EOT Position Update – January 20, 2010

| January 20, 2010

January 20, 2010

Market Snapshot

It’s earnings season… that means expect higher volatility.

Remember, investor expectations, analyst estimates, and management guidance aren’t always on the same page.  This disconnect leads to wider than normal price swings.

So far, investors aren’t impressed with what they’re hearing.

The markets have seen heavy selling pressure two out of the last three trading days. All of the selling has pushed the Dow, S&P 500, and NASDAQ lower.  All three indexes are now testing the support lines of their uptrends.

Even with a couple of bad days, the market action over the last week isn’t setting off any alarm bells for me.  Remember, stocks had been rocketing higher for over a month. The S&P 500 ran up over 5% and the NASDAQ almost 7% since mid-December.

A minor correction at this point is healthy.  And it’s providing us with a good entry point to buy more call options… Keep an eye out for a trade alert later this week.

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 between $18 and $18.50.  The stock and our options should continue to climb after a short period of consolidation.  LVS is putting the finishing touches on a massive worldwide expansion.  I’m looking for management to give upbeat guidance when they announce earnings in a few weeks.  Hold tight for now. Resistance is at $21 and $25.  Support is at $15 and $13.

  CSCO Apr 2010 $24 CALLS 
CSCO is holding steady above a strong support level.  A combination of trend lines and moving averages should keep CSCO from falling below $24, even if the rest of market pulls back.  More importantly, analysts have been raising their earnings estimates for CSCO over the last few weeks.  If management delivers on the earnings announcement in a few weeks, the stock and our options should pop!  Resistance is at $26 and $29. Support is at $22.50 and $20.

  NVDA Mar 2010 $15 CALLS (UVACC)
The semiconductor industry has given back some of its gains recently.  It looks like a round of profit taking to me.  I’ve seen a few other chip companies release earnings that have blown the doors off expectations… I think NVDA should do the same. Aggressive traders should hold tight for the earnings announcement in a few weeks. The next resistance is at $20.  Support is at $13 and $12.

  SBUX Apr 2010 $22 CALLS (SSUDV)
SBUX reports earnings today after the markets close.  They’re expected to earn $0.28 per share with a whisper number of $0.29.  More important than the earnings will be management’s expectations for the future.  I think SBUX is well positioned to be one of the hottest growth stories of 2010.  If management has the guts to say as much, the stock should explode through our next resistance 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 continues to be an area of heavy selling pressure.  Aggressive traders still holding these options should start looking to exit soon.  The next resistance is at $22.50.  Support is at $14.50 and $12.65.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS has fallen back from its highs to just under $32.  Aggressive traders should hold out for the earnings announcement in a few weeks.  A good number or positive guidance could send MCRS through 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

About the Author ()

Comments are closed.