the shorts off guard.
Most of the talking heads on the tube weren’t expecting much from the “old” Tech heavyweight but we were pretty bullish on their earnings and said a beat of more than a penny should be good enough for a pop in the stock.
We profiled the Cisco May 21 calls (CSCO130518C00021000, $2.80, up $2.20) at 60 cents yesterday and while it would have been a “lottery ticket” as the options expire tomorrow, these call options are up a whopping 381% as you can see below.
The Cisco June 22 calls (CSCO130622C00022000, $1.88, up $1.54) are up an astounding 452% after we profiled them yesterday at 35 cents.
If you are in any of these call options, we suggesting ringing the resister and taking profits!
Tech Giant Cisco Systems (CSCO) on Deck with Earnings
Cisco Systems (CSCO, $21.27, flat) will be announcing their earnings after the close and Wall Street will be eager to hear their numbers. A beat-and-raise should send shares past double-deuces while a disappointment could mean a back test to $20. Shares currently yield 3.2% so there should be some support if they slip.
Bullish traders can play the May 21 calls (CSCO130518C00021000, $0.60, down $0.05) or the June 22 calls (CSCO130622C00022000, $0.35, down $0.05) for a possible push past $22.
Bearish traders can play the June 21 puts (CSCO130622P00021000, $0.60, flat) or the May 21.50 puts (CSCO130518P00021500, $0.60, down $0.05).
The company is expected to earn 49 cents a share on revenue of $12.18 billion. There are 37 analysts that cover the stock and the company has beaten estimates for 4-straight quarters in the past year. They have a history of beating by a penny but in the last two quarters the company has come in 2 and 3 pennies ahead. If Cisco can come in a nickel ahead of estimates then shares could move 5%-10% as a match or a penny beat might not be to exciting for the suit-and-ties.
Playing options around earnings can be tricky but expect the aforementioned call and put options to be heavily traded today.
Sony (SNE) Surges Past $20
We have done well playing Sony (SNE, $20.89, up $2.00) call options this year and we have been calling for a run to $20 since late January. Shares were hovering near $15 when we first starting recommending call options and in March we loaded up on the April call options and had 3 trades that made our subscribers 178%, 128%, and 95%, in less than a week. Shares made a nice run from $15.75 to $17.75 and the 13% move in the stock gained us triple-digit returns in the options.
Last week, after shares broke above the $17.75 level and tested $18, we knew our $20 target was just around the corner. Yesterday’s open at $18.29 was also a clue the May 20 calls (SNE130518C00020000, $1.00, up $0.90) could be worth a lottery trade as they closed at 10 cents. They are currently up 900% but these call options have traded to a high of $2.00 today as shares have reached a high of $22.22 this morning. This equates a 1900% return.
A $1,000 investment in these call options would have banked you $10,000 at current levels in less than 24 hours.
More conservative traders could have played the June 20 calls (SNE130622C00020000, $1.50, up $0.95) as they closed at double-nickels (55 cents) on Monday. These call options are currently up 172% but have traded to a high of $2.55 for a 364% return.
There is more room for shares to make a run as our new price target for Sony is $25, possibly $30 if they spin-off the entertainment division. However, we would wait for a back test to $20 before getting into another possible call option trade.
SolarCity (SCTY) Continues Impressive Run
We have been following SolarCity (SCTY, $37.81, up $8.93) since its initial public offering (IPO) and it has been a recent recommendation for our Weekly Wrap. We have talked about the momentum shares have displayed in recent weeks and today’s 30% surge has been a windfall for traders playing the May options.
The SolarCity May 30 calls (SCTY130518C00030000, $7.30, up $5.70) are up a whopping 356% today and huge volume as nearly 1,400 contracts have traded. Shares have gone parabolic and could reach $50 on continued strength.
We will continue to monitor the stock and more importantly the options. If we see a chance to play a continued upside move we may go with some May or June call options. However, at some point down the road, we will look at put options for a trade as well.
Goodyear Tire & Rubber (GT, $12.89, down $0.16)
July 14 calls (GT130720C00014000, $0.35, down $0.02)
Thoughts: These options traded over 2,000 contracts yesterday and the open interest is over 6,000. The 52-week high for the stock is $14.65. If shares can run to $15 by mid-July these options would be worth $1-$1.05 for a 200% return. We like these options at current prices and would use a stop of $12 for those that may want to jump in. These are “cheap” options on a solid stock that could make a run to new 52-week highs and has been a laggard during the bull market run over the past 6 months.
Tesla Motors (TSLA) Jumps 26%, Options Zoom
Shares of Tesla Motors (TSLA, $70.42, up $14.63) are at a 52-week peak and all-time highs after the company smashed Wall Streets estimates. The company reported a profit of 12 cents a shares versus expectations for 3 pennies a share. They also raised guidance which sent the shorts running for cover.
Today’s surge in the stock price is pretty nice but the Tesla May 65 calls (TSLA130518C00065000, $5.90, up $4.80) are up a whopping 436% after closing yesterday at a buck-10. They have traded to a high of $6.60 today.
We have followed the company since its IPO in mid-2010 and love the volatility that accompanies the stock. Shares could easily roll to $100 on continued short covering and at some point there will be a consolidation but there is no denying the momentum.
5/8/2013 (12:05pm) EST
ValueClick Gets Whacked, Put Options up Nearly 300%
ValueClick (VCLK, $26.69, down $5.05), a name we have played in the past, is getting hammered after missing estimates and lowering guidance. We should have circled this one on our possible earnings trade Watch List but we dropped the ball. Shares were near 52-week highs and can be very volatile on earnings announcements. The company had beaten estimates for 3-straight quarters but has a history of disappointing the suit-and-ties.
