EOT Position Update – February 24, 2010

| February 24, 2010

February 24, 2010

Market Snapshot

All eyes are on Fed Chairman Ben Bernanke today.  He’s sitting down to talk interest rates and economic recovery with members of Congress.

As I write, I’m listening to Bernanke field questions from congressmen and women on the House Financial Services Committee.  I’m amazed by the number of stupid questions that come out of their mouths.

I physically cringe in embarrassment at some the questions they’re asking.  The ugly truth is many of them lack a basic understanding of economics.  And these are the members of Congress on the Financial Services Committee?!?  Ugh… Frankly it makes me a little sick to my stomach.

Moving on to a more positive note, Bernanke is fielding the questions like a pro.  He’s keeping his cool (which is more than I could do in his position) and he’s delivering his patient answers like he’s talking to a petulant five year old child.

The main message is the Fed will keep interest rates low for an “extended period”.

What exactly is an extended period?

I’m taking it to mean interest rates will remain low until business conditions in the private sector improve to the point they start hiring new employees.  That’s to say, until the unemployment rate starts ticking down consistently, we’re going to have very low interest rates.

And that’s exactly what the market needs to hear to justify higher stock prices.

Overall, I’m impressed by the Feds ability to keep their eye on the ball.  Bernanke appears to be focused on getting the economy back on track.  And he’s doing it despite the ignorance and political grandstanding going on around him.

Now for 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.

  INTC July 2010 $20 CALLS 
INTC is pushing higher since we recommended it two weeks ago.  Our option is now in the money and showing a very solid 45% gain!  The oversold conditions that made INTC ripe for a quick rebound have largely played out at this point.  Going forward, the improving fundamental picture should carry INTC and our option higher. The main catalyst for a higher stock price is the improving PC market.  Intel has an 80% market share of the chips used in PCs.  Hold tight for the next leg higher. Resistance is at $21.50 and $25.  Support is at $18.50 and $18.

  SWKS May 2010 $15 CALLS
SWKS got a boost from an analyst upgrade this week. The analyst said, “[SWKS] should continue to gain market share at handset and smartphone vendors.”  He also bumped his price target up to $18.  SWKS is looking good.  Our options hit a new peak gain of 40% this week!  Hold tight for bigger gains ahead.  Resistance is at $16.50 and $18.  Support is at $12.25 and $11.50.

  LVS March 2010 $19 CALLS
LVS reported earnings basically in-line with analyst estimates.  LVS’s move into Macau is paying off nicely and their Las Vegas properties have stabilized.  The news wasn’t good enough to provide the pop we were looking for though.  I still like LVS’s potential but we’re starting to run out of time on these options.  Start looking for an exit point over the next few weeks.  Resistance is at $21 and $25.  Support is at $15 and $13.

  NVDA March 2010 $15 CALLS (UVACC)
NVDA fell back to the support line of the uptrend after they reported earnings.  The future for NVDA is bright but time is starting to run out on our options.  Aggressive traders should start looking to sell into any rally NVDA can make over the next few weeks.  The next resistance is at $20.  Support is at $13 and $12.

***Editors Note***

Option Symbology changed on February 12, 2010.  That means a new method for identifying options is now in place.

What does this mean for you?  The old five character option ticker is a thing of the past.  It’s being replaced by a new option ticker format.

Here’s what it breaks down to.

The new option ticker will be expressed as:  Root + Expiration + Strike + Type.

Root = the ticker symbol of the underlying stock.
Expiration = the expiration date of the option.
Strike = the strike price of the option.
Type = call or put.

The good news is we already give you all of the information for the new ticker in the trade alert.  The bad news is the new ticker is going to be longer.  And to top it off, individual brokerage firms may generate their own tickers for use only on their platform. So make sure to check with your broker.

Category: EOT Update

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