EOT Position Update – January 6, 2010

| January 6, 2010

January 6, 2010

Market Snapshot

The first week of the New Year got off on the right foot.  All three major averages closed higher on the first trading day of 2010… And all three are at new 52-week highs as well.  Hopefully this is a sign of good things to come…

The market rally sent five of our options to new highs in just the last week! Conservative and aggressive traders alike should be locking in solid gains to begin the year.

I’ll be keeping a close eye on one lagging economic indicator going forward.  It’s the key to transitioning from a ‘fragile recovery’ to one that’s more stable… it’s the employment numbers.

So far, hope and expectations of economic expansion have carried the markets higher. But in order for the economy to live up to expectations, we need to start adding jobs.

Right now we sit at a crossroads.  We’re on the verge of beginning to add new jobs.  If the job growth trend turns positive, the market should rock and roll…

Eventually we’ll run into issues of inflation and rising interest rates… For now, an improving job situation should keep the markets moving higher.

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 our most recent trade.  We sent it out yesterday.  Take a look at the trade alert email or the website for more details.  LVS moved higher yesterday and our option has already traded above the buy-up-to price.  Remember, we don’t recommend “chasing” the option past our buy price.  Be patient… If it pulls back in the next few days, go ahead and buy.  Otherwise, wait for the next trade.  Resistance is at $21 and $25.  Support is at $15 and $13.

  CSCO Apr 2010 $24 CALLS 
CSCO broke through its short term downtrend on high volume on Monday.  My prediction of “A breakout above the short term downtrend should send shares up quickly” proved to be accurate.  In fact, CSCO was able to reach and close at a new high for the rally.  Look for CSCO and our option to jump higher after a quick pause for investors to catch their breath.  We’re in the money on this option… Hold tight for now.  Resistance is at $26 and $29.  Support is at $22.50 and $20.

  NVDA Mar 2010 $15 CALLS (UVACC)
NVDA’s impressive rally over the last two months has sent shares up more than 60%. We’ve hit a peak gain on our option of 151% in a little under a month!  NVDA is consolidating between $18.50 and $19.  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 is consolidating just below the $24 level the last two weeks.  Conservative traders should have locked in a solid 87% gain!  There are two technical trends pushing SBUX higher.  As the trends rise and SBUX consolidates, we could see SBUX bounce higher triggering a breakout above $24.  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)
VIT is attempting to break out to new all-time highs above $21 today.  The intraday move cleared our first resistance level.  However, it was met with heavy selling pressure.  Conservative investors should lock in their 75% gains now!  Aggressive traders should hold on for the next leg higher.  The next resistance is at $22.50.  Support is at $14.50 and $12.65.

  MOT Apr 2010 $10 CALLS (MOTDB)
MOT closed right at our first support level last week.  Conservative traders may want to sell to conserve capital.  So far, support levels are holding.  The short term downtrend and the $7.75 support line are drawing closer together every day.  It’s looking like a breakout could be just around the corner.  Aggressive traders should hold tight to see if MOT can regain its positive momentum.  Resistance levels are at $10 and 12.  Support is at $7.75 and $7.

  MCRS Mar 2010 $30 CALLS (MFKCF)
MCRS is set up for another run at our next resistance of $33.  Over the last month, MCRS broke out above resistance.  Then it pulled back exactly to the breakout level. Now it’s moving higher again.  This is a very bullish chart pattern!  Conservative traders should already have doubled their money!  Aggressive traders should sit tight for the next leg higher.  Support is at $25 and $22.50.

  MMM Jan 2010 $75 CALLS (MMMAO)
Our 3M calls have already rocketed past both of our resistance levels.  The aggressive traders who are still hanging onto these options are now up a whopping 221%!  These calls are now deep in the money as 3M trades above $84. The uptrend is showing no signs of cooling off.  Keep holding for bigger gains.

***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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