SVNT taken to the cleaners! Overdone or time to place a small long position?

I agree with most analysts on the street that the selling in SVNT was overdone to say the least! The stock closed down 44% on news that the Company was not able to secure a buyer. Now call me crazy, but haircuts like this don't take place in the biotech world if a Company isn't able to secure a buyout based on an APPROVED drug with very large future cash flow potential. Yes ladies and gentlemen, they have an approved drug and even though they did not get bought for a price tag many on the street were anticipating at north of $26, todays price action changes many things. For one, the stock is definitely something one can now be bullish on purely from a valuation standpoint at $12/share instead of $22 (where it was roughly trading at before the announcement today). Second, they will now likely market the drug themselves which will probably be discussed at an 830AM conference call tomorrow and could include a share offering. There's a few ways to make a bullish play on this stock. One can be long by selling puts and/or just buying upside calls/call spreads from the proceeds coming from selling the puts.

1- The December $12 put is yielding around $1.50 meaning u can pick up a 10% premium right off the bat if the stock were to stay in this range or tread higher (which is what I think will likely happen). If it were to close below $12 at Dec expiration, you would be forced to purchase the stock for $12 and pocket the $1.50 premium which isn't such a bad deal!

2- I would use the $1.50 premium and purchase a Dec 14/17 call spread which currently costs just $0.54 for $3 of potential upside if SVNT were to close above $17/share at Dec expiration. So basically I just used $0.54 of the $1.50 or so I picked up from my earlier trade and pocketed ~$1 NET NET for now if nothing really happened between now and Dec expiration. However, like i mentioned earlier, I think the stock will move higher once we get clarity on the Company's next steps so be prepared to potentially make a killing on this trade!

*** Remember the conference call is 830 AM tomorrow. Details: http://finance.yahoo.com/news/Savient-Pharmaceuticals-to-prnews-441253181.html?x=0&.v=1

Prepare for the Rally...long tech!

As futures point to a higher open today, it seems like once should continue to invest names that have been working. The tech sector has shown amazing strength and in situations where the QQQQ's are up significantly pre-mkt, how can I resist purchasing a tech-leader at the open. I actually like AMZN. The Company reported last Friday and despite the choppy action in the market, the stock closed higher on the back of some pretty amazing growth. What should we look at? I think there's a few different ways to get into this name. The way I'd like to play this would be to purchase upside calls on the weeklies expiring this week. Take a look at the $175 strike calls trading at just around $1. If the stock was to open at or near this, we could purchase 10 contracts for just $1k giving us upside on the stock above $176 at expiration. We probably don't even need to wait that long. If the market pushes higher today and the stock closes in the 173-174 range, I don't see any reason why these calls would not double.

BIDU reporting this week 10/21...whats the trade??? Weekly Call Options!!!

I've been watching the weekly calls on BIDU today and the 115 strike looks particularly interesting. It's up above 80% from Fridays close which is spectacular! I'd buy them for $1.80 and hold on to them for the next day or so. If the stock touches $107-$108, They will likely double again and I would take my initial investment off of the table and let the rest ride until they report. This could set up nicely but be careful as the weeklies expire this week! However, its a cheap way to play the earnings this week which have resulted in some 10% plus moves to the upside.

Apple earnings on Deck tomorrow....Net Long options position with downside protection!

As you all probably know by now, Apple is set to report their earnings after the bell tomorrow. Most on the street expect extremely strong earnings but thats not the real question. The stock has gained over 50% this year and the stakes couldn't be higher tomorrow. Not only does Apple have to beat expectations, but they have to beat them across all categories for the street to justify another lift in share price. Personally I think that apple shares will continue the rise and may even touch $330-$335/share after hours. However, I am definitely recommending protecting your net-long position against any selling of the stock.

I am particularly interested in the 330/340 November Call spread costing us close to $2.6. This means that if apple was to close above $340 at November expiration, we would profit almost $7.90 from this trade. Who doesn't love 3x plus trades?!! But thats not all. I am tempted to purchase some downside puts to participate (and protect our call-spread) by purchasing downside puts on the weeklies at the $290 strike just costing $2.09. If the stock were to collapse on back of some unexpected news, we would stand to make a killing! Do I expect that to happen? Probably not. However, whats a few bucks to participate on any downside action in the stock :).

