YUM Strangle

YUM will be reporting earnings on Oct 6.  The Oct 47 calls are around 0.81 and the Oct 45 puts are around 51 cents for a total entry price of around 1.32 + commissions.  I would expect the stock to move around 4 to 5 dollars after earnings based on past movements.

Update:  The way I would play this is that you would need to be up and monitoring your position on the morning of Oct 6 to the reaction to the earning news.  At that point, you would have to decide when to close your position.  I will post my update when I close out my position.  If the stock makes a strong move in one direction, you can close out that position and decide to either close out the opposing position or wait another 3 days until expiration to see if the stock then moves the other way.  Blowout earnings will probably result in a gap up, whereas, missing earnings will end up in a gap down.  The worst scenario is that the company meets earnings and the stock does not move much, but I would expect the chances for that to be low.

New transaction update

Of course, I sold the RIG options too early (but hey, I made a nice profit).

Entering new position on Dec 17.5 calls on Logitech.  Stock is breaking out of a base.  Looking for a target of 20 within 30-60 days.  Options are trading at 0.80 bid - 0.85 ask.

Can't decide whether I want to enter a long position on NANO.  Stock is behaving well, coming out of a nice base, yet its normally so thinly traded that I am reluctant to enter the position.  Could make a nice run if you can stomach the lack of liquidity in this stock.

Position update

I closed out my RIG Oct 60 calls at 4.20 this morning.  Even though I think the stock may have entered a new uptrend, I figured I would lock in my profits and revisit the stock at a later date.

I also closed out my NVDA position at 11.83 per share to lock in approx 30% profits on that position.

Opening new position in DRYS - Dry Ships Inc. Stock is currently trading at 4.87 bid / 4.88 ask.

Eastman Kodak (EK) chart is looking good.  Stock is responding positively to the release of Kodak Gallery for Facebook. 

New Position - JBLU

Opening an equity position in JetBlue (JBLU) around 6.42 per share.  Pure speculative and momentum play.

NVDA position Update

I closed out my NVDA Dec 10 calls at 2.41 per share (entry price was around 0.96 per share), banking a profit of about 150%.  Approx. holding period was about 2 weeks.  I am still holding onto the shares for now.

New Options Play - HIG

Hartford Financial Services Group (HIG)

I like the chart for HIG.  The stock fell below a support level but has now clawed back to the support tier.  The current chart pattern (weekly) is of a flag.  The daily pattern is of an upside down head and shoulder pattern (however, the price has not yet penetrated the neckline to the upside).  Combine those two patterns together and we could have a pretty nice rally if the stock manages to break to the upside and move towards a price of $28.00   I have decided to play this with Jan'11 at the money calls (22.50 - trading at 2.18 bid and 2.22 ask) and entered the position a few minutes ago at 2.22.

Of course, all options have an inherent risk of losing all your investment in it so you should only speculate if you can afford to lose the money.

Market update

RIG has finally made a move to the upside.  Options (Oct 60) are finally in the money.  Now the greed/fear tug of war starts.  At what point do you sell and get out?  Position is now profitable but there is so much more money to be made IF the stock continues to move.  I think I'll give it a bit more time yet watch it closely.

NVDA Dec 10 calls are nicely in the money and up around a 100% from purchase.  NVDA is pulling back this morning.

NFLX and CMG are both up.  So are HPQ (Hewlett Packard) and GS.  Let's see how the day plays out since the market is currently down a little.

Reflections:
One of my misses recently was TNH (Terra Nitrogen).  I spotted the pattern yet hesistated in pulling the trigger about a week ago.  In hindsight, I should have bought it, but if the economy does recover, there is huge potential in this stock.  So keep it on your radar.  If the stock does keep moving (and the market doesn't tank), previous high is around 138 (but first it has to overcome resistance in the 107-109 range).  I still like FSLR as well.

Market cycle is approaching a peak.  Lot of stocks have stochastics that are peaking indicating an over bought condition.  So be careful in your trading and keep an eye on the market.

PS:  The very long shot pattern I was playing on GS with way out of the money calls appears to have failed.