With shares just under $32 going into yesterday’s close, we could have bough the May 30 puts (VCLK130518C00030000, $3.10, up $2.30) for 80 cents and banked nearly a 300% return by now.
We have been waiting for these types of trades and we finally bagged a big one last week. With our portfolio light and profitable, we may take a few of these types of earnings plays this week and next but the risk/ reward will be extremely high as these types of trades are all of nothing.
We do have some current trades that we are taking action on and we also have 2 NEW TRADES we are getting into.
As we head to press, the Dow is advancing 10 points to 15,066 while the S&P is higher by 4 points to 1,630. The Nasdaq is up a 12-pack to 3,408.
Subscribers, check the Members Area for the updates and use limit orders to get the best fills.
Apple Mini Options Pack a Punch
Note: This article was written this past Sunday for our Weekly Wrap. We wanted to share it with our readers as the Apple mini call options continue to surge. Quotes are from last Friday’s close and we update the mini options at the end of this article.
We were thisclose to making Apple (AAPL, $449.98, up $4.46) and official trade recommendation last week by using the mini options. We haven’t traded any mini options as they just became available and there are only 5 stocks that we can trade as of right now. Others are coming but let’s take a look at how Apple traded last week
Apple came into the week at $417 and opened at $420.45 on Monday. It would have cost $42,045 to buy 100 shares of Apple on the open and if you would have sold the Apple May 440 call (AAPL130518C00440000, $13.40, up $2.00) you would have received $2.45 or $245. This would have lowered your cost basis to $41,800 but you are now on the hook to sell your shares if the stock is above $440 by mid-May or when the options expire.
Assuming Apple is above $440 by expiration (May 18) you would be called away and you would now have $44,000 in your account after making 5%. This would be a great return in 3 weeks but most investors don’t have the capital to buy 100 shares of Apple and it is a ton of money to put at risk to make single-digits on one trade.
The mini options hope to solve this problem by only requiring investors to buy 10 shares of stock in order to write a covered call. These options trade like regular options but with a slightly different symbol that include a “7”. This also reduces the cost of writing covered calls on triple-digit stocks to a tenth of the price.
Using the above scenario with Apple opening at $420.45 last Monday, to buy 10 shares would have cost $4,204.50. The Apple May 440 call (mini) (AAPL7130518C00440000, $13.20, up $1.75) opened at $2.47 and you would have received $24.70. This gets your cost down to $4,179.80.
These calls closed at $8.50 on Monday and on Tuesday they zoomed another 70% to close at $14.45. From Monday’s open this would equate to a sizzling 500% gain in just 2 days. These options pulled back on Wednesday but on Thursday they traded up to $13.50 after Apple closed at $445 and near this level on Friday. We would have likely cashed in before Tuesday’s close with a 5-bagger if we had taken the mini’s as a directional call option trade for our Daily, but overall, the calls returned 434% from Monday’s open to Friday’ close.
Yes, we missed an incredible trade for our Daily but once we master the mini options that trade on Apple, watch out!
Tuesday 5/7/2013 2:00pm (EST) update: The Apple May 440 call (mini) (AAPL7130518C00440000, $15.45, down $2.15) have traded to high of $19.54 today.
BMC Software (BMC, $45.42, up $0.18)
June 48 calls (BMC130622C00048000, $0.60, up $0.10)
Thoughts: The 52-week high is $47.98 and we feel a push past $50 is coming. This company has been in the chatter as a takeover target and earnings are out on Tuesday.
Regeneron Pharmaceuticals Call Options Zoom 400%!
Here is a sneak peak on a current trade for our DAILY newsletter that is going parabolic today:
Regeneron Pharmaceuticals (REGN, $265.00, up $16.37)
May 270 calls (REGN130518C00270000, $6.00, up $3.70)
Entry Price: $1.50 (5/2/13)
Exit Target: $4.50+ (closed half @ $8 on 5/3/2013)
Stop Target: $3
Action: We closed half of the trade at $8 this morning as the options traded up to $8.90 on the stock’s surge to $270.
We went with these options because we felt they offered us 20-1 odds or even 30-to-1 if shares made a run to $290-$300. We also realized we could have lost our premium if shares were flat or flew south today.
The company reported earnings that needed to come in above analysts’ forecasts for 94 cents a share. They did by nearly doubling it and revenues were up. We should take the other half of the trade off the table but let’s push it into next week and see how we open on Monday. If there is a drop below $255, we will likely close the other half of the trade but we are still holding out for a run to $300.
If you are not a subscriber but would like to get more, real-time trades, please click here. We are one of the fastest growing stock options trading advisors on the internet and we had an incredible 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis.
Skechers (SKX, $21.25, up $0.27) is scheduled to report earnings on Friday and shares could make a huge move.
The 52-week high is $23 and good numbers could propel shares to fresh highs while a disappoint could lead to a drop below $20.
The May 23 calls (SKX130518C00023000, $0.25, up $0.05) could be used to play an upside breakout while the May 20 puts (SKX130518P00020000, $0.40, down $0.05) can be used to play an earnings miss. We are doing some research as we head to press and if we take action on Skechers, we will send out a Trade Alert.
Weekly Wrap Profit Alert (BAC)/ Trade Alerts (GNW, MGM) for 5/1/13
We have action to take on a few of our current trades for the Weekly Wrap. One of our recommendations, Genworth Financial (GNW, $10.50, up $0.47) is seeing its shares pop 5% so we want to write some covered calls against the position as we look to improve our double-digit gains so far as we got you in under $10.
Bank of America (BAC, $12.12, down $0.19) is pulling back and could fall below $12 so we are locking-in our 9% win.
Subscribers, check the Weekly Wrap Premium section for the details.