Options Trader: Friday Morning Ideas

by: Philip Davis

We could go either way today but I will be very surprised if war worries can leave us with a positive note going into a weekend.

It's supposed to be all about jobs today as the report is out at 8:30 but now it's all about Steve Jobs and what he knew when. Mr. Jobs has already given back a very large amount of suspicious grants, effectively cancelling the transaction before the SEC made him, but now Apple says they found a few more problems and will restate earnings back to 2002 (but the problems go back to 1997 in fact).

I say who cares, just tell me how many IPods, IMacs and IPhones (oops, shhh, that one's a secret) you're going to sell next year. Just check out BRKS who already went through this and lost close to half their value since January but announced great earnings yesterday.

Let's see how hard Apple gets hit today as a mild slap on this high profile issue could ignite a major SOX and Nasdaq rally next week. Apple is up 40% since July 14th and just around earnings on 7/19 Apple said the option issue would not be substantial. That seemed pretty clear at the time so I'm wondering what is up with this sudden panic. Unless something really new has happened a drop would seem very overdone.

I mentioned in the comments that I will not miss another chance to get Apple at $60 but apparently traders in Europe and Japan agree with me and quickly snapped up shares as they crossed below $65.

Speaking of Japan, Asian stocks were mixed but Europe is having a nice morning but waiting for the go ahead from our jobs data (employment, not Steve).

Oil continues to be out of control and anyone I can't really believe the Fed is going to pause so Exxon can help consumers finance $80 per barrel. There is officially no hurricane and if last weeks pick, TEVA isn't worried about the war, why should you be?

Gold is in peak consumer demand season with weddings in India that will blend into the holiday buying season (if NILE is up 40% then what are they mounting the diamonds into?) so it's now or never for a run at $700. We lost $650 yesterday and BVN got crushed after flirting with $31, a possible prelude to a sector sell-off.

Jobs are out and for the second week in a row they are way off, 113,000 vs. 140,000 expected and, more importantly, unemployment shot up to 4.8% - a real shocker. So it turns out Monday Phil was right and the Fed totally blew it and overtightened!

That should mean it's rally time in the markets so let's see where we can make some money:


We should now hit all the targets we talked about last night and that means it's game on for the markets so let's go back to Tuesday's picks and concentrate on any that are still buyable. Additionally, we had the leap list from yesterday from which we have some nice trades still available like GE, NOK, PD, RTP, THQI, TIF and YHOO.

Today is a good day to play the slow movers but be prepared to get out if the market falls back below our targets, but I sort of doubt that now.

TXN Sept $32.50s are just .45 and very reachable.

GE has been really dogging it but the Sept $32.50s are only up .10 to .90 so far.

AA should break over the 200 dma of $30 and the $30s are just .50 but watch out for the 50 dma at $30.50 where you will be up about 75%.

Here's today's WSJ article on exactly what I said yesterday about SBUX - we must hang out with the same people!

TM may take this opportunity to finally break over $120 where it should have been all year on another spectacular earnings report. I think you can get the $115s for $1 or less and that should be a good play on momentum.

If HOV didn't give such crummy outlook I would be all over the builders and FRK today. I think HOV is wrong and will surprise themselves so let's watch for a good price on the Sept $30s from them.

FRK was at $67 last October so I don't mind paying $2.35 for the Dec $45s for a company that is growing over 20%.

DIS is a nice slow mover ready to break out and I like the $30s for .75 but getting right out if it falls below $29.60.

I'm only giving up on my oil puts if XOM breaks $69.30 otherwise I will gamble and hold them through the weekend.

HPQ has been waiting for an excuse to go and this might be it and the Sept $35s for .60 are safer than the current $32.50s.

CUP should get it's groove back in a Fed pause market. The $5s are just .20 and make a nice small gamble.

DWA is one I should have seen coming as he who dies by the DVD sales is also resurrected by those sales. The stock should go crazy today as it is way way oversold.

Britsh Air had huge earnings so CAL $30s might work at .30.

MSFT $25s for just .15? I was going to wait for a pullback but this should make a nice quick trade on the momentum.

Have fun today but don't chase! Take profits if you can because anything can happen over the weekend. I expect big Nasdaq resistance at 2,118 if we get there.