Long Google!!!!!

October, Nov Calls should be very active today on back of the massive rally in Google shares after the reported yesterday after the close. I'm particularly interested in the Oct 600 strike and the November 630 strike.

Keep the Casino Trade On!

The Casinos continue to be on fire with LVS, WYNN and MGM leading the charge. I continue to be a firm advocate of LVS and WYNN from a bullish perspective. Charts show that they still have plenty of upside potential remaining. Gaming revenues in Macau continue to astonish investors. The call options on both stocks show alot of bullishness. I like the LVS $45 call options trading at $2.13 and the WYNN Nov 120 calls going for just $0.70. I believe 100% moves to the upside in call option pricing for both names is still very possible.

There goes Cloud, but here comes Apple!

I think the cloud trade is over for now but for those of you still looking to place trades on technology, how can you not put some money into the premier name in tech...Apple! The stock is clearly breaking out and with the Streets analyst placing price targets well above $300/share (one just placed a target of $400 recently), its hard not to get involved. I've found some particular interest in the November $330 call strikes. That's ~16% away from where its currently trading at, but I believe that Apple will break $300 before they report next week. I think this could result in a 30-60% move in the option to the upside which is currently trading at $2.90 per contract. Futures are down and tomorrow may provide an excellent entry point to get long Apple options going into earnings. Good luck everyone!

Is it over for Cloud Computing? I don't think so..and Goldman agrees!

So with the recent sell-off in all the could computing stocks, what should we do? The two most interesting in this group are VMW and CRM. Both have been up significantly this year and a pullback should not be treated as an opportunity to exit them. Instead, it gives us a great chance to buy them. How would I do this? Well, to buy 1,000 shares of CRM even at current levels, it would cost $105,000. That's alot of dough. The option chains provide a much cheaper way to participate in any upside in the stock to follow the brutal selling.

The trade? Let's take a look at a short-term approach:

Short-term:

Look at the Oct 110 strike calls that expire in about a week. They are currently trading at $1.20 and any upside in the stock north of $2-$3 would mean at least a 50% move in the option. Remember guys, to participate on the equivalent of 1,000 shares of upside in the stock, we are only shelling out $1,200 (versus $105,000 worth of stock)!

LVS still has legs!

Casinos continued to rally as investors couldn't get enough casino stocks with exposure to China. Names that did particularly well included Wynn Resorts (Wynn) up 4% and Las Vegas Sands (LVS) up 3.6% on very large volume. LVS traded 39 million shares which is nearly 30% higher than its average volume. On a day where the S&P 500 traded lower by almost 1% shows that these guys have plenty of room to run. So, I'm going to make a fairly low risk bet buy suggesting a call strike waaaay OTM. I'm going to go after the $45 strike upside calls expiring Jan 2011. These guys are currently trading around $1.20 and I think that a double is well within reach. I see this stock going to $40/share in the very near-term (within the next 30 days) if this bullish action continues. If that were to occur, B-S suggests these guys almost doubling. Should we hold our for a deuce? No, take 50% upside and run! ;).

Buy Atmel Stock NOW!

Not only is the Company trading near its 52-week range but the stock reportedly has a $12 price target by Jeffries. If you've been following Atmel stock like i have for the past 10+ years, You will realize that the Company's stock seems to have very bullish momentum. The guy at Raymond seem to agree and say the following:

"After two days of meetings with Atmel’s management last week we came away with significantly increased conviction on the Atmel story,” he writes in a research note. “We are upgrading ATML … based on increasing secular momentum in the broad-based 8- bit and 32-bit [micro-controller] markets and also the rapid market share gains in next generation multi-touch screen applications in smartphones and tablets.”

They have put a $12 price target on the which I think is very achievable. Now I know that a $7.80 stock is not what one would define as "expensive" but there is a cheaper way to participate in potential upside in the Company. Take a look at the March 2011 7.5 strike upside calls trading at $1.05. Your break even price at expiration is around $9 but I believe that the bullish momentum this stock is experiencing will propel it to much higher level. I would not be surprised if we see the stock move towards $12/share by Jan or Feb of next year before it starts to become attractive to potential buyers. Semi's are a hot commodity right now and underpriced companies like Atmel would be an asset to many players...especially those looking to leverage the boom in touch screen technology which Atmel provides products for.

