TEN Exclusive: Options Update – 8/18/10
Wednesday, August 18th, 2010Today started off looking like the market was ready to give back yesterday’s gains but it steadily battled back and spent most of the session in positive territory. It was an extremely boring session but it was encouraging that the market kept its gains from yesterday. A good portion of the enthusiasm the past two sessions was derived from merger-and-acquisition activity.
The SPX challenged the 1100 level again today and failed to overtake the level. At this point it is too early to tell if this is the beginning of a march to 1130 or simply an oversold bounce. Trading was slow today as there are some important economic reports due out tomorrow, highlight by the weekly jobless claims. That report alone should move the market.
We are cautious but we are neutral at the moment. Tomorrow’s flurry of reports should help shed some light as to short-term direction.
Weekly Economic Calendar:
Thursday
- The weekly report on initial jobless claims will be released, along with the Conference Board’s Leading Indicators Index for July, and the Philadelphia Fed Index for August. Dick’s Sporting Goods Inc. (DKS), Dollar Tree Inc. (DLTR), GameStop Corp. (GME), Stein Mart Inc. (SMRT), Yingli Green Energy Holding Co. Ltd. (YGE), Aeropostale Inc. (ARO), Blue Coat Systems Inc. (BCSI), Dell Inc. (DELL), The Gap Inc. (GPS), Hewlett-Packard Co. (HPQ), Intuit Co. (INTU), Marvell Technology Group Ltd. (MRVL) and salesforce.com inc. (CRM) will report earnings.
Friday
- There are no major economic reports scheduled for Friday. Rounding out earnings for the week will be AnnTaylor Stores Corp. (ANN) and Hormel Foods Corp. (HRL).
New Trade Idea:
Buy Baidu (BIDU) September 82 Calls @ $4.20 or Better:
BIDU has traded down to the 20-day moving average and we should see a bounce from this level. We’re setting our entry below the current price as we may see some further volatility tomorrow. Let the option come to you. Use $8.00 as a target and $2.10 as a mental stop-loss.
Buy Aruba Networks (ARUN) September 16 Puts @ $0.75 or Better:
ARUN has had trouble breaking back above overhead resistance and looks poised to break lower form here. Use $1.50 as a target and $0.40 as a mental stop-loss.
Open Positions:
Research in Motion (RIMM) August 52.5 Puts @ $0.75:
We hit our target of $1.50 for a smooth 100% profit. Nice trade.
Chipotle Mexican Grill (CMG) August 140 Put @ $1.50:
Our stop-loss was triggered and the position was closed.
JP Morgan Chase (JPM) August 38 Puts @ $0.95:
Our stop-loss was triggered and the position was closed.
