Four Stocks That Have Pop Potential

 |  Includes: GSK, ISLN, RCPI, TIVO
by: Michael Levin

These 4 stocks all have the potential to run big or pop overnight.

Isilon Systems (ISLN) has already received a $33.85 offer from EMC and the deal seems done, or is it? I went long the Dec $35's at $.10 2 weeks ago, then the Dec $34's at $.05 last week and even the Mar $35's at $.05 last week too. Why? Some feel that this deal wasn't the best that ISLN could get and if there is a big enough outcry as some law firms are suggesting, "maybe" the deal gets sweetened to $35+ (my opinion) or perhaps someone else steps in like the PAR deal and who knows where this goes to - $40? Having options that cost $5 each with the "potential" in a small incremental raise to say $35 would be almost a 20:1 payoff if sold at par. If, and I mean a BIG if, the deal is busted and another steps in at say $38, that is a 60:1 payoff. Again, if you know me, I take big swings (and often miss) but when I connect, it's a landslide.

TIVO... Ahhh Tivo, I had (for friends/clients) over 3500 TIVO Nov options expire worthless a week ago, standing there waiting for some sort of positive news and ready to collect a couple million if it happened, but alas, just a lot of potential and no payoff. There's that "big hitter" in me wiffing in the bottom of the ninth with the bases loaded. Did it deter me the other day when, after poor earnings, TIVO ripped over $9 handily only to slip back into the low $8's? Nope, I started buying (again, just a tad too early) the Dec $9's at $.45 (nibbling) and then more all the way down to the $.26 area. Will I be vindicated with some major news or a Tivo win in their en banc case against Dish (NASDAQ:DISH)-EchoStar (NASDAQ:SATS)? Or a Google (NASDAQ:GOOG) nibble at some deal? Or, who knows? But the pop potential is big here and the short squeezes when they do happen can at least get me out even to maybe a 50% gain over the next few weeks. Or again, a swinnnnnnng and a miss.

Human Genome Sciences (HGSI) is one of those stocks I kept missing to short (and would have made money on) and I stayed away before the recent advisory panel ruling as the options were just too expensive to take a bet on. But, last week I jumped into the Dec $25 calls at $1.50 sensing that somehow, with the Dec 9th ruling by the FDA, they just might win this and see some sort of pop to the $27 or so level, maybe allowing me to sell the $30 calls for a decent premium and lower my cost on the $25's and establish maybe a $.50 5 point spread. Again, if it goes HGSI's way, I'm golden; if not, back to the dugout and the end of the bench.

Star Scientific (CIGX) is one of those little stocks with enough potential to keep one in it for years, waiting. I am in this from $2.05 slightly to $1.80-85 heavily to some in the $1.75 area. Their court date against RJ Reynolds is set for mid January, which could go either way and is big enough that one would hold for a while. Their smoking cessation product, CigRx, is being rolled out (spoken about in much great/better detail by Seeking Alpha author "onthemarket") and my favorite reason to put this in a retirement account and check back in 3 years is the Alzheimer's potential of a nutraceutical product already on the market. See James Altucher's April 8th article.

I don't get into too much detail on any of the stocks I trade because there are so many other great authors on this site that are better than I am and do a much better job in their research. I thank you for this. I DO however know how and when to take a position and make some money, so be forewarned. I can and do lose money often, but I also win and big too. Trade at your own risk level and enjoy.

Disclosure: Long CIGX stock and Dec $2 call options, Long ISLN Dec $34/35 calls and March $35 call options, Long HGSI Dec $25 calls and Long Tivo Dec $9 calls.