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Spider Gold Shares (GLD) Pushing $130
Gold Continues Its Slide
5/17/2013
12:05 (EST)
We have been all over the gold trade like grass on dirt and with today's $25 drop our downside targets are coming into play. We said after a back test to $1,475, Gold is poised to test new lows south of $1,325. The drop below $1,400 earlier this week was the trigger to go short and today's $25 drop to $1,362 could be the start of another free fall.
We have been following the Spiders Gold Shares (GLD, $131.80, down $2.29) and the June 125 puts (GLD130622P00125000, $1.80, up $0.50) that are getting a nice 40% pop today.
We wanted to get into this trade on the break below $140 but we have been late to the sell the gold party. We will see what the chart says over the weekend but if our projections are right, Gold has further weakness and these puts options could continue to do well.
Cisco Systems (CSCO) Options Active On Upcoming Earnings Announcement
5/15/2013
Cisco Systems (CSCO, $21.27, flat) will be announcing their earnings after the close and Wall Street will be eager to hear their numbers. A beat-and-raise should send shares past double-deuces while a disappointment could mean a back test to $20. Shares currently yield 3.2% so there should be some support if they slip.
Bullish traders can play the May 21 calls (CSCO130518C00021000, $0.60, down $0.05) or the June 22 calls (CSCO130622C00022000, $0.85, down $0.05) for a possible push past $22.
Bearish traders can play the June 21 puts (CSCO130622P00021000, $0.60, flat) or the May 21.50 puts (CSCO130518P00021500, $0.60, down $0.05).
The company is expected to earn 49 cents a share on revenue of $12.18 billion. There are 37 analysts that cover the stock and the company has beaten estimates for 4-straight quarters in the past year. They have a history of beating by a penny but in the last two quarters the company has come in 2 and 3 pennies ahead. If Cisco can come in a nickel ahead of estimates then shares could move 5%-10% as a match or a penny beat might not be to exciting for the suit-and-ties.
Playing options around earnings can be tricky but expect the aforementioned call and put options to be heavily traded today.
Weight Watchers (WTW) Blows Up, Options Up 1,000%
The market opened lower this morning and has traded in a tight range after economic news, both positive and negative, has impacted trading. The bears took comfort in a higher-than-expected jobless claims number as the number of people filing for unemployment benefits jumped by 25,000 claims and came in at 410,000.
The bulls found relief in the Philadelphia Fed manufacturing survey which reported its best number since July 2008. The February reading of 35.9 way ahead of analyst’s estimates for a print of 21.
Despite the mixed numbers, the market has shrugged it off and has turned positive as we head into the second half of trading.
The Dow is higher by 12 points to 12,300 while the S&P 500 is up by 2 points to 1,338. The Nasdaq is showing an advance of 7 points and is currently trading at 2,832.
A quick update on earnings: Weight Watchers International (WTW, $62.78, up $17.86) is have a HUGE day as shares are up nearly 40%. We highlight earnings each week in our Weekly Wrap and the stocks we think are going to move 5%-10% we have in bold as possible trades.
We had a feeling this company would do well but we stayed on the sidelines as we already have a number of ongoing trades. However, a few of our subscribers who have purchased or received our option trading course, How to Trade Options on Momentum Stocks, have done well with this name.
Some of our subscribers played call options on Weight Watchers while others played straddle and strangle option trades. As far as a straight-up trade, the February 45 calls (WTW110219C00045000, $16.50, up $15.15) were at $1.35 yesterday and are up over 1,100%.
Some subscribers used protection by playing the March options for a strangle trade. The stock was at $45 going into the closing bell and the March 50 calls (WTW110319C00050000, $12.60, up $12.20) were going for 40 cents while the March 40 puts (WTW110319P00040000, $0.05, down $0.35) were going for 40 cents as well.
The call options are up a staggering 3,050% while the puts are down nearly 90%. In other words an $800 investment in the March strangle trade is now worth $12,650.
Our option trading manual shows you how to do these types of trades and strangles and straddles are “safer” ways to trade options if you are expecting a move of 10% or more in a stock. We show you step-by-step on how to figure out your profit and loss zones based on the movement of the stock and many of our subscribers got the option trading manual for free when they upgraded their membership to a 1-year deal.
The beauty of these types of trades is that when you get a move like we did from Weight Watchers today, they can show incredible returns without that much risk. We will be doing another video for those of you who recently upgraded you membership to get the course. And for those of you who haven’t. We will offer you this deal one last time from today through the weekend.
We have had many requests to extend last weekend’s special so here is the deal. If you purchase a 1-year membership to our Daily newsletter or a 1-year subscription to our Weekly Wrap, you will receive the option trading course at no charge (a $599 value). This offer is not listed on our site but don’t worry about not getting the course. We ship them the next day after we receive your information and they usually arrive within a week unless they re international which may take up to 10 days. Either way, we cover that bill as well.
Once your payment is received, you will get an email from us within 24 hours to the ongoing video links we have established. These videos talk about the market, support and resistance, earnings, and possible option trades outside the Daily newsletter. After this, it will be awhile before we offer our option trading course at these levels as the price of our course will be going up now that we have a library of videos available.
We have a lot to cover in our Members Area today so we have to roll but we do hope you hit us up on our offer. For those of you on the fence, there will be no better time than now to get a great options education at a steep, discounted price.