TEN Exclusive: Options Update – 2/10/10
Wednesday, February 10th, 2010Written by Dan Micovic
Yawn!! On the heels of a very volatile and exciting start to the week, today the market decided to take a break and catch its breath. Part of it can attributed to lighter than average volume, partly because of the bad weather that has swept across a good portion of the country. Part of it can also be attributed to a lack of a resolution of the situation in Greece. Federal Reserve Chairman Ben Bernanke did his part to stir up some action as he unveiled a few technical details of the central bank’s plan to unwind various stimulus measures. However, the Fed chief declined to offer a timeline, simply stating, “The sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments.”  Meanwhile, reports out of the European Union indicated that France will team up with Germany to piece together an aid package for cash-strapped Greece, further alleviating the threat of a potential default. After wavering between positive and negative territory, stocks eventually settled modestly lower.
Not much has changed in regards to market sentiment or direction since our update on Sunday but we should get a clearer picture of near-term direction tomorrow if, we get a resolution to the Greek crisis. We remain mildly bearish.
[private_Options Update]Weekly Economic Calendar:
Thursday
- Traders will get the weekly initial jobless claims, January’s retail sales, and December’s business inventories on Thursday. Akeena Solar Inc. (AKNS), AutoNation Inc. (AN), JA Solar Holdings Co. Ltd. (JASO), PepsiCo Inc. (PEP), Agilent Technologies Inc. (A), Buffalo Wild Wings (BWLD), Cheesecake Factory Inc. (CAKE), McAfee Inc. (MFE), and Panera Bread Co. (PNRA) will report earnings.
Friday
- Friday brings only February’s University of Michigan consumer sentiment index. PepsiAmericas Inc. (PAS) and Duke Energy Corp. (DUK) will report their earnings on Friday.
New Trade Idea:
Buy Vertex Pharmaceuticals (VRTX) March 35 Puts (VQROG) @ $1.00 or better:
The stock has broken a key line of support and looks intent on filling a gap back down to the $35 level. Be quick to take profits but we could see a double out of these calls.
Open Positions:
JP Morgan (JPM) March 38 Call (JPMCC) at $2.35:
Continue to hold. JPM has retraced to its support level and the 200-day moving average is approaching the 30-day moving average. With JPM at its 7-month low, this looks like a good entry point on the 38 calls for a nice short-term gain.
Whirlpool(WHR) March 75 Put (WHROO) @ $4.60:
Continue to hold. Whirlpool peaked in early January along with the overall market and has put in a series of declining tops which should ultimately take this stock to $70 and perhaps down to the mid-$60′s.
Research in Motion (RIMM) March 70 Call (RFYCN) @ $2.60:
Research in Motion is finally beginning to fill the gap from back in December. The next targets for the stock are $68.50 and then $69.70 on its way above $70. Continue to hold.
Apollo Group (APOL) March 60 Put (OAQOL) @ $3.30:
Continue to hold. The for-profit education stocks are beginning to rollover after student lending legislation stalled. Apollo is nearing its last major line of support and we could see a quick drop to its old support around the $58 level. Use a mental closing stop of $1.90 for the option and a rough target of $5.30.
Exxon (XOM) March 65 Call (XOMCM) @ $2.20:
This position was closed.[/private_Options Update]
