Volume Talks Monday: A Sirius Reversal

As the market traded higher across the board Monday on lighter volume, there were many stocks which traded higher/lower on above average volume. Today's breakout report is for Monday March 22, 2010. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher/lower in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 23 stocks which traded higher on heavier volume, and 12 stocks which traded lower on heavier volume Monday March 22, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The tables below show the company, ticker, per share % increase, and volume increase (% increased compared to 50 day average). The first table is a list of potential bullish stocks, the second table is a list of potential bearish stocks. For your convenience I have ranked both tables in order from greatest to least volume % change.

Breakout Bulls
Company	Ticker	Price Change	Volume Change
Centene Corporation	(CNC)	10.58%	389.30%
Health Management Associates, Inc.	(HMA)	11.32%	360.71%
HRPT Properties Trust	(HRP)	6.96%	272.68%
Williams-Sonoma, Inc.	(WSM)	12.26%	247.85%
iStar Financial Inc.	(SFI)	6.30%	217.18%
Las Vegas Sands Corp.	(LVS)	9.90%	178.27%
Systemax Inc.	(SYX)	4.85%	167.35%
Universal Health Services, Inc.	(UHS)	6.18%	164.06%
The Boston Beer Company, Inc.	(SAM)	5.05%	146.43%
The Scotts Miracle-Gro Company	(SMG)	3.38%	141.24%
Sirius XM Radio, Inc.	(SIRI)	3.98%	128.19%
ViroPharma Incorporated	(VPHM)	4.16%	127.76%
Lumber Liquidators Holdings, Inc.	(LL)	5.54%	107.32%
Pennsylvania R.E.I.T.	(PEI)	8.40%	106.50%
Wynn Resorts, Limited	(WYNN)	6.68%	96.99%
Waddell & Reed Financial, Inc.	(WDR)	3.32%	90.93%
Cooper Tire & Rubber Company	(CTB)	3.30%	64.00%
Emergency Medical Services Corporation	(EMS)	6.05%	62.14%
Tenneco Inc.	(TEN)	6.29%	60.80%
Jo-Ann Stores, Inc.	(JAS)	3.27%	60.65%
NetLogic Microsystems, Inc.	(NETL)	7.35%	57.54%
Baidu, Inc.	(BIDU)	1.77%	55.70%
SXC Health Solutions Corp.	(SXCI)	1.88%	53.37%
Breakout Bears
Company	Ticker	Price Change	Volume Change
Dex One Corp	(DEXO)	-2.83%	294.51%
Gallagher Arthur J & Co	(AJG)	-2.38%	288.77%
Piper Jaffray	(PJC)	-3.82%	175.60%
Chesapeake Energy	(CHK)	-4.01%	172.50%
World Acceptance Corporation	(WRLD)	-3.54%	157.74%
Consol Energy, Inc.	(CNX)	-1.89%	134.31%
Amphenol Corporation	(APH)	-1.22%	111.98%
Telekomunikasi Indo	(TLK)	-1.99%	100.12%
Sunpower Corp	(SPWRA)	-3.96%	85.78%
Cabot Oil & Gas Corp	(COG)	-1.55%	80.04%
Unitedhealth Group, Inc.	(UNH)	-3.17%	57.44%
Pre Paid Legal Services	(PPD)	-1.92%	55.14%

Out of the bullish list above, one stock I was watching all day Monday was Sirius XM Radio, Inc. (SIRI). Sirius opened Monday slightly lower than Friday's close and traded down to 79 cents before reversing the day to close higher by 3.98%. Most of us know about Sirius XM, but as always before we get into the chart details, I will give a company profile from Google (GOOG) Finance below.

Sirius XM Radio Inc. has two principal wholly owned subsidiaries, XM Satellite Radio Holdings Inc. and Satellite CD Radio Inc. The Company is engaged in broadcasting in the United States, its music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through its satellite radio systems, the SIRIUS system and the XM system. On July 28, 2008, its wholly owned subsidiary, Vernon Merger Corporation, merged (the Merger) with and into XM Satellite Radio Holdings Inc. and, as a result, XM Satellite Radio Holdings Inc. became its wholly owned subsidiary. The SIRIUS system consists of three in-orbit satellites, approximately 120 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios. The XM system consists of four in-orbit satellites, over 700 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios.

Looking at the chart below, we can see some rather bullish price action. To me, this price action signals short term strength; I was selling June put options as it ticked positive, and buying May call options near close when it was apparent of this bullish chart pattern. I wrote about Sirius XM in early March as I saw a similar reversal, and Sirius traded higher by roughly 10% following that post before retesting the lows of that reversal day on March 2. If I was strictly an equities trader I would get long Sirius XM here with trailing stop loss of about 5-6%. However I am more of an options trader, so I have outlined a strategy below which will put me into shares of Sirius for roughly a 7.7% discount and give me unlimited gains to the upside if it happens to move higher by May options expiration.

Sirius XM Radio Option Strategy: This is a very simple trade to make and only require two different option legs. First I would look to sell in the money June 1 strike put options for a credit of $25 per contract. Note that if Sirius closes on June 19, 2010 below $1 per share I will receive 100 shares for each contract I am short. I would then look to purchase May 1 strike Call options for $5 per contract. This would put $20 (less commissions) into my account for each long combo position I got filled making my overall cost basis on each share of Sirius 80 cents (if it gets put to me). It is very important to note that I do not mind owning shares of Sirius at 80 cents come June options expiration. By purchasing the May call options, I will also capture unlimited gains beyond 1.05 per share by May options expiration. There is a rumor that March auto sales may be stronger than anticipated which would be a positive for Sirius, therefore there may be some increased buying in shares of Sirius going into that release on April 1, and will likely cause an increase in volatility which will cause the options to be a bit overpriced. It is important to note that I am looking to get long additional shares of Sirius for a slightly lower cost without losing upside potential, which is why I am using this option strategy. It is extremely important to note that this strategy is much less liquid than purchasing shares of SIRI and may not suit a very active trader.

