EOT Position Update – July 14, 2010

| July 14, 2010

July 14, 2010

Market Snapshot

Optimism… It’s back!

Earnings season is underway.  And so far it’s giving investors reason to believe the economic recovery can continue.

Headlining the impressive earnings is Intel (INTC).  The semiconductor giant reported a monster quarter.  In fact, they recorded their best quarter ever!

The good news didn’t stop there either.  Intel CEO, Paul Otellini, said strong PC sales and business demand for new servers drove profits to new highs.  And he expects business to remain strong throughout the rest of 2010 and 2011.

Intel’s results and comments support a continued economic recovery.  It’s a very different message than what most investors have been expecting since the European debt crisis emerged.

If more companies follow suit, we could see investors come flooding back into stocks.

Remember, earnings season is just getting started.  There’s sure to be more fireworks as new earnings reports are released.

In fact, I’m working on a new trade for later this week.  So keep an eye on your email!

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.

  SBUX October 2010 $25 Calls
SBUX is our latest trade.  Since we sent it out last Thursday, SBUX is up about 5%. And our call option has shot up 46%!  We’re closing in on our first resistance level quickly.  Right now it’s bumping up against the 20- and 50-day moving averages.  If you’re ultra conservative, you might consider scalping a quick profit here.  But I think SBUX has plenty of room to run.  Aggressive traders should continue holding for further gains.  Resistance is at $26.25 and $28.  Support is at $23 and $22.10.

  JNJ October 2010 $62.50 Calls
JNJ is looking good since breaking out above $60 last week.  It’s since pulled back a little but this isn’t unusual.  We’ll often see a stock breakout, then pullback before resuming its uptrend.  Our option hit a peak gain of 65% already.  I think there’s plenty more upside.  Hold tight for now.  Resistance is at $62.50 and $65.  Support is at $57.50 and $55.

  RIG August 2010 $40 Puts
RIG is facing a lot of selling pressure around $55.  Investors are selling into every rally once RIG reaches this price.  And for good reason too.  Offshore oil drillers are facing a lot of uncertainty right now.  But our option is losing value as volatility declines and our option expiration date approaches.  Start looking for a good time to sell these options to conserve capital.  Resistance is at $56.75 and $64.  Support is at $40 and $35.

  ENS September 2010 $22.50 Puts
ENS is back up to the downtrend line.  This line has stopped ENS dead in its tracks the last three times it rallied.  I’m expecting ENS to move lower from here.  We still have plenty of time on these options so sit tight for now.  Resistance is at $25.50 and $27.  Support is at $20 and $19.

  ASIA October 2010 $30 Calls
ASIA’s momentum is building.  It closed above its 200-day moving average for the first time since May 10th.  Remember, ASIA is the number one software and IT solutions supplier to the three Chinese Telecom companies.  And ASIA is about to merge with Linkage, the number two player in the industry.  They’re poised to report strong earnings growth this quarter.  Hold tight for the earnings announcement in a few weeks.  Resistance is at $29.50 and $32.  Support is at $18 and $16.

Category: EOT Update

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