EOT Position Update – January 25, 2012

| January 25, 2012

January 25, 2012

Market Snapshot

Apples and Obama…

The stock market is building on its bullish momentum.  The S&P is now up more than 11% so far this year.  And it’s showing no signs of slowing down…

Yesterday, Apple (AAPL) reported blowout numbers.  The tech giant simply crushed revenue and earnings estimates.  And to top it off, they gave upbeat guidance for this year.  The stock soared more than 7% to an all-time high of more than $450 per share.

The news added fuel to the bullish fire.

In fact, investors were in such a good mood, that even last night’s State Of The Union address from President Obama couldn’t derail the bullish outlook.  It’s obviously good to see investors ignoring the partisan bantering going on in Washington DC.

What’s more, investors liked what they heard from Fed Chairman Bernanke today.  The Fed chief said they’ll keep interest rates near 0% through 2014.  That’s a one year extension of the record low interest rates.  And Bernanke hinted that another round of QE could be on its way.

If nothing else, the Fed’s commitment to keep interest rates low should drive money out of fixed income investments and into riskier investments like stocks.  And that bodes well for the stock market and our call options.

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.

  BHI April 2012 $47 Puts
BHI dropped like a rock after our recommendation went out on Monday.  In fact, it dropped right through our $47.50 support and it nearly hit our $45.00 support on Tuesday.  Our put options soared to a peak gain of 41%.  Congratulations to everyone who captured these quick profits.  Aggressive traders should continue holding.  I think we’ll see BHI resume its downtrend and hit our $45 support in short order.  Resistance is at $52.50 and $55.00.  The next support is at $45.00.

  TGT April 2012 $50 Calls
TGT’s rocketing back from oversold conditions.  Our option reached a peak gain of 71% this week.  But the best is yet to come… Continue holding for bigger gains. Resistance is at $55.00 and 60.00.  Support is at $42.50 and $40.00.

  GLD March 2012 $166 Calls
GLD prices began to rise quickly after Bernanke gave the Fed update today.  Low interest rates and the potential of QE3 should boost demand for gold as a hedge against inflation.  Our option soared to a gain of 79% today.  We’re well on our way to capturing a cool double with these options.  Keep an eye on GLD as it approaches resistance at $170.00 and $176.00.  Support will be at $148.00 and at $140.00.

  CAT February 2012 $95 Calls
CAT’s absolutely on fire!  Our options have soared to an eye-popping 379% gain!Here’s the thing… the equipment manufacturer will report their 4th quarter earnings tomorrow before the markets open.  Aggressive traders still holding these options should look to capture profits tomorrow.

  TRV April 2012 $60 Calls
TRV shot through our $61.00 resistance level on Friday.  That’s our cue to take profits… Congratulations to everyone who captured gains of up to 91% on this trade!

Category: EOT Update

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