Profit & Loss: The maximum loss from this strategy will be $80 per long combo position and will be if Shares of Sirius XM trade to zero ($0.00) by June options expiration. The gain from this strategy is unlimited until May options expiration with profit increasing with each penny shares of Sirius trade over $1.05, the position can be closed at anytime or shares can be exercised at expiration for $1. After May options expiration the gain is capped to $20 per long combo position until June options expiration, with the maximum gain being if Sirius closes above $1. The break even per share price is 80 cents at June options expiration. I rarely wait until expiration to close or allow my position to get exercised.

This is a bullish strategy and should not be considered if you think the stock will sell off in the near future. However if you feel the stock could move higher in the near future, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: Long SIRI, SIRI May 1 Call Options, Short SIRI June 1 Put Options Sphere: Related Content

Volume Talks Monday: A Potential Option Straddle Play

Today's breakout report is for Monday March 15, 2010. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher/lower in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 7 stocks which traded higher on heavier volume, and 15 stocks which traded lower on heavier volume Monday March 15, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The tables below show the company, ticker, per share % increase, and volume increase (% increased compared to 50 day average). The first table is a list of potential bullish stocks, the second table is a list of potential bearish stocks. For your convenience I have ranked both tables in order from greatest to least volume % change.

Breakout Bulls on Heavier Volume
Company	Ticker	Price Change	Volume Change
CNX Gas Corporation	(CXG)	16.13%	1234.78%
Phillips-Van Heusen Corporation	(PVH)	9.76%	589.99%
St. Jude Medical, Inc.	(STJ)	8.16%	370.10%
Pegasystems Inc.	(PEGA)	6.71%	241.31%
Baidu, Inc.	(BIDU)	4.83%	163.08%
Medicis Pharmaceutical Corporation	(MRX)	4.85%	117.51%
EMCOR Group, Inc.	(EME)	2.50%	100.15%
Breakout Bears on Heavier Volume
Company	Ticker	Price Change	Volume Change
Sterling Construction Company, Inc.	(STRL)	-16.60%	975.96%
Resources Connection, Inc.	(RECN)	-3.60%	613.37%
Watson Pharmaceuticals, Inc.	(WPI)	-2.63%	302.53%
EZCORP, Inc.	(EZPW)	-7.15%	282.74%
Ulta Salon, Cosmetics & Fragrance, Inc.	(ULTA)	-5.23%	203.46%
Varian Semiconductor	(VSEA)	-5.30%	201.71%
CONSOL Energy Inc.	(CNX)	-10.09%	183.59%
ExlService Holdings, Inc.	(EXLS)	-3.93%	155.54%
athenahealth, Inc	(ATHN)	-2.20%	153.09%
Thor Industries, Inc.	(THO)	-6.42%	149.09%
Hi-Tech Pharmacal Co.	(HITK)	-7.69%	143.85%
Lam Research Corporation	(LRCX)	-4.61%	141.50%
CGG Veritas	(CGV)	-3.45%	131.85%
Almost Family, Inc.	(AFAM)	-2.23%	131.48%
Jinpan International Limited	(JST)	-9.42%	122.14%

Out of the bearish list in today's report, I have two ideas. First, because options do not trade on Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), I will note that I would look at getting long this stock if it pulls back to the 21.50 range and can hold that level for two consecutive closes. Ulta had a great earnings report on March 11 and rocketed higher on massive volume, however it was downgraded Monday morning giving back much of Friday's gains. I think if Ulta holds the 21.50 range, it is due for a move beyond its 52 week high. I would get long near 21.50 with a tight trailing stop loss. The other stock which caught my eye is Almost Family, Inc. (AFAM), but before I get into the option strategy I am looking at using I will first give a company summary from Google (GOOG) Finance below.

Almost Family, Inc. (Almost Family), along with its subsidiaries, is a provider of home health services. The Company has service locations in Florida, Kentucky, Connecticut, New Jersey, Ohio, Massachusetts, Alabama, Missouri, Illinois, Pennsylvania and Indiana (in order of revenue significance).The Company has two operating segments: Visiting Nurse [VN] and Personal Care [PC]. The Company is compensated for its services by Medicare (Visiting Nurse only), Medicaid, other third party payors (insurance companies and other sources) and private pay (paid by personal funds). Its VN segment provides a range of Medicare-certified home health nursing services to patients in need of recuperative care, following a period of hospitalization or care in another type of inpatient facility. The Company’s PC segment provides services in patients' homes on an as-needed, hourly, or live-in basis. On June 1, 2009, the Company acquired the assets of the Medicare-certified home health agencies.

When checking the chart on Almost Family, I noticed a rather ugly bearish engulfing pattern formed Monday. The stock hit an intraday low of 35.30 which is support, however it bounced off of that level and closed a bit higher.

Click to enlarge chart
The chart tells me we will see short term weakness in this name, so I would put a short position on this stock if it breaks below 35.25 with a stop loss at Monday's open of 36.47. Key levels of support below 35.30 to watch are 34, and 32.50. However I noticed a big bet in the options market Monday and will outline the strategy below.

