Pete V's Trading Options: January 2011

Monday, January 10, 2011

A Few More Stocks to Stalk this week

I will be keeping a close eye on the following stocks this week for trading opportunities.

AXTI
ATML
AREX
CY
LLTC
LVS
FFIV
MIPS
TMO
TZOO

Sunday, January 9, 2011

Taking a look at the Transports and a focus on Railroads

I mentioned on the Sector review video that we need Transportation to be healthy if the markets are going to continue their bullish treck. A pull back is expected and would be welcomed. In this video I am taking a look at the Rail Roads. I have traded them throughout the year and am currently in a CSX jan 62.50/60 put credit spread which will expire in 12 days and I will likely get to keep the full premium collected as long as the stock remains above 62.50 by expiry.

Ok moving right along. I am really liking,

NSC
UNP
CP
KSU

They are all very attractive on the monthly and weekly charts. KSU is a bit extended on the daily, therefore I will be looking to enter positions long on NSC, UNP, and CP, I will likely take 2 of these and look out to March and May expiration. Please watch the video link below for a better understanding of what I am thinking.

http://www.screencast.com/t/3hj4aTrt

Bullish Look on RRC

I am going to position myself long in RRC using Call Options. I am considering the Feb $45 call for $2.60. I also like the Mar $45 or $46 Calls, which give me a little more time. I do think this chart is set up technically and has a good possibility of attaining $50 in the next 60 to 90 days.

There was a ton of call activity that crossed the tape on Friday January 7th. They were going after the jan and feb strikes. The feb 52.50 saw 5435 contracts traded with a previous Open Interest of 0. So it is evident these were being bought to open. Now keep in mind they can be a hedge if attached with shares sold short.

RRC is in the Natural Gas sector and was downgraded on 1/6/11. Natural Gas prices have been depressed for quite a while now. We have seen a recent push up in Natural Gas prices but keep in mind that there is still an abundance of Natural Gas Supplies.

Aubrey McClendon, is (CHK) Chesapeake Energy's CEO. I consider him to be a sharp individual and a great leader. He invested a ton of his own cash into his company and because of the economic recession, Hedge fund, and Shorts pressuring the stock down, he was forced to sell his common shares because of margin call requirements, taking a large loss I presume. OK, the point I am getting at is, this CEO is confident in his company and its future. He invested a ton of his own cash in his company, which is one of the reasons I like CHK in the Natural Gas sector. Along with it being the largest U.S producer of Natural Gas, it has great management!!

CHK has also hedged about 96% of their Natural Gas production for 2011, Here is an interesting article.http://www.fool.com/investing/general/2011/01/07/chesapeake-finally-takes-its-foot-off-the-pedal.aspx

With that being said, lets get back to RRC. I mention CHK because I much rather own them or APA for that matter, but I am first and foremost a trader and RRC in my opinion offers a better technical setup at this time. I have enclosed a a video with some technical analysis and my thoughts on RRC.

Here is the link to the Video

http://www.screencast.com/t/iuNK9k0pagRz

Sector Review

Here is a video link to a discussion on Sector review

http://www.screencast.com/t/zPU3duMs

SPY, QQQQ, IWM, DIA

here is a link to a video on the major indexes.

http://www.screencast.com/t/ciEh2xKrt

Saturday, January 8, 2011

January Effects Results

Here are the results of the January Effects trades.

The Results may vary depending on the dates entered and exited as well as execution price. The results listed here are based on an entry of the closing price on Monday December 27,2010 and exiting the trade on Friday January 7, 2011's closing price. I also took 5 of these trades using call options and entered them after December 21,2010. Please feel free to look at the archives under January Effects posted on December 21, 2010

Security - Entry Price - Exit Price - P/L

AONE _ $9.71 _ $9.63 -0.83% Jan 10 Call in @.20 out @ .20

BYD _ $9.98 _ $11.92 +16.27% jan 10 Calls in @.45 out @.90 & 1.80

BPZ _ $4.62 _ $4.95 +6.67% Common Shares

BZ _ $8.15 _ $8.15 Unch Common Shares

FTK _ $4.35 _ $5.14 +15.36% Jan 5 Calls in @.70 out @.80 &.75

GMXR _ $5.56 _ $6.00 +7.33% Common Shares

HOV _ $4.01 _ $4.45 +9.89% Common Shares

LNET _ $4.00 _ $4.47 +10.51% Common Shares

MNKD _ $7.97 _ $8.20 +2.80% Common Shares

PMI _ $3.50 _ $3.74 +6.41% Common Shares

SOMX _ $3.15 _ $3.30 +4.55% Common Shares

SQNM _ $8.13 _ $7.70 -5.58% Jan 5 Calls in @.42 out @.84

SPF _ $4.44 _ $4.78 +7.11% Common Shares

SVU _ $9.26 _ $8.66 -8.08% Jan 9 Calls in @.50 out @1.00 &.80

STP _ $8.16 _ $8.28 +1.45% Common Shares

UTA _ $6.29 _ $6.37 +1.25% Common Shares

YRCW _ $3.71 _ $3.41 -8.80% Jan 4 Calls in @.24 & .14 out @.07

Largest % winner not including Call Options BYD + 16.27%

Largest % loser not including Call Options YRCW -8.80%

Total P/L not including Call Options +7.49%

6 total Call options

4 Winners

BYD
FTK
SQNM
SVU

1 Loser

YRCW

1 Break Even

AONE

Thursday, January 6, 2011

CRUS

I picked up a long March 17 call in CRUS today. The charts look very constructive and I am getting long CRUS as a derivative play going into AAPL earnings. I think this offers a low risk entry with a possibility of retracing to this past July's highs @ 21.20.

