EOT Position Update – September 19, 2012

| September 19, 2012

September 19, 2012

Market Snapshot

The markets closed slightly up for the first time in three days.

As I’ve mentioned before, I expect a slightly weaker market as it appears to not be able to go much higher for the time being.  So far we have seen small movement down with light volume, both characteristics of a pullback.

On another note, I added a trade Monday (see previous post) to take advantage of the rest of September’s flurry of good news coming out on pharmaceutical companies. This will leave us with positions in October that will increase in value even with a little move higher in the market or a little movement to the upside in the VIX.

On the home front…

The homebuilder’s index was up yesterday with two more housing numbers on their way.  These are the housing starts and existing home sales data.

We will also see the Philly Fed and weekly jobless claims Thursday, nothing on the economic front Friday, but don’t forget options expiration.

Now, technically speaking…

The S&P looks to be in a pullback, maybe to the 1,450 level.  We are still in a bullish trend and I anticipate a continuation after this pullback.  Remember, anything can happen so we must stay balanced in our portfolio.

September options will expire this week so make sure any positions taken respect the October time frame.  Let’s not think we have to trade the pullback, we can always wait for support to be established and trade the next move.

Bottom line…

It seems no matter what the domestic news is, the market continues its run higher. The only data that seems to affect the market these days is news out of Europe.

I think this is how it is going to be for the foreseeable future and we will trade based on this assumption.

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.

  NPSP October 2012 $9 Calls
NPSP is our newest trade.  I recommended it on Monday and it’s already up 17% in two days.  Congratulations for all of you who got in on Monday.  This pharmaceutical company is very ripe for an acquisition and/or an FDA approval that is scheduled right before the October expiration cycle.  This is one of the reasons the premiums are a bit elevated.  No worries, I have my eye on it and will update you as needed.  Until then, we are holding these options for something spectacular to occur!  Remember, we want this stock to rise in value.  Support is at $7.75 and $7.25.  Resistance is at $9.25 and again at $9.75.

  AXP October 2012 $60 Calls
AXP has been up as high as 45% since our recommendation.  Although it has come off of that level, we still have a profit in the call options.  And since we have six weeks until the October expiration, AXP has a very good chance of moving up and over our strike price of $60.  Time is on our side and we’ll take advantage of that moving forward as we watch this stock continue to outperform and profit from its rising stock price.  So, obviously we’re going to hold these call options for large gains!  Remember, we want this stock to rise in value.  Support is at $55.50 and $54.00.  Resistance is at $60 and again at $62.

Category: EOT Update

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