Almost Family Option Straddle: It seems that at the same time (Monday - 12:27 PM) someone dumped 100,000, 500 May 35 Straddle positions were traded for a net debit of $422 per straddle. A total of 510 May 35 call options traded on open interest of 1064, and a total of 500 May 35 put options traded on open interest of 806. The open interest suggests that these straddles could have been closed, however if these straddles were opened I may follow the money and copy this trade. Be careful, the April 35 straddle position may seem like a better idea because it is about two-thirds of the price, however the May 35 straddle gets more than double the amount of time until expiration, but more importantly AFAM is likely to report earnings by May options expiration. If these straddles were opened someone is betting quite heavily that AFAM will be above/below 35 per share by at least 12.06% by May options expiration, however they will likely be closed before expiration as the straddle will gain value with any directional move as long as the move is sooner rather than later. The current theoretical price of opening one May 35 straddle is roughly $450.

Profit & Loss: Assuming I could open this option position for the price of $450, my maximum risk is limited to $450 per straddle, this will occur if both legs of the straddle are held and AFAM closes at exactly 35 per share on May options expiration. The break even points for this straddle are shares of AFAM at either 39.50 or 30.50 on options expiration. The profit for this strategy is unlimited with it being greater for each penny shares of AFAM trade above the higher break even point, or each penny shares of AFAM trade below the lower break even point. I rarely wait until expiration to close or allow my position to get exercised.

This is a neutral strategy and should not be considered if you think the stock will trade in a tight range in the near future. However if you feel the stock could have a large move in either direction by May options expiration and have the money to speculate with, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: No Positions Sphere: Related Content

Party Like It's 1999: Shares of Baidu Trading Higher Than Shares of Google

Well today is the day that shares of Baidu (BIDU) are trading higher than Google (GOOG). After this whole story with China broke and Google's pain became Baidu's gain, I didn't think it would take this this long until shares of Baidu were trading higher than Google... Well as of pre-market today when Google announced they are almost 100% certain they will be pulling out of China, the shares are down about 2% to 569, and Baidu up about 4% to 572. I understand that Baidu is a growth story and they are expected to grow 2010 earnings 50% over 2009, but I am not going to shake a stick at the 18% Google is expected to grow; not to mention that is well baked into the share price based on current levels of PE ratios. I am not going to say short one and buy the other, but it feels a bit like 1999 and if I had to choose one to own here, I would most definitely buy Google. However I will say that both can be owned as a pair trade. I have traded both Baidu and Google multiple times, but currently do not own Baidu in my investment portfolio. Sphere: Related Content

Volume Talks Wednesday March 10: Two Option Ideas on One Hot Stock

Today I am going to introduce my new breakout report which will also include stocks which traded the session lower on heavier volume. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher/lower in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 26 stocks which traded higher on heavier volume, and 19 stocks which traded lower on heavier volume Wednesday March 10, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The tables below show the company, ticker, per share % increase, and volume increase (% increased compared to 50 day average). The first table is a list of potential bullish stocks, the second table is a list of potential bearish stocks. For your convenience I have ranked both tables in order from greatest to least volume % change.

Breakout Bulls on Heavier Volume
Company	Ticker	Price Change	Volume Change
Psychiatric Solutions, Inc.	(PSYS)	21.29%	1435.10%
Kinetic Concepts, Inc.	(KCI)	14.29%	1240.87%
Vanda Pharmaceuticals Inc.	(VNDA)	11.30%	610.19%
Evercore Partners Inc.	(EVR)	2.41%	586.03%
Harbin Electric, Inc.	(HRBN)	10.00%	558.51%
Aixtron AG	(AIXG)	7.27%	417.52%
Helix Energy Solutions Group Inc.	(HLX)	8.93%	371.88%
RadioShack Corporation	(RSH)	5.58%	290.62%
Rovi Corporation	(ROVI)	3.29%	277.25%
Micrel, Incorporated	(MCRL)	1.25%	163.32%
Universal Health Services, Inc.	(UHS)	2.98%	151.05%
Denbury Resources Inc.	(DNR)	4.02%	143.64%
Alaska Air Group, Inc.	(ALK)	5.64%	132.41%
Helen of Troy Limited	(HELE)	2.46%	123.50%
Newell Rubbermaid Inc.	(NWL)	2.07%	115.43%
Assured Guaranty Ltd.	(AGO)	8.01%	115.39%
Amylin Pharmaceuticals, Inc.	(AMLN)	6.47%	104.22%
Companhia Siderurgica Nacional	(SID)	2.11%	91.91%
The Boeing Company	(BA)	3.27%	81.41%
Valeant Pharmaceuticals International	(VRX)	1.78%	66.44%
OmniVision Technologies, Inc.	(OVTI)	4.34%	65.04%
Jo-Ann Stores, Inc.	(JAS)	1.83%	54.59%
Nordson Corporation	(NDSN)	1.87%	51.42%
MetLife, Inc.	(MET)	2.38%	50.80%
Power Integrations, Inc.	(POWI)	1.45%	50.72%
Breakout Bears on Heavier Volume
Company	Ticker	Price Change	Volume Change
Transatlantic Holdings, Inc.	(TRH)	-1.01%	938.92%
AboveNet, Inc.	(ABVT)	-12.19%	877.72%
The Boston Beer Company, Inc.	(SAM)	-3.17%	564.04%
J. Crew Group, Inc.	(JCG)	-4.32%	465.83%
AeroVironment, Inc.	(AVAV)	-3.11%	449.55%
Navistar International Corporation	(NAV)	-5.29%	420.91%
Collective Brands Inc.	(PSS)	-7.17%	364.99%
Smith & Nephew	(SNN)	-2.15%	336.74%
EQT Corporation	(EQT)	-5.68%	292.01%
DaVita Inc.	(DVA)	-2.54%	185.85%
VanceInfo Technologies Inc.	(VIT)	-4.40%	157.98%
RehabCare Group, Inc.	(RHB)	-2.26%	142.11%
Coca-Cola FEMSA, S.A.B. de C.V.	(KOF)	-1.00%	111.62%
International Speedway Corporation	(ISCA)	-3.06%	111.42%
Carrizo Oil & Gas, Inc.	(CRZO)	-2.34%	79.42%
Cummins Inc.	(CMI)	-1.47%	67.38%
Western Digital Corp.	(WDC)	-1.86%	56.64%
Landstar System, Inc.	(LSTR)	-1.32%	55.74%
Kohl's Corporation	(KSS)	-1.79%	53.49%

