TEN Exclusive: Options Update – 8/11/10
Wednesday, August 11th, 2010Written by Dan Micovic
Look out below!! The market nose-dived today in what could be a multiple day sell-off. After the close, Cisco Systems reported disappointing earnings and forecast and the futures dropped quickly afterwards.
The market seemed to take the Fed Announcement in stride yesterday, but after the Bank of England announced similar conditions and couple that with disappointing news out of both Japan and China, well it turned out to be the perfect storm for a sell-off. It wasn’t just the U.S., the global markets sold-off as well. The VIX spiked above it’s 200-day moving average as the bulls ran for the door.
The Dow finished below its 10-day, 20-day, and 200-day moving averages for the first time in about a month and is now negative on the year.
As you know, we like to use the SPX as our key index ad today it broke several important support levels. It had put together a nice trend of over a week’s worth of closes above its’s 200-day average. It’s now sitting right at support and threatening to go much lower.
We believe we’ll see more selling early tomorrow and that eventually we’ll trend down to the 1060 level on the SPX. We will be aggressively adding puts if we get early weakness tomorrow.
Weekly Economic Calendar:
Thursday
- The weekly report on initial jobless claims will be released as will July’s import/export prices. The Estee Lauder Companies Inc. (EL), Kohl’s Corp. (KSS), O’Charley’s Inc. (CHUX), Royal Gold Inc. (RGLD), Sara Lee Corp. (SLE), Wendy’s/Arby’s Group Inc. (WEN), Autodesk Inc. (ADSK), Nordstrom Inc. (JWN), NVIDIA Corp. (NVDA), and Red Robin Gourmet Burgers Inc. (RRGB) will report earnings.
Friday
- The latest inflation data, with the release of the consumer price index (CPI) and the core CPI reading will be released. Also on the docket are July’s retail sales, August’s University of Michigan consumer sentiment index, and June’s business inventories index. Joining the earnings parade will be China TransInfo Technology Corp. (CTFO) and J.C. Penney Company Inc. (JCP).
New Trade Idea:
Buy JP Morgan Chase (JPM) August 38 Puts @ $0.95 or better:
Let’s play this downtrend in the financials for a quick pop. Use $1.55 as a target and $0.50 as a mental stop-loss.
Open Positions:
Green Mountain Coffee Roasters (GMCR) August 30 Calls @ $1.65:
We hit the target in today’s horrible market for an unbelievable 82% profit.
Baidu (BIDU) August 80 Calls @ $4.00:
Target hit earlier this week for a very nice double. 100% Profit.
American International Group (AIG) August 40 Calls @ $1.90:
This play was stopped out today.
NetApp (NTAP) August 43 Calls @ $1.90:
This play was stopped out yesterday.
