EOT Position Update – November 19, 2008

November 19, 2008

Market Snapshot

The Dow just closed at 7,997.  We continue to trade in choppy markets.  The Dow just hit a new 5 year low…the last time we traded at these numbers was 2003.

The big news this week…

Hewlett Packard (HPQ) surprised the street with a positive earnings announcement.  I wonder if the analyst’s estimates were just too low, or if the company’s really outperforming in a horrible market.

At Yahoo (YHOO), Jerry Yang stepped down as CEO… finally.  Unfortunately I think it’s too late to revive the deal with Microsoft (MSFT).  Yang was quite successful at scuttling that deal a few months back.

InBev received approval to finish its acquisition of Anheuser-Busch (BUD).  Our most famous American beer brand is now owned by Europeans.

Japan is officially in a recession now…I don’t think anyone told currency traders.  They continue to bid the currency to new higher levels.

Goldman Sachs (GS) once again makes all of “Wall Street” look greedy.  This time it’s not their oversized bonuses, it’s their refusal to take them.  With salaries as high as $600,000 I guess they could give up a bonus or two.

Layoffs continue.  Citigroup (C) decided to cut a boatload of jobs… a little too late as the stock is now well under $10.  Speaking of cutting, Intel also cut their year-end sales forecasts.  Not good for the tech industry.

Now for the trade 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.

 SU January 2009 $17.50 Puts (SXHMW)
This was the new trade this week.  With continued weakness in oil prices, I expect the value of oil company shares to fall.  We’re showing a small gain in the SU trade already and I expect much more.  Give it a few weeks to develop.  Resistance levels are $23 and $25.50.  Support levels are $17 and $15.

  KSS December 2008 $30 Puts (KSSXF)
Today we had a nice move up in the option price.  Peak option value is up 149% so far.  Everyone should be showing nice gains.  We’ve broken the first level of support and are quickly approaching the second.  Resistance is at $38 and $40.50.  Support is $30 and $25.

  JCP January 2009 $30 Puts (JCPMF)
JCP continues its freefall.  We’re now well below $16 on the stock.  The option’s peak value is up 598%.  Only the most aggressive traders should still be in this option.

Parting Shots…

More subscriber questions:

“While I appreciate the great work, I don’t know how you can consider the [last] trade in the big winner column.  I immediately looked to enter the trade upon receiving the alert and the market was already above.” – Brian V.

Brian, thanks for the question.

First off, I appreciate your kind words.  We work hard trying to identify winning opportunities for all of our subscribers.  It’s good to be appreciated!

With that said, your question has to do with several different items.

First is trade delivery.  We post all new trade alerts to the website and e-mail them to every subscriber at the same time.  Unfortunately, the delivery of an e-mail can vary based upon a bunch of different factors.  Anything from the speed of your connection, to the ISP you use, to the time it takes for the email to reach your e-mail server.

It’s all quite complex and I’m not an IT guy.  That being said, we send our trade alerts to everyone at the same time.

Another factor is the markets.

Sometimes, buying pressure moves the price of an option up.  At other times market action will cause the price to rise.  Remember, we issue trade alerts during market hours. That means the price of the stock and the option are constantly shifting.

If the market’s moving in our direction, we can see the option price move up relatively quickly.  That’s why we give a buy-up to price with every trade.  We don’t want our subscribers to overpay for a position.

If you don’t get in right away, keep your eye on it.  Sometimes the price of an option will retreat.  You might be able to pick it up 24 or 48 hours later at a better price… it really depends on the market.

Lastly, if you don’t get in on a trade, don’t worry.  We’re constantly looking for new opportunities, and you’ll have another trade in your e-mail box in no time.

Hope that helps.

Category: EOT Update