Out of the large list of stocks above one stock that caught my eye quickly from the bullish list was Nordson Corporation (NDSN). This stock has appeared several times in the past 2 weeks as it has been in a steady incline since it reported earnings on February 22, 2010. As always I will first give a company summary from Google (GOOG) Finance below.

Nordson Corporation is engaged in manufacturing of equipment used for precision material dispensing, testing and inspection, surface preparation and curing. The technology-based systems are found in the production facilities globally. It serves the markets, including the appliance, automotive, bookbinding, container, converting, electronics, food and beverage, furniture, life sciences, medical, metal finishing, nonwoven, packaging, semiconductor and solar energy industries. The equipment ranges from manual, stand-alone units for low-volume operations to microprocessor-based automated systems for high-speed, high-volume production lines. The Company operates in three business segments: Adhesive Dispensing Systems, Advanced Technology Systems and Industrial Coating Systems. In January 2010, the Company acquired German distributor GLT mbH based in Pforzheim, Germany.

This company is a real growth story, and one I certainly wouldn't mind betting on. The company is projected to grow FY 2010 earnings 49% over FY 2009, and another 26% in FY 2011.

Click chart to enlarge
As we can see from the chart above this stock is very strong, setting new 52 week highs everyday and judging by the top end of the bollinger band 73 doesn't seem impossible short-term. If I was only an equity trader, I definitely wouldn't short it here, but would actually consider getting long these shares and setting a tight trailing stop loss, however I am more of an options trader so I'll outline my plans below.

Nordson Corporation Vertical Call Spread Strategy: Sooner or later profits have to be taken, therefore I plan on waiting for a slight correction in this stock before structuring this trade. I would like to see the stock pull back to the 20 day moving average and support at around 65 per share on lighter volume and hold at least 2 days. If this occurs I would look at purchasing a 65 strike call option with at least 20 days until expiration and writing out a 70 strike call option against it. If the chart gives me a clear bullish sign and I am convinced Nordson will move higher in the days after the light volume test, I may choose to just purchase at-the-money call options and wait for a move higher to write out the higher strike call option for a greater premium.

Nordson Corporation Vertical Put Spread Strategy: As stated this stock may reach levels of 73 before profits start to be taken, therefore here is an idea that will return a very nice yield considering the risk in a very short time period. With the hovering on a strike price it is always a great idea to see what premiums can be made if the stock holds the current level or even continues higher. With the trend being up on this stock, I would look at selling near-the-money March Vertical Put Spreads. I would sell the March 70 put options and purchase the March 65 put options against them to limit my downside risk. As of current data this spread can be opened for a net credit of $95 or a 19% return on maintenance (less any commissions) in 9 calendar days.

Profit & Loss: The first strategy outlined is a scenario which accurate profit and loss cannot be determined, however the maximum loss will be limited to the price paid per option spread, and the maximum gain will be limited to $500 less the price of the spread. The second scenario is based on current data, therefore we can get a much more accurate profit and loss. Assuming this vertical put spread was opened for a net credit of $95, the maximum loss is limited to $405 per spread, and that is if Nordson sells off and closes at or below 65 a share on March options expiration (March 19). If Nordson moves higher, sideways, or lower-but by less than 11 cents a share by March options expiration this strategy will return the maximum profit of $95 per spread. It is also important to note that the break even point for this strategy is shares of Nordson at exactly 69.05 on March options expiration. Commissions are not taken into account for any of the profit and loss calculations.

Updates to Previous Posts:
As stated on my blog post here I thought ROVI corporation was an ideal stock to structure a synthetic stock position on for the March options expiration with two closes above 34.50. I updated that post here (where I informed readers to keep a close eye on Nordson) and said an ugly pattern had emerged and I would not get into Rovi until that patern had been voided. It was completely voided on March 2 and closed at 34.75. On March 3 ROVI was setting up to close its second day above 34.50 (closed at 34.63) and I entered into this trade near close. It has since rallied as much as 10.9% intraday. Although the chart still looks good and signals ROVI could move higher, the stock finished well off the highs sending me signal to lighten up on this position, therefore I closed two-thirds of my vertical put spread position on ROVI, as well as one-third of my March 35 Call Position on ROVI.