Switch Oct Apple 300's with Apple 310's

I believe the market is in for a breather for the next few days and though we could see a pullback in Apple as well, I prefer not to take Apple off the table completely as I continue to believe that the stock is breaking out and will continue to do so as we approach their earnings report next month. The Apple $300 calls closed at $3.80 while the $310's closed at $1.80 meaning that we can leave an apple trade on with half the cash we would need if we leave the Oct 300 strike on. I would take half of the profits left over from the $300 strike and buy the $310's. If apple continues to break out and successfully breaks $290 tomorrow, these calls would appreciate nicely as well. I think we still have a good 40-60% upside on these calls just on another $3-$5 move in the stock over the next few trading days.

ADOBE HAMMERED OVER 21% AFTER LOWER THAN EXPECTED FORECASTS

Once again the market may have provided us with an opportunity by terribly overdoing the sell-off with Adobe. Sure, the forecasts were lower than expected and Apple is also hurting them badly but if you notice the stock is currently trading at levels close to its 52-week low. So far the 52-week low level of $25.81 has held. If it were to break that level (meaning close below it), then all bets are off from the long-side and you are probably better off selling your position (which I would recommend be a small one). However, if we are able to hold this level and close above it for a few days as the stock consolidates over the course of the next few days, we could see a run to $28/share. So how should we play it? We could just buy the stock outright but I would less inclined to do so. I would purchase the Jan 2011 $28 strike call option trading at around $1.45 currently. If the stock was to make a run to even $27/share over the next few trading days, I believe we would see a substantial (possibly over 20%) rise in the price of the option. Not bad for $1.45 trade is it?

Buy the Aapl October 300 calls NOW!

Apple is trading significantly higher today on back of the news that Google docs will now be made available to edit on the Ipad and the Iphone will start selling China this week. The stock is up nearly 3% and the 300 Oct call has nearly doubled today. With 4 weeks still remaining in the expiration of this option, I think there is plenty of room to make money here. Do I think Apple will cross 300? Maybe, maybe not. But remember, it does not have to do that for us to make money. We will take advantage of the "time-value" of the option and leverage any further upside moves in the stock (and hence the option) to profit from it. I think a run to $290/share is very likely this week alone which could result in another 30-50% move in this specific strike. For those of you still hesitant from spending $2.20 on the 300 strike can go after the $310 strike for just under $1. This is definitely also going to show strength if the apple touches or clears 290 this week. Many apple investors have been waiting for this move. The stock not only cleared its 52-week high, it blew past it signaling a very bullish trend that many believe can take the stock to well over $300/share (inching closer to the analyst price targets that go as high as $360+). I'm not the only one that is suggesting a bullish trend on the stock to continue. We had over 100,000 options trade on the call-side in apple with the 300 strike as the most active with over 30,000 contracts alone!

Ok, guys, here's our chance to get in on apple at an extremely low entry point with a very bullish signal in place. Let's take advantage of this and get on the bandwagon.

SVNT IMPLIED VOLATILITY ON FIRE....IS THE MARKET ANTICIPATING A BUYOUT? SEEMS LIKE IT.

Hello folks. Just thought I'd give you all a heads up on svnt. The stock is somewhat neutral (in relations to yesterdays closing price) but the Implied Volatility is screaming to the upside. The Jan 11 22.5 and 25 strike calls are up nearly 20-30% based on this alone. I don't know if the market will begin to price the stock accordingly but my I suspect that it may. In either case, the options market seem to suggest a buyout happening relatively soon in the $25-30 range which is on the higher side of the price targets initiated by the various Equity Research guys. In either case, anything north of $26 would create a massive profit for even our Jan 11 $25 strike calls.

ORACLE BEATS WHILE RIM RETREATS OFF ITS HIGHS.....BUT TRADE APPLE :)

This is what headlines (in relation to Oracle's earnings) look like: "Oracle Corp. (NasdaqGS: ORCL - News) has reported fiscal first quarter 2011 earnings results after the bell Thursday, and the much-anticipated report did not disappoint Oracle investors. Citing strength in new software licensing, Oracle reported a 50% jump in revenues (non-GAAP) to $7.6 billion in the quarter. This amounts to an EPS of 42 cents per share, easily beating the Zacks Consensus Estimate of 35 cents.".

