EOT Position Update – January 13, 2010

| January 13, 2010

January 13, 2010

Market Snapshot

The stock market continues its steady advance.  The Dow, S&P 500, and NASDAQ remain firmly entrenched in their uptrend.

Improving economic data is doing its part to support higher stock prices as well. Everyone (including me) is keeping a close eye on the employment picture.  Even with the mildly disappointing payroll report last Friday, the overall trend is improving.

The big news today came from Google (GOOG).  The internet search engine giant said they may pull their operations out of China.

This isn’t a decision Google is making lightly.  They’re potentially turning their back on tens of billions in future revenue if the leave China.

This is the first foreign company (that I’ve heard of) standing up to the intrusive practices of China’s Communist government.  Up to this point, Google has gone along with the government’s censorship of internet search results.  It will be interesting to see how this plays out.

This outcome could have a major impact on future business/government dealings in the country.

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.

  LVS Mar 2010 $19 CALLS 
LVS is consolidating around $18.50 after its breakout above the downtrend line last week.  The stock and our options should continue to climb after a short period of consolidation.  We’ll see if the people are back to scratching their gambling itch next month when management reports Q4 ’09 earnings.  Hold tight for now.  Resistance is at $21 and $25.  Support is at $15 and $13.

  CSCO Apr 2010 $24 CALLS 
CSCO has pulled back to an area of support after breaking through the downtrend last week.  The breakout and pullback to support should set the stage for CSCO and our options to move higher from here.  Hold tight for the next leg higher.  Resistance is at $26 and $29.  Support is at $22.50 and $20.

  NVDA Mar 2010 $15 CALLS (UVACC)
NVDA’s impressive rally has been temporarily turned back at the $19 level.  Now the stock has pulled back to support of the 20-day moving average.  Aggressive traders should hold tight for the next leg higher.  The next resistance is at $20.  Support is at $13 and $12.

  SBUX Apr 2010 $22 CALLS (SSUDV)
SBUX shares fell back to support of the trend line earlier this week.  Then right on cue, SBUX reversed course higher today.  Never underestimate the power of a Venti Mocha Latte… Aggressive traders should hold tight for bigger gains ahead.  The next resistance is at $26.  Support is at $18.50 and $17.

  VIT Feb 2010 $17.50 CALLS (VITBW)
The bulls and bears continue to battle it out over VIT.  The $21 level has proved to be an area of heavy resistance.  Every time it looks like VIT has successfully overtaken this level, a ‘sledgehammer’ of selling sends it back down.  We still have another month before our options expire.  Aggressive trader should hold tight for now.  The next resistance is at $22.50.  Support is at $14.50 and $12.65.

  MOT Apr 2010 $10 CALLS (MOTDB)
The last few days sent MOT through our first support level.  Conservative investors may want to sell these options to conserve capital.  We still have plenty of time and a quarterly earnings announcement that could get MOT back on track.  Aggressive traders should hold tight for now.  Resistance levels are at $10 and 12.  The next support is at $7.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS was turned back at $32.50 for a second time in the last few weeks.  However, the trend lines and moving averages are catching up to the stock.  I wouldn’t be surprised to see MCRS consolidate at current levels for awhile longer before making another run at our next resistance at $33.  Support is at $25 and $22.50.

***Editors Note***

Option Symbology is set to change by February 12, 2010.  That means a new method for identifying options is currently being put in place.  Some of you will see it before others but February 12 is the cut off for all firms to be in compliance.

What does this mean for you?  The current five character option ticker will be 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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