This is a bullish strategy and should not be considered if you think the stock will sell off in the near future. However if you feel the stock could move higher in the near future, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: Long ROVI March 35 Call Options, Short ROVI March 35/30 Vertical Put Spread Sphere: Related Content

Tuesday's Hot Stocks: One Fahionable Option Trade

With the major indices trading slightly higher Tuesday, there were 28 stocks which broke higher on BIG volume. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 28 stocks, all of which traded higher on heavier volume Tuesday March 2, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The table below shows the company, ticker, per share % increase, and 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
RiskMetrics Group, Inc.	(RISK)	4.22%	708.32%
Sotheby's	(BID)	5.47%	398.03%
Sirius X M Radio, Inc.	(SIRI)	1.24%	389.34%
Domino's Pizza, Inc.	(DPZ)	5.10%	352.15%
The Dress Barn, Inc.	(DBRN)	4.35%	345.73%
Acxiom Corporation	(ACXM)	6.07%	343.50%
A. O. Smith Corporation	(AOS)	2.70%	248.57%
Rovi Corporation	(ROVI)	3.95%	234.36%
Power Integrations, Inc.	(POWI)	1.99%	210.19%
Green Mountain Coffee Roasters Inc.	(GMCR)	5.12%	207.96%
VeriFone Holdings, Inc.	(PAY)	4.77%	195.50%
VMware, Inc.	(VMW)	1.39%	182.60%
Medivation, Inc.	(MDVN)	5.17%	179.23%
Atheros Communications, Inc.	(ATHR)	3.11%	165.37%
J.C. Penney Company, Inc.	(JCP)	3.44%	153.81%
NBTY, Inc.	(NTY)	3.46%	143.64%
Albemarle Corporation	(ALB)	2.26%	141.47%
F5 Networks, Inc.	(FFIV)	2.47%	140.16%
Sirona Dental Systems, Inc.	(SIRO)	2.30%	124.33%
Hartford Financial Services	(HIG)	3.67%	109.34%
WebMD Health Corp.	(WBMD)	1.09%	107.75%
priceline.com Incorporated	(PCLN)	1.17%	103.15%
RINO International Corporation	(RINO)	7.29%	94.85%
Concho Resources Inc.	(CXO)	2.12%	84.46%
Steven Madden, Ltd.	(SHOO)	1.90%	78.74%
Jo-Ann Stores, Inc.	(JAS)	1.58%	66.80%
Smith International, Inc.	(SII)	2.40%	53.17%
Vale (ADR)	(VALE)	2.49%	51.69%

Out of the 28 stocks above, there are quite a few which I have already outlined potential option trades on in previous posts, therefore if you follow my posts you'll definitely want to see the update section below. Out of Tuesday's breakout stocks on big volume, one which I have been debating opening an option strategy on for some time is Steven Madden, Ltd. (SHOO), however at this point I believe the stock is overbought and I would like to wait for a pull back to get long. First I will give a company summary from Google (GOOG) Finance below.

Steven Madden, Ltd. designs, sources, markets and retails fashion-forward footwear for women, men and children. The Company also designs, sources, markets and retails name brand and private label fashion handbags and accessories through its Daniel M. Friedman Division. The Company distributes products through its retail stores, its e-commerce Website, department and specialty stores throughout the United States and through special distribution arrangements in Canada, Europe, Central and South America, Australia and Asia. Its business comprises three segments: Wholesale, Retail and First Cost. Steven Madden Retail, Inc., its wholly owned retail subsidiary, operates Steve Madden and Steven retail stores, as well as its e-commerce Website. Its wholly owned subsidiary, Adesso-Madden, Inc. acts as a buying agent for footwear products under private labels and licensed brands for many mass merchandisers and mid-tier department stores. In February 2010, the Company acquired Buddha, Inc.

Steven Madden (SHOO) reported earnings the morning of February 25, 2010, gapped higher and closed much lower (opened at 43.58, closed at 41.99; a rather bearish chart pattern and a potential reversal signal), the following day the stock traded in a big range (high of 42.94, and low of 41.23) but bulls managed to dominate and SHOO closed nearly unchanged, just 2 cents higher, SHOO seems to have regained its footing and on March 1 & 2 the stock has exploded to the upside on larger volume. As stated before, the day of earnings signaled a very ugly chart pattern to me, and I believe SHOO would have sold off if it was not helped by Deckers (DECK) reporting earnings the evening of February 25. As stated I believe SHOO is a bit overbought, but based on the current chart I certainly wouldn't short it here, so I will outline a potential option trade that will get me into the stock lower if SHOO sells off, but will allow me to participate in gains if the stock continues higher, sideways, or even lower by as much as 10% over the next 17 days.

Steven Madden Vertical Put Spread: As stated I wouldn't mind picking up shares of this stock if it traded lower, and based on the chart and bollinger bands I don't believe seeing the stock down near the 40-38 range is impossible. Instead of setting a limit order to purchase these shares, I have decided to sell March 40/35 vertical put spreads, that way if the stock continues higher I will also return slight gains, instead of just having a good until canceled limit order. Using current market data, this strategy could be opened for a net credit of $25 per spread or 5% return on maintenance (less any commissions) in 17 calendar days, but I plan on placing my order on weakness in the underlying to try and get a bit more premium than current levels.

Profit & Loss: Assuming I could open this option position for the prices outlined above, my maximum risk is limited to $475 per position, this will occur if SHOO sells off and closes on March options expiration at or below 35 per share. This position will achieve maximum profitability if SHOO closes above 40 per share on March options expiration (10.17% lower than Tuesday's close price), returning $25 profit per option spread (less any commissions). The break even point for this strategy is SHOO at 39.75 per share at March options expiration (less any commissions), anything below 39.75 per share at expiration will result in an unrealized loss on shares of SHOO (assuming the position is not closed and is exercised).