So what the trade? From the long-side, I'd actually use the opportunity (in the potential jump in the tech sector on back of the Oracle news) to look at Apple. Why Apple? Because its the best Technology Company out there and more importantly, the option pricing provides an attractive opportunity to make some $$$$. I like the Jan 2011 300 strike call options. They are trading at around $10.50 at the bid and the stock is at a technical crossroads. It's extremely close to its 52-week high $279.01 and I believe that if we were to take that down, this would ignite a further rally in the stock both from long-only investors and short covering. Most of Wall-Street have Apple's 1-year price target pegged at $320-360/share and I believe that we can see $300 share easily going into Q3 earnings. That could mean a handsome return for Jan 2011 Calls which don't expire for a few months after that.

Below is the trade:

Buy: Jan 2011 Call Option
Strike: 300
Price: ~ $10.50

Strategy: Buy if we break our 52-week high and hold until next Q earnings.

SVNT ON FIRE!!! OPTIONS GOING BAZURK AND NO SIGNS OF SLOWING DOWN!!!

Shares of the Company are up almost 35% on news that the FDA approved its gout treatment. "The FDA approved Savient's Krystexxa for the treatment of hard-to-treat gout in adults." as reported by Marketwatch and a flood of other news agencies. I've looked at the price target increases and they are up HUGE across the board today. They range from $22 to $26/share on speculation that SVNT is a prime takeout opportunity from some of the larger players.

I'm taking a particular interest in the Jan 2011 22.5 strike currently trading at $1.26 and the Jan 2011 25 strike at $0.55. I think that SVNT has some more room to run (even if it is not taken out) and could see some more positive momentum over the next few days pushing the pricing of these calls higher.

Hardly an interesting day overall, but interesting enough in Tech!

The Dow and S&P spent most of the trading day see-saw'ing around positive and negative territory before closing slightly negative for the session. However, the real money was made in technology AGAIN....anyone see a pattern here? :)

Once again Priceline defies odds by moving higher and is taking the poor unfortunate souls caught between a short squeeze to the cleaners. The fact that the stock still has a considerably high short interest, I continue to believe that along with strong fundamentals of the Company will continue to push the stock higher. The guys at Benchmark Co agreed and this morning raised their price target from $320 to $384!!

So how do we get a piece of some of this action? Trying to buy just 1,000 shares of PCLN will cost us in the neighborhood $335,000!! Any guesses on what other "Options" we have? You got it, we're going to check out the option chains! :)

The October 350 strike is currently trading at a Bid of $9.60 meaning that 10 contracts (representing 1,000 shares of potential upside) would cost just $9,600 + commissions. Not bad is it? However, if we sell the $360 strike against it (creating a call spread), our net trade would cost us just $3.10 but also capping our upside at $10 or close to 3x! Who's complaining??? :)

Ok so here's the trade:

Buy: Oct 350 @ $9.6
Sell: Oct 350 at $6.5
Net cost of Spread: $3.10

Max Upside: 3x!

Is Visa undervalued? Bulls are making the case that it is!

With V well below its 52-week high and a business model that carries little risk towards the financials (when compared to a Citibank of a BofA), its hard not to look at this Company a bit more curiously. Remember, Visa does not issue credit/ That is the job of the bank or institution.

Now back to the Options! Today, the Call Options are looking very attractive behind the Bernstein downgrades. I believe the market is clearly over reacting, which in turn, has created a potentially profitable opportunity for us here :). I'm particularly interested in the Dec 2010 $75 strike and Jan 2011 $80 strikes. Both strikes are trading close to 50% and 60% respectively below their trading prices on Friday.

For those of you that are interested in spreads, selling the next higher strike in relation to the one purchased earlier would provide the best bang for the buck. The Jan 2011 75/80 call spread can be purchased for just $0.83 for a possible $5 of upside if it were to close at or above $80/share at Jan 2011 expiration.

I would even go one step further and also sell a Jan 2011 $50 put currently giving us $1.07! Not only would this make our Call spread FREE, it would give us a $0.24 credit :).