Weekly ToS Chart of CRUS

Daily ToS Chart of CRUS

Here is a link to a short video on CRUS

http://www.screencast.com/t/ey0MKlZHrF

Wednesday, January 5, 2011

PCX, AMD, BYD, CE, SID, NI, CSC, WCC

NI is in Diversified Utilities

Back on December of 2006 it put in a high of 28.03. I am taking a look at a Fibonacci study from that time frame using a monthly chart. I also am looking at the weekly and break it down to a close up of the daily. I am looking at this Using the monthly and weekly as I do all positions before breaking it down to the daily, 30 min, 10 min, 5min. For longer term positions I emphasize on longer time frames and since this is a July 20 Call option, I do just that. I use the daily and shorter tie frames to establish an entry. I picked up these call options today @ .25

With that being I have a 6 month target of the 78% retracement from the 2006 highs which comes in @ 23.70. The 61.8% retracement comes in at 20.30 and the measured move target from the recent Inverse Head & Shoulders comes in at 18.50.

So my targets are as follows,

First target 18.50
Second Target 20.30
Third Target 23.70
And Ultimately it would be nice to retrace the full 28.03, but I am not expecting that, but will manage it as time progresses.

NI Monthly ToS Chart

NI Weekly ToS Chart

Close up on the NI Daily ToS Chart

WCC is in the Industrial Equipment Wholesale space

In the summer of 2006 WCC traded at a high of 80.29. I am taking a look at the monthly, weekly, and down to the daily. This has had a great run in the last 4 months and it is now bumping up at the 61.8% retracement of the May 2006 highs which comes in at 53.82. This Fibonacci level is usually a level for pause or a possible pull back. I entered the April 55 Call option at 2.40 today with the expectation that this will continue higher and push up to at least the 78% retracement at the 65.46 level.

WCC Monthly ToS Chart

WCC Weekly ToS Chart

WCC Daily Tos Chart

Even though it is a bit extended on the Monthly I chose to enter this position today after seeing bullish activity on the options. Also, if you take a close look at the daily here you can see, it has a nice uptrend in tact and it has pulled back a bit to previous resistance level which looks to be acting as support as depicted by the horizontal red line and the green uptrend line. That gives me 2 probabilities that favor a low risk long entry.

CSC is in the Information Technology Sector

The Monthly chart is looking very constructive and one can identify an Inverted Head and Shoulders type pattern. The weekly chart also has a chart pattern of a more recent Inverted Head & Shoulders. It is at an area of resistance here and it might consolidate which would also be welcomed and would be fine as long as the uptrend line stays intact. On the weekly, you can see that there is a longer term uptrend line in tact and also in the last couple of months another shorter term higher angle uptrend is being formed. These uptrend lines are depicted by the dotted green lines. The Inverted Head and shoulders is also easily identified on the daily chart. It is at an area of resistance here. Great volume has been poring into this name. You can notice that on the days we push up volume surges. The last couple of days have seen very good volume and I feel if the 52 level can get taken out, there should be blue skies up to 54 followed by 55.
I have positioned myself to profit from a push up by the way of purchasing June 55 Call options. I paid 2.00 and 2.03 were my fills. The implied volatility is a bit juiced @ 26.63 in comparison to a Historical Value of 18.63. With a Vega of .13 the position can loose quite a bit with a volatility crush. ex. if the IV 26.63 falls to HV of 18.63, that would be a 8 point drop. You multiply those 8 points by the Vega of .13 and that gives you 1.04. So a Volatility crush would cripple the position by 50%. For this reason I took a small position and will evaluate methods for hedging the position if it starts going against me.

CSC Monthly ToS Chart

CSC Weekly ToS Chart

CSC Daily ToS Chart

Here is a link to the video

http://www.screencast.com/t/ypygYR0VSWNi

Tuesday, January 4, 2011

GNK

There was some interesting bullish action hitting the February 14 calls today.

Here is a link to a video with my thoughts and analysis.

http://www.screencast.com/t/enS3KYDn5FL

ATPG, BYD, GGB, MIPS, NFLX, NTAP, YRCW

Here is a link to the Video

http://www.screencast.com/t/GqYyxpiuHvh

Monday, January 3, 2011

MTW, WFT, BAX

I saw some very interesting option activity in MTW, WFT, and BAX. I will be stalking these names tomorrow and setting alerts on both down and upside. I will look to accumulate these names throughout the year as long as they stay intact technically.

here is a link to the video with my thoughts,

http://www.screencast.com/t/eoBBULz0

ATPG, BYD, FTK, NTAP, SQNM, SVU, YRCW update

Here is a link to the video,

http://www.screencast.com/t/VfgfKoxQ

Sunday, January 2, 2011

DNDN, HK, NFLX, NTAP, YRCW

Here is a video link to a couple of trades that are currently in the red and a couple of losers that got stopped out.

http://www.screencast.com/t/an82GJNm

DNDN Jan 38 Call, entry .88 stopped out @ .50 for a .38 loss

HK Jan 19 Call, entry .80, stopped out @ .32 for a -.48 loss

NTAP Jan 55 call , still long, currently in the red

NFLX jan 190/200 call spread, still long , currently in the red

YRCW Jan 4 Call, still long, currently in the red