This should not be considered if you think the stock will sell off by more than 10% in the near future. However if you feel the stock could move higher or sideways in the near future, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

Updates to Previous Posts:
First it is important to note that I traded entirely out of my China Agritech (CAGC) March Vertical Call Spread position Tuesday as I noticed immediate weakness following a huge gap higher at the open. It looks as if the daily chart is marked with a very ugly bearish engulfing candle pattern, and I would not want to be long this stock here.

Second I lightened up on my Sirona Dental (SIRO) position after witnessing the stock reverse off the higher end of the bollinger band near 38 per share. The chart still looks okay on Sirona, however this was my signal to lighten up.

Third, going way back to my Sirius (SIRI) buy-write option strategy outlined on February 2, 2010, I believe that identical strategy could be considered at these levels. Going into the close Tuesday, I purchased additional shares of Sirius as it looked like it had a reversal day and the short term bottom may be in (gapping lower at the open, trading as low as 82 cents, and finishing the day in positive territory; having its second highest volume day in the past 52 weeks, only to the day Sirius got booted from the Russel Index on June 26, 2009). I hope to write the shares out for the March options expiration on strength in Sirius, however I may have to write them out for April.

Last but not least another update to Rovi Corporation (ROVI). After outlining a bullish option strategy on February 24, I made an important update to the post on February 25 stating a very bearish pattern had emerged and it was likely to show some short term weakness. ROVI showed weakness the following three days, but finally broke out again Tuesday voiding that bearish chart pattern and actually setting a new 52 week high. I might reconsider opening the option strategy outlined in my post on ROVI, however I think I would rather purchase shares of the stock and set a tighter trailing stop loss, as ROVI has just been far too volatile lately.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: Long NTY March 45 Call Options, SIRI, SIRO March 40 Call Options, SIRO April 25 Put Options, Short RINO March 20 Put Options, SIRI March 1 Call Options, SIRO April 30 Put Options Sphere: Related Content

Detailed Option Trade for a Potential Apple Reversal

Apple has been on a tear lately, up over 6% from the closing price Monday February 23. Judging by Tuesday's price action, I believe it may head a bit lower in the following sessions, and I have outlined an option strategy to capture a move lower below. First I must mention that I do not mind owning shares of Apple after options expiration, because the strategy outlined below does involve being naked one contract of Apple (AAPL), this means for each contract I am "naked" I could get 100 shares of Apple "put" to me.

Click chart to enlarge

As we can see from the chart above, Apple gapped higher to 209.93 per share at open Tuesday and closed below that price at 208.85, finishing the day down 0.14 points (14 cents). The volume was not huge, but greater than the previous two trading sessions. I believe Apple is heading lower short term based on this bearish looking pattern, but for confirmation I need to see Apple close lower on at least average volume Wednesday.

Apple Ratio Put Spread Option Strategy: With this pattern emerging, I decided to structure a ratio put spread on Apple. This is a fairly simple trade and only involves two different option legs for the same expiration. I first must state that I only anticipate short term weakness on Apple down to the 20 or 50 day moving averages before it consolidates and moves higher. With my short term price target being near 200 per share and the stock trading near 209 per share, that gives me all the info I'll need to structure this trade. First I purchased in-the-money March 210 strike put option contracts on Apple, then for each one (1) I purchased, I sold two (2) March 200 strike put options against them. I was able to open this spread for a net debit of $170 per ratio put spread. Using current market data as of close Tuesday the theoretical price for opening one of these spreads is roughly $195 per spread, which gives an extrinsic option premium to this spread of $80. Once opened it is very important to be monitoring this position, as I rarely wait until expiration day to close or let the position exercise, so a key support level to watch is 205. If Apple tests support near 205 per share and holds, I will look to be exiting this position, if it cannot hold the 205 level I will continue to hold it.

Profit & Loss: Although I rarely wait until expiration to get out of my positions, I will outline the maximum profit and losses associated with this trade if I waited until March options expiration to close or get exercised on this position. Assuming I could open this option position for the prices outlined above, my maximum risk is limited to $195 per spread, this will occur if Apple trades higher and closes on March options expiration at or above 210 per share. This position will achieve maximum profitability if Apple closes exactly at 200 per share on March options expiration, returning 513% or $805 profit per option spread. This strategy has two break even points, one being Apple at 208.05 per share, and the other at 195.98 per share at expiration (less any commissions). Anything below 195.98 per share at expiration will result in an unrealized loss on shares of Apple (assuming the position is not closed and is exercised). It is important to note the net delta, gamma, and theta for this strategy as well, considering it may be a good idea to trade out of this spread before expiration. Based on current market data some important Greeks to note for this spread are Delta = -0.082, Gamma = 0.014, and Theta = -0.077.