So let's summarize this below:

The Trade:

Buy: Jan 2011 $75 Call
Sell: Jan 2011 $80 Call
Sell: Jan 2011 $50 Put

Price of Spread: $(0.24) CREDIT
Upside Potential: $5!!!!!!!!!!!

Is this rally sustainable? The bulls sure seem to think so! Time to check out Google!

Given the oversold conditions the market has been experiencing over the past several weeks, this rally could have some legs. I always say that when everyone in the market is bearish, its time for you to turn bullish and vice versa. Where do I think the best opportunity lies to capitalize on an upswing in the market while minimizing downside risk? I believe technology offers the biggest bang for the buck. Flushed with cash and hence, meticulous balance sheets, many technology companies could ride this wave higher beautifully. Today let's look at Google (symbol: Goog). While Google has significantly underperformed its peers this year, I believe that for this reason the Company is poised for a considerable rally. By putting their cash chests to work, Google is clearly positioning itself as a market leader (both through acquisitions and internal infrastructure investment) and the Options market allows investors to cheaply take advantage of the rally this stock is poised to experience (in my opinion).

Let's take a look at the Jan 2011 550/600 Call spread. This spread costs just $4.90 with almost $45 of upside!! What does this mean? This means that 10 contracts cost just $4,900 (+ commissions) for almost $45 of potential upside if the stock were to close at $600 at Jan 2011 expiration which is over 4 months away. Now does the stock have to close at $600 to make money? Of course not, we would be more than happy with a close of $590 :). But in all seriousness, if the stock were to push $500 within the next few weeks, we could easily see a 30% - 50% appreciation on our initial investment.

I have highlighted the specifics of the trade below:

Stock: Google
Strategy: Buy 550/600 Call Spread
Cost: $4.90 (based on yesterdays closing price)
Maximum upside potential: ~$45 or 9X!!!


I this trade still too expensive? We can sell the the $360 strike Jan 2011 put for a credit of $5.10 making the above trade almost free!! Whats the downside? It's that you would have to get long the stock if it were to close below $360 by Jan 2011 expiration which is almost 26% lower than the $470 Google is currently trading at. That wouldn't be such a bad entry point now would it?!

Apple Sept $270 Call (Weekly's)

This looks particularly interesting given the strong move in apple today. It's trading at just $0.25 and has already traded close to 1,600 contracts.

Salesforce (CRM) September Call-Spread/Put Write looking very attractive

With the market in alot of uncertainty at the beginning of the trading week, there's one thing for certain. That is, people still love cloud computing and the action in CRM yesterday proved just that! With the S&P500 down over 1%, CRM closed flat. I believe the stock is in a consolidation stage and will soon be ready for its next leg higher!

An interesting opportunity lies within the September 125-130 Call spread. This trade allows you to take advantage of the low option pricing with under 2 weeks left until expiration. And what makes us want to put on this trade? It's not just the bullish uptrend this stock is experiencing, its the PRICING of this call spread. It can be purchased for just $0.75 with a potential of $5 of upside if the stock were to close at $130 and options expiration. But that's not the end of it, one could then sell the $110 strike for almost $0.70 essentially making the trade as close to FREE as possible (the trade would only cost about $0.05). I think realizing the full $5 at expiration is unlikely, but a move upward in the stock of only 2-3% over the next few days could result in a handsome return on this trade (potentially as much as 50% - 100%)!! I also believe that getting put the stock at $110 is unlikely and if that were to occur, it would create a handsome opportunity to be long the stock.

Summary of the trade:

Trade Type: Purchase 125/130 Call-Spread, $110 put write
Price: $0.05
Max Profit: $5.00
Time to expiration: 10 days

U.S. Steel Takeover Target?? Option Activity through the Roof. Cheap plays!!

Wall St is betting that a takeover is potentially in order for U.S. Steel (X). Heavy option activity in strikes far as far out as $70 means that there's a cheap way to take part in this bet that a takeover could happen.

