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Daily Stock Market Equity and Options Trading Commentary

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Monday, September 14, 2009

25 Breakout Stocks to Watch: Week of September 14, 2009

In this post is a fresh list of 25 bullish stocks to watch for the week of September 14, 2009. I will be keeping my eye on all of these stocks this week, but chose only one to write a detailed option trade about this week. All of these stocks demonstrated tremendous strength during Friday's trade breaking out to the upside on huge volume. The table below shows the company, ticker, Friday's per share % increase, and Friday's volume increase (% increased compared to 50 day average). For your convenience I have ranked the stocks in order from greatest to least volume % change.

Company Ticker Price % Change Volume % Change
Tri Valley Corp TIV 164.96% 11291.34%
Neurometrix Inc NURO 30.04% 3365.85%
Altair Nanotechnologies ALTI 29.83% 2773.34%
Ambassadors Intl Inc AMIE 75.31% 1705.57%
Discovery Labs Inc DSCO 78.96% 1356.74%
Pinnacle Gas Resources PINN 13.51% 1116.25%
Fibertower Corp FTWR 36.84% 853.97%
Warren Resources Inc WRES 29.84% 725.83%
Innodata Isogen Inc INOD 5.69% 676.12%
Entegris Inc ENTG 7.32% 661.58%
Eagle Rock Energy Ptnrs EROC 9.32% 356.02%
Exterran Holdings Inc EXH 11.48% 355.00%
Informatica Corp INFA 6.73% 288.06%
Sealy Corp ZZ 13.38% 274.78%
Fedex Corp FDX 6.41% 252.02%
Select Comfort Corp SCSS 12.11% 217.41%
United Parcel Svc Cl B UPS 4.44% 204.66%
Powerwave Tech Inc PWAV 9.27% 193.93%
Commercial Vehicle Group CVGI 15.82% 190.16%
Motorola Inc MOT 8.91% 152.54%
B J Services Co BJS 2.63% 123.09%
Cirrus Logic Inc CRUS 4.48% 117.66%
Take-Two Interactv Sftwr TTWO 3.86% 95.38%
Amer Axle & Mfg Holdings AXL 16.14% 90.88%
Alliance One Intl Inc AOI 7.78% 30.62%

The stocks which are most attractive to me from the list above are: Informatica Corp (INFA), Innodata Isogen Inc (INOD), Fibertower Corp (FTWR), and Select Comfort Corp (SCSS). However from the four listed, the only stock which has options available to trade is Informatica, so below is a detailed option trade involving Informatica. To learn more about the option strategies outlined in this post, risks, pricing, calculations, other strategies, and options in general, click here.

INFA Option Trade:
I am quite bullish on INFA longer term, therefore I will be looking at opening a diagonal call spread. To open this I would purchase in the money March 15 call options and sell October 22.50 Call options against them. As of Friday's close this position could be opened for roughly $600 per option spread, and If I happened to get called out (INFA above 22.50 at October options expiration), this position would yield 25% in just over 1 month. If I was not called out, I would look at selling a similar call option for the month of November. This is a bullish income generating strategy.

The ideas outlined above involve the use of stock options. The reason option volumes have surged in the last 5 years is because they are a great way to hedge your portfolio as well as create income off of your shares (see option volume chart).

These are just examples and are not recommendations to buy or sell any security; if you're more bullish/bearish, you’ll want to adjust the strike price and expiration accordingly.

Disclosure: No Positions

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1 comments:

mardigrasstephen said...

Great blog. Certainly added to my watch list. Still haven't sat down to read your ebook yet.

I know it is more important not to lose money but I still have to ask what your success ratio is on 1) These ~25% return investments and 2) on your ~600% very speculative, don't put more than 1% of your capital into the position.



Stephen

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