This should not be considered if you think the stock will rally in the near future. However if you feel the stock could move lower but no lower than 4.23% in the near future, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: Long AAPL March 210 Put Options, Short AAPL March 200 Put Options

Sphere: Related Content

Monday's Hot Stocks: Charge Up Your Portfolio With Volterra

With the major indices starting off March with a bang Monday, there were plenty of stocks which traded higher on above average volume. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 28 stocks, all of which traded higher on heavier volume Monday March 1, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The table below shows the company, ticker, per share % increase, and 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
OSI Pharmaceuticals, Inc.	(OSIP)	51.94%	3438.90%
Halozyme Therapeutics, Inc.	(HALO)	21.21%	565.39%
Dillard's, Inc.	(DDS)	18.73%	420.81%
USEC Inc.	(USU)	20.64%	402.38%
Insituform Technologies, Inc.	(INSU)	3.26%	308.66%
Volterra Semiconductor Corporation	(VLTR)	6.96%	285.11%
Crosstex Energy, L.P.	(XTEX)	11.39%	248.45%
Power Integrations, Inc.	(POWI)	6.23%	247.08%
Pall Corporation	(PLL)	3.90%	242.46%
Radware Ltd.	(RDWR)	4.53%	202.75%
Pacer International, Inc.	(PACR)	13.07%	190.37%
Cantel Medical Corp.	(CMN)	5.22%	178.79%
Tuesday Morning Corporation	(TUES)	11.21%	167.25%
NBTY, Inc.	(NTY)	4.41%	165.91%
A. O. Smith Corporation	(AOS)	1.32%	144.08%
AboveNet, Inc.	(ABVT)	3.89%	127.93%
The Dress Barn, Inc.	(DBRN)	3.50%	115.04%
Rockwell Collins, Inc.	(COL)	3.75%	113.94%
Riverbed Technology, Inc.	(RVBD)	5.14%	111.79%
Albemarle Corporation	(ALB)	5.20%	99.11%
NetLogic Microsystems, Inc.	(NETL)	3.03%	98.63%
SanDisk Corporation	(SNDK)	11.94%	92.14%
F5 Networks, Inc.	(FFIV)	4.39%	87.90%
M & F Worldwide Corp.	(MFW)	8.55%	81.15%
The Boston Beer Company, Inc.	(SAM)	3.42%	80.31%
Steven Madden, Ltd.	(SHOO)	4.02%	80.14%
Nu Skin Enterprises, Inc.	(NUS)	5.69%	72.16%
priceline.com Incorporated	(PCLN)	5.22%	71.65%

Out of the 28 stocks listed above the one which I will be keeping an extra close eye on in the following sessions is Volterra Semiconductor Corporation (VLTR). This stock looks like it has some real momentum, and had its highest 52 week close Monday. As always, I will give a company profile from Google (GOOG) Finance below.

Volterra Semiconductor Corporation (Volterra) designs, develops and markets, high-performance analog and mixed-signal power management semiconductors for the computing, storage, networking and consumer markets. The Company's core products are integrated voltage regulator semiconductors and scalable voltage regulator semiconductor chipsets that transform, regulate, deliver, and monitor the power consumed by digital semiconductors. Through its power system architecture and mixed-signal design techniques, Volterra has integrated power, analog, and digital circuits onto a single complementary metal oxide silicon [CMOS] semiconductor, eliminating the need for a large number of discrete components required by conventional power management solutions.

As stated Volterra had its highest close on Monday, and I think it has potential to go even higher. Before I go too much further into detail, it is important to note that it may be slightly overbought short term (judging by how the stock pulled back off the higher end of the bollinger band Monday), therefore before I jump into the trade outlined below, I would like to see the stock hold the 23 price level over the next few trading sessions. If the stock can hold the 23 level, I would look at opening March 22.50/25 Vertical Call Spreads. It looks like these call spreads had some action Monday, as 72 of the March 22.50 strike call contracts traded on open interest of 350, and 70 of the March 25 strike Call contracts traded on an open interest of 55. It is also very important to note that these contracts are not as liquid as I'd like them to be, but with increased interest moving into them they should become more liquid.

Click chart to enlarge
Volterra Option Strategy: As stated I will be looking at opening a March 22.50/25 Vertical Call Spread position on Volterra. This is a very simple option strategy and can be opened with just two legs. I would be a buyer of the March 22.50 call options and a seller of the March 25 call options (1 for 1). If the stock trades higher the call spread will become a bit more expensive to open but will have a higher probability of achieving maximum profitability. Using March options and current market data the spread could be opened for a net debit of $110 per option spread. This spread is already in the money by 0.85 points (85 cents), so at this theoretical price I would be paying an extrinsic option premium of 25 cents a share or $25 per option spread.

Profit & Loss: Although I rarely wait until expiration to get out of my positions, I will outline the maximum profit and losses associated with this trade if I waited until March options expiration to close or get exercised on this position. Assuming I could open this option position for the prices outlined above, my maximum risk is limited to $110 per position, this will occur if VLTR sells off and closes on March options expiration at or below 22.50 per share. This position will achieve maximum profitability if VLTR closes above 25 per share on March options expiration, returning 127% or $140 profit per option spread. The break even point for this strategy is VLTR at 23.60 per share at March options expiration (less any commissions). It is important to note the net delta and gamma for this strategy as well, considering it may be a good idea to trade out of this spread before expiration on continued strength in the underlying. Based on current market data this spread is long delta 0.418, and long gamma 0.022.

This is a bullish strategy and should not be considered if you think the stock will sell off in the near future. However if you feel the stock could move higher in the near future, this strategy could yield a nice gain. To get a better understanding of stock options and different option strategies please check out my Simplified Stock Option Trading E-Books.

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.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: Long NTY March 45 Call Options Sphere: Related Content

Thursday's Hot Stocks on Heavier Volume

With the major indices trading lower Thursday, there were 21 stocks which fought the trend and traded higher on heavier volume. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 21 stocks, all of which traded higher on heavier volume Thursday February 25, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made.