How can we do this CHEAP? I have two interesting scenerios (based on the Sept Calls):

(1) Purchase a call outright Out-of-the-money (OTM). I particularly like the $60 strike currently trading $0.23. If one was to purchase 10 contracts, it would cost them $230 (plus commissions). If the buyout was to occur around $70/share, which is reasonable assumption, you would stand to profit $10,000 (give or take depending on your commission structure with your broker). However, if you were to purchase 1,000 shares (the equivalent of 10 contracts), your cost would be $$48,000! This is why people use options :)

(2) We can make this trade even cheaper by selling calls at a higher strike (same number of contracts, in this case 10, based on the hypothetical trade listed above) and creating a spread. The $70 strike looks particularly interesting since there's a $0.12 premium associated with it. Therefore, if you were to sell the $70 call against it, we could get a credit of $0.12 meaning our total trade would cost us just $0.11 !!!!! Not bad at all. A $110 cost would result in potentially a $10k profit (not taking into account commissions) based on 10 contracts.

NFLX LOSING STEAM?

NETFLX has had a huge positive run over the past week (almost 20%) on the back of the Apple TV news. Many analysts believe that the stock has more room to run. However, while I am positive on the outlook for the company I agree with my friends at Seeking Alpha that the company is overvalued.

http://seekingalpha.com/article/223782-netflix-defying-the-laws-of-gravity?source=yahoo

They believe that given a meaningful pullback (which I believe may have started today) would result in a better entry point from the long-side. We can wait for that to happen, but until it does, there may be an opportunity from the short-side to take advantage of a near-term pullback in the stock. Over the past 5 days, the puts have been absolutely hammered. They provide us with a low-risk opportunity to take advantage of any pullbacks on the stock.

Which puts look attractive? Here's what I think:

I suggest looking at the Oct 130/125 put spread which costs around $1.60 giving us the opportunity for $3.40 in upside. Do I think that we'll be able to max out our opportunity here? Probably not, but I think a 50% and even possibly a 75%-100% profit is very achievable.

Great job numbers...BUY Las Vegas Sands!!!!

High beta names such a LVS and WYNN should do wonders in an up-trending market. I believe a covered call strategy on both names could provide some very good, low-risk returns. Both names are considered best-in-breed in the sector and their considerable exposure to China makes them attractive investments.

Since, we love options, I'll get to the point. Here's the trade:

LVS: Purchase the Jan 2011 $40 strike for $0.83c. I believe that this call will appreciate considerably as the stock moves towards $35/share over the next month or so. Another option is to create a spread by selling the $45 strike against it and picking up $0.30 cents in the process resulting in an overall cost-basis of just $0.53c for a possible ~ $4.50 return if the stock was to settle at or above $45/share by the end of Jan 2011.

DNDN trade is back on!!!!

Buy the stock!

Some of the overhand on the stock concerning medicare issues seem to have lightened up.

WSJ: "Shares in Dendreon rose more than 6% after Medicare authorities scheduled a Nov. 17 meeting to consider coverage of the company’s Provenge prostate-cancer treatment — and investors concluded the question of whether or not to pay for the therapy was not an issue."

This means the risk trade on the stock is back on! I saw this stock trade in the 50's before this whole mess with Medicare started. There's no reason for this stock not to move back to this range. 

How should we play DNDN? Look into a covered call strategy or sell puts ATM to take advantage in the uptrend behind this stock. I believe selling an ATM put at current price levels will likely result in the stock not being "put" to the investor. If that were to occur, the elevated option premiums would create an interesting opportunity to create income/reduce cost basis by writing calls against your position.

If we are exceptionally bullish,  I would take a look at the OTM options. The October 50 STRIKE did very well (more than doubled today) and will likely continue to trend higher. I think its possible for it to double once more over the next few weeks. 

The trade? Wait to see if the stock pulls back tomorrow and if it does not, take a look at the October 50 strike CALLS or the ATM puts!

CRM on FIRE!!!!!! Options still providing opportunity!!!!

Not only is the stock trending drastically higher, the options (naturally) are doing the same (this stock is up over 10% over the past 5 days). Some interesting option strikes to look at are the Sep 125 and Sep 130 CALL strikes. Granted they both are expiring over the next few weeks, I believe that this stock has plenty of room to move higher. Another 6-7% move in the stock over the next few days would result in a healthy increase in premium of these calls (in my opion 50% or more of a profit premium would not be impossible but LIKELY).

Of course the likelihood of the Sep 130 calls increasing over 50% in value is much higher than the 125 strike. For those of you who are conservative in their approach, consider a spread.

