SPLS becoming a Staple in the portfolio... Call Options to Capture the Upswing!!

In my fortunes and follies of trading options I have learned to look for momentum, and finding momentum off of an unreasonable downturn to return to previous levels is my favorite kind of momentum. I have traded Staples before and have made some money off of the stock. The company has become undervalued and is looking for a good bump up a few dollars in the coming months.

A couple of things I like about the movement of SPLS is that it dropped suddenly on some bad news but it dropped off of positive momentum. After the drop it is quickly gaining steam on several days of upward momentum with growing volume well above the average trading for this stock. I think we are looking at a stock that will return to previous levels at or near $13 dollars in the coming months. 

The chart is simple but paints a good picture of a huge shift downward on bad news (an over reaction to news is not uncommon). But with building faith and good news on the company that is creating a positive outlook.  

I don't anticipate this being a long term trade, a couple of weeks at most, It may give back some of today's gains but having purchased some in-the-money call options I don't expect the option to be as volatile as the stock. What is important is maintaining upward momentum over the next few weeks and the in-the-money calls, especially those a long way out should benefit nicely. 

I'll let you know how it turns out!

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

13% in 8 Days!! Monster loss becomes our Gain!!

Monster has been on a huge losing streak the past 2 months. I spotted the channel at an opportune moment when the stock was just cresting on the upper resistance level. Purchased a $55 put option with a Dec 2012 expiration date. The stock was above $60 when I bought and has crawled down to $56 this morning. 

With such a short execution period I decided to take profits on this one early. I still believe this stock has a long way to go down and will probably be below $40 before this losing streak is over. But the number 1 rule in investing and one of my favorite Jim Cramer quotes "Bulls make money, Bears make money, Pigs get slaughtered." Don't. get. greedy.

Keeping an eye on MNST in the next few days could provide an inflection point. There is some support around the $53 level in the long term trends. The channel is strong enough that it may blow right through it and keep heading down, if it does I may get in on another put to get in for a long ride down. 

I'm trading such small amounts of money that the broker fees take a chunk out of my gains. What I bought for $420 cause me an extra $10 in fees and sold for $500 another $10. Losing $20 in profit on a $80 trade is no small thing and took my net gains to 13% on this trade after fees. 

20% Gross and 13% Net on a trade that lasted 8 Days!!! That is not a bad trade. Risky, yes, but profitable. My portfolio is on a big winning streak since jumping back in after my summer hiatus. On track to beat all major indexes for the year.

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

MNST Losing Its Energy

After a huge year of stock gains Monster Beverage Corp has been on a huge losing streak. It has gone from bad to worse and I think it has further to drop. Investigations into the claims made by energy drink manufacturers will at worst hamstring their marketing, and at least give the segment a lot of bad press.

I put in an order today for a $55 Put option with a Dec 22nd expiration. The stock is sitting at $59.48 today but if the current losing streak continues I will make a good return on this trade.

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

The bottom falls out of BBY! 32% gain in 2 Weeks!

BBY took a huge dive early this morning falling 10% in early morning trading. It has quickly rebounded and has gained 6% of it back. The 12% gains from yesterday quickly turned into 32% this morning as I was able to exit my $20 PUT option at the bottom of the 10% drop.

This is my favorite kind of trade. Calling the bluff on wild rumors and speculation. Best Buy needs a miracle, not an over-zealous founder trying to convince the public he has the financial backing to take Best Buy private. This stock is toxic and financiers are scared of losing their shirt on it. With the new CEO that has ZERO retail experience on top of that, Best Buy probably has a long way to fall. 

I sold my PUT option this morning to lock in solid gains. As one of my favorite blowhards, Jim Cramer, likes to say "bulls make money, bears make money, pigs get slaughtered". Don't get greedy with solid gains. I'm in this for quick in/quick out gains. Holding for too long in this market is asking for trouble. Options trade on momentum, get out while the momentum is in your favor. 

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

Best Buy (BBY) Tumbles!! Up 12% and Moving in the Right Direction!!

Best Buy (BBY) gave a lot of it back today. There was a huge 25% jump the other day on the speculation that Best Buy had the buyers to take it private. The smart money started betting against the buyout right away. That 25% dropped to 13% later that day as it started to sound to good to be true. 

I made the call after that jump that BBY would be back to $18 soon once the hype died down. Got a few more cents to go, but it looks like I was right. On news today that the buyout is beginning to fall through. BBY gave back the rest of the gains. Falling to $18.50 just a short way from my target. 

The $20 Put option jumped nearly 30% today as it has become clear that the stock will not be worth the $24 or $26 dollars that people were hoping for a few weeks ago. 

I will be hanging on to the option for another few weeks as I wait for it to find a bottom under $18. There seems to be a support level around the $17 dollar range and if it hits that level I may bet on the up side. Until then enjoy the ride down! 

I'm up about 12% on this trade in just a few weeks, think i'll hit 15% before the week is out. 

I'll let you know how it goes.

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

Hype pushes Best Buy 13% - Put options to ride the wave back down.

Did you hear the news today about Best Buy CEO saying he will maybe make an offer someday that he thinks might come in around $26 a share if he can raise the money from a bunch of people that haven't yet committed a penny to the cause. And then did you see the stock jump 25% on the hype!

BBY closed up 13% as investors started coming to their senses and taking the gains on the beaten and bruised stock. There have been a few of these spikes for BBY over the past few months but none have shown any legs what-so-ever. Expecting this one to be exactly the same.

Placing a conditional order based on the sale of my Jan 2014 $1 Sprint call option. If that one clears for the price I'm expecting an order will hit for a $20 March 2013 put option for BBY. This option lost 30% of its value today on the ridiculous hype. I'll get that back in a couple of weeks.

I'll let you know how it turns out!
 

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.

 

Taking Profits in Sprint (S) 104% gain on this trade!!

104% up on Sprint in the past 8 months! Not a bad trade. Got in on this around December when Sprint added the iPhone. It has been nothing but up from there. After beating on earnings a few days ago Sprint has formed a good exit point on this trade.

It is a good point to bring up that I think Sprint (S) is a great stock poised for long term investment growth over the next several years. The combination of huge subscriber growth on lower than average prices and unlimited data plans will lead to revenue gains in many quarters to come. But my strategy is not about the long term investments. I'm in the trading game and I think I may have found some other opportunities that present a bigger quick win opportunity.

The chart told a good story back in December as a solid support level was established near historical lows for the stock. The stock rode that support level for several months before subscriber numbers began to forecast huge growth. Sure enough, with a huge beat a few days ago the stock gapped again forming the solid exit we have today.

I am selling my Jan 2014 $1 Call to free up some cash for a new opportunity that has presented a quick win opportunity.

Thanks for reading!

Straight from the Chart 

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.