The table below shows the company, ticker, per share % increase, and 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
Coca-Cola Enterprises	(CCE)	32.85%	1635.94%
Dr Pepper Snapple Group	(DPS)	11.10%	781.15%
True Religion Apparel	(TRLG)	18.38%	649.76%
Cinemark Holdings	(CNK)	4.70%	334.09%
Mylan	(MYL)	6.59%	325.24%
Safeway	(SWY)	5.23%	303.13%
Limited Brands	(LTD)	2.83%	298.08%
TRW Automotive Holdings	(TRW)	7.22%	252.96%
Iron Mountain Inorated	(IRM)	7.08%	239.72%
Liberty Media	(LINTA)	8.20%	215.33%
Cablevision Systems	(CVC)	3.29%	194.26%
Kohl's	(KSS)	4.83%	180.93%
The TJX Companies	(TJX)	3.04%	153.29%
Altera	(ALTR)	1.20%	109.08%
Big Lots	(BIG)	3.52%	81.55%
Whole Foods Market	(WFMI)	1.62%	62.22%
Perrigo Company	(PRGO)	1.93%	51.98%
Cree	(CREE)	1.84%	43.49%
China Agritech	(CAGC)	6.48%	41.75%
DineEquity	(DIN)	2.60%	39.92%
ATP Oil & Gas	(ATPG)	5.03%	25.38%

Out of the 21 stocks above, one stock I will be keeping a close eye on in the following sessions is China Agritech (CAGC). I have noticed China Agritech appear multiple times lately, including on Monday's List. I believe after Thursday's price action it could be poised for a move even higher, with a bullish candle pattern emerging. You will see a bullish engulfing pattern on the chart below, however I would like to see continued strength and a close above 24.03 (which takes out the open price on February 23) on heavier volume for a confirmation. Unfortunately I will not be detailing an option strategy today as options on CAGC were recently released for trading and they currently have zero open interest across the board, therefore they are still very illiquid. I may post the option strategy I will be looking to use on CAGC (if and when I decide to do so) in a future post so keep checking back if you want some ideas.

Click chart to enlarge
It is also important to note that one stock which appeared both Thursday and Wednesday is Cree, Inc. (CREE), so I will also be watching that stock in the following trading sessions as well.

These are just examples and are not recommendations to buy or sell any security.

The reason option volumes have surged in the last five years is because they are a great way to hedge your portfolio as well as create income off of your shares (see chart here). Keep in mind when using this strategy it is essential that broker commissions are low enough to profit from the position.

Disclosure: No Positions Sphere: Related Content

Wednesday's Hot Stocks on Heavier Volume

With the U.S. markets paring much of Tuesday's losses Wednesday, there were 15 stocks which hit my screener that traded higher on heavier volume. If this is your first time reading one of my breakout reports you'll want to read the section below, however if you are familiar with my daily breakout report you should skip ahead to the list of stocks.

To reiterate previous blog posts like this, the first thing I do is scan the list for familiar names, such as stocks I am quite familiar with or ones which have appeared on similar scans multiple times in the past week or two (most of these names are unfamiliar so it saves a lot of time). This indicates there may be some real momentum behind the stock, and that it could trade higher in following sessions as well. Then (if and when any of the stocks I find are familiar to me), I make sure the stock has options available to trade, and then take a look at the chart(s) to see if I can structure a potential option trade. The list in this post includes 15 stocks, all of which traded higher on heavier volume Wednesday February 24, 2010. Many times I find an option strategy I plan on opening if I am convinced some money can be made, however tonight is one of those rare instances where I will not be outlining any trades. However it is still important to track these stocks because if they appear again in the following sessions this may signal some real bullish activity. It is also important to note that this method is just one of the ways I use to find stocks for potential option trades.

The table below shows the company, ticker, per share % increase, and 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
Dollar Tree	(DLTR)	12.26%	507.63%
ViroPharma Incorporated	(VPHM)	10.24%	196.17%
TIM Participacoes	(TSU)	5.51%	191.25%
Altera Corporation	(ALTR)	3.92%	122.95%
Acme Packet	(APKT)	6.05%	107.79%
Dollar Thrifty Automotive Group	(DTG)	2.01%	95.11%
Capella Education Company	(CPLA)	3.28%	90.92%
Nordson Corporation	(NDSN)	3.74%	85.91%
Green Mountain Coffee Roasters	(GMCR)	4.12%	77.51%
Cracker Barrel Old Country Store	(CBRL)	2.88%	54.80%
Ashland	(ASH)	4.33%	50.66%
Rackspace Hosting	(RAX)	3.46%	27.03%
Aegean Marine Petroleum Network	(ANW)	3.12%	25.97%
The Estee Lauder Companies	(EL)	2.30%	24.57%
Cree, Inc.	(CREE)	1.62%	21.83%

Out of the fifteen stocks above, one I will be keeping a very close eye on is Rackspace Hosting (RAX). I have traded Rackspace multiple times over the past 9 months and it looks as if it could move higher. I would consider a long position in RAX if it closes two days above 20.50. It may also be beneficial to note that Nordson Corporation (NDSN) also appeared on Tuesday's list of Hot Stocks.

Important Updates to Previous Posts:
First I believe it is important to make a quick update to Tuesday's blog post and my option strategy outlined on Rovi Corporation (ROVI). As stated I was looking for two consecutive closes above 34.50 in order to get long my bullish option strategy, however Rovi not only failed to show strength as the entire market rallied, but actually developed an ugly chart pattern, a bearish harami candle pattern. In order to still consider the strategy outlined yesterday, I will need to see this bearish pattern voided within the next few sessions. If the pattern is not voided I believe the play now becomes a bearish option strategy or a short candidate. If this pattern is not voided, I would consider a short position with a stop loss near 34.50. Sphere: Related Content