An interesting spread to look at is the SEP 120-125 which is going for $1.76. If the CRM closes at or above 125 at expiration (in 2 weeks), you would stand to recover $5 which is over a 100% profit!!!

I also believe that the market is going to trend higher for the next few weeks (due to its drastically oversold conditions) in which case CRM could continue to rally. Is $125/share in the cards for tomorrow? Wouldn't be impossible but I think $122/share is more likely if we get a rally behind the unemployment numbers we're going to get early in the morning.

Burger King bought out for $24/share

Selling a $22-$24 put (whichever will give you a premium at the open) would be a good trade considering the likelihood of this transaction closing is very high.

The premiums will be exceptionally low at the open but its pretty much free money at this point. As the day progresses, the value of the options will keep decaying so getting in early is the best way to go!!

Futures look flat

First half of the trading day might be a good time for an Iron Condor trade on the weekly SPY.

Stay tuned....

WOW, WHAT A DAY!!!!!

DOW: UP 2.5%
NAS:  UP 2.97%
SP:      UP 2.95%

With all of the negative sentiment out there, its hardly a surprise the way the market rallied.

I think an Iron Condor trade (on the weekly SPY) is in order:

Trade: Write Iron Condor
Time until expiration: 2 days

SELL:  111 CALL
BUY:   112 CALL

SELL:   107 PUT
BUY:    106 PUT

PREMIUM: ~ $0.21 if you can hit the MID!!!

RETURN IS 27% (BASED ON A $210 PREMIUM WITH $790 IN CAPITAL AT RISK) BASED ON 10 CONTRACTS TRADED.

SHORT-COVERING RALLY OR SOMETHING MORE?

In my opinion, as you know, the market was oversold too fast. Although I still believe the general macroeconomic environment is still shaky, I believe the risk has now (albeit temporarily) shifted to the upside. Those of you that are short the market, be careful as this relief rally could last for a few days.

Given this, my trade for the day is (drumroll please)....

None other than PAR!

There are new reports that Dell is not ready to bow out of the race just yet. If Dell decides to Match HP's $30/share offer, I believe that HP will come back and bid $32.5 or possibly even $35. So whats the trade?

1 - Go long the stock OR
2-  Jump right into the options :)

I would purchase what we refer to as a call-spread. I would buy the $35 option and sell the $37.5 which creates a spread. You net price to purchase the option is just $0.25! Not a bad bet if the bidding hoopla continues for a few more days. If not, what the heck, it's $0.25!!

Be very careful out here guys. We've got a volatile week coming!

http://biz.yahoo.com/c/e.html

WEEKLY SPY - IRON CONDOR HITLIST

POSSIBLE TRADE:

SELL CALL: 110 STRIKE
BUY CALL:  111 STRIKE

SELL PUT:  102 PUT
BUY PUT:   101 PUT

EXPIRATION: FRIDAY 09/06.

PREMIUM: $0.17 @ MID  OR A 15% RETURN FOR THE WEEK!!!!!!!!!

EXPLANATION: CURRENTLY THE SPY IS TRADING AT 106.7 MEANING THAT WE HAVE A HUGE RANGE TO WORK WITH HERE.

3PAR on Fire!!!! Options Action!

The stock is trading well above the increased HP-offer of $30/share in anticipation of Dell coming back (again) and increasing their bid.

Here's some interesting ways to play this activity:

1. Write the Sep 30 put for a $0.15-$0.20 premium and use the proceeds to buy the Sep 37.5 call for $0.20-$0.25 creating almost a free trade. This saga may still have some legs and could result increased options activity potentially driving up the latter strikes.
2. Another option is to just buy the Sep 37.5 call @ outright given the low price!

Sept Expiration (HPQ)

HPQ:

Action: Write PUT

Strike: 37
Premium: $0.77 premium

Logic: Stock is beyond oversold behind the departure of the CEO. I believe selling this strike and holding the stock for passive potential covered call income offers tremendous opportunity.

OPTIONS ACTION

IRON-CONDOR (WEEKLY SPY)
EXPIRATION: THIS WEEK (FRI, AUG 27TH)

TRADE:

SELL CALL: 106
BUY CALL: 107

SELL PUT: 103
BUY PUT: 102

PREMIUM: $0.26 (@NATURAL) OR 38%!