EOT Position Update – August 4, 2010

| August 4, 2010

August 4, 2010

Market Snapshot

In today’s uncertain economy, there are endless opportunities to make a killing with options.

Keep in mind, there’s more than one right way to trade options.  What works for one trader doesn’t necessarily work for another.

It’s why we give more than one support and resistance level.  We know you need to adapt our recommendations to fit your style.  We also have subscribers who use our picks with their own strategy.  And that’s ok too.

I know some of you are “swinging for the fences”.  You’re looking for the double and triple baggers.  The options going up 200%, 300%, or more…

You’re like homerun hitters in baseball.  You may strike out more often, but the ones you do hit, are spectacular.

Whatever your style, just remember you must be comfortable with it.  Don’t trade in a certain way just because it works for someone else.

Remember, your success as a trader ultimately rests on your shoulders.

Let’s move onto the updates…

Position Updates

Just a quick note:  Remember, we won’t update every open position every week.  I try to focus on the positions that have some significant news or price movement.

  DCO September 2010 $20 Puts
DCO saw revenue decline again this quarter.  But they managed to beat earnings estimates by cutting costs.  I expected investors would see declining revenue as their cue to sell.  But management spun a nice tale about their future prospects.  Apparently they gave investors enough hope to continue holding on.  I still think DCO is a dying company but it’s not going to happen before our options expire. Conservative traders should start looking for a good opportunity to sell these puts to conserve capital.

  BRCM November 2010 $39 Calls
BRCM is looking good.  Their line of top-notch semiconductors for wired and wireless communications is invaluable.  All signs point to BRCM continuing its sensational run higher.  Hold tight for now.  Resistance is at $40 and $45.  Support is at $32 and $29.

  SBUX October 2010 $25 Calls
SBUX is hovering around $25.  Concerns about consumer spending are holding back the services sector.  But I’m optimistic positive news about jobs will spark a rally in SBUX. Aggressive traders should continue holding for further gains.  Resistance is at $26.25 and $28.  Support is at $23 and $22.10.

  JNJ October 2010 $62.50 Calls
JNJ’s building bullish momentum.  The stock’s still cheap and pays a solid dividend yield of 3.6%.  I’m expecting JNJ to continue charging higher.  Hold tight for now. Resistance is at $62.50 and $65.  Support is at $57.50 and $55.

  ASIA October 2010 $30 Calls
ASIA’s rally came to an abrupt end last week.  The company reported better than expected earnings.  But they also revealed the delay of several important contracts. This blindsided a lot of investors.  Many of them panicked and hit the sell button. Since the initial knee jerk reaction, ASIA has bounced back nicely.  In the long run, I think it’s a great company.  But short term, I don’t see the stock making any big moves.  Conservative traders should start looking for a good spot to sell these calls to conserve capital.  Resistance is at $29.50 and $32.  Support is at $18 and $16.

  CTSH October 2010 $60 Calls
Congratulations to the aggressive traders who held onto CTSH.  You were rewarded handsomely when they issued earnings guidance above analysts’ estimates on Tuesday.  Our call options quickly jumped to a peak gain of 278%!

Category: EOT Update

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