AAPL

2/2/2010 - UPDATE

Obviously, with the price movement following the debut of the iPad, we have held off on our consideration of a new entry into AAPL.  It now looks as if AAPL may also be rolling over with the general market so we’ll sit tight for the time being and watch the show.

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1/27/2010

With the announcement of the new iPad and the pricepoint it will be selling at ($499)… we are looking to reenter AAPL yet again as a Long-Term Option position.

Tomorrow we will evaluate our entry criteria and report our conclusions.

Coach BD

Well………………….

I am happy to finally be able to report…

The Trade Coach is back at work full-time for the first time since October.  For those of you who use our Private Trade Execution Services, you all know that Coach BD has been busy taking good care of all of your portfolios and we can report that RMBS, SNDK, AAPL, ESRX & The VIX were all MONSTER trades for 2009, with SNDK, AAPL & ESRX needing close to no adjustments or action for most of the year.

That was simply because these trades were carried over from 2008 and all were either already profitable or close to zero carry trades, through very effective hedging in 2008.  This gave us the luxury of simply holding them through this past year, risk free.  The ultimate, and perfect trade scenario.

For some of you who got in early w/us on TSRA, that was another very good result, though if you waited for either of the add-ons to open your initial position, you are probably near breakeven (BE) or even down 10 - 20% on that trade… BUT fear not, for those of you who are holding TSRA we will be trading this position for Income over the next few months waiting for the HUGE potential move in RMBS to drag TSRA along.

Finally, we made very big returns on the VIX early in the year and then SOLD ATM premium against our Long OCT Calls through JULY, when we exited, leaving us with another year of very big gains using the VIX, though unlike 2008, when high volatility reigned, 2009 was a hedge against our hedge trade as we sold 5 straight months of ATM Premium, collected it ALL, and then sold our core OCT Calls for just $1.00 under our Cost Basis @ JULY Expiration.

So, where does that leave us…

We will be exiting AAPL & ESRX @ JAN Expiration.  We SOLD ATM & near OTM Premium against these for JAN because we thought these runs may be coming to an end, and we wanted to hold these into this year so we won’t have any tax reporting, or tax paying, until next year (2011)…  SWEET…!!!  SNDK will fall into that same boat though we intend to roll out our JAN Expiring Calls that we have held since 2008, and we will be trading those out for JAN 2012’s.

For those who remember our past discussions, SNDK has been one of our favorite LT Trades almost every year because of the huge runs this stock routinely makes in both directions.  We feel that this upside run in SNDK may continue through this whole year as SNDK has reestablished itself as the Gorilla in its market.  Since JAN 2006, SNDK has been making a nice LT cup formation from its highs near $80, and now that we have a new, strong uptrend building the right side of the LT Cup, $80 may be in play once again over the next year or two (thru 2011).

We’ll address our outlook for RMBS and TSRA in a separate post because there is just so much to talk about with RMBS… (so what else is new)… BOTTOM LINE… Hang onto RMBS, and TSRA, for now cuz the storm is comin.  This strong move we’ve made from the NOV 2008 lows near $5 to where we are now, near $23.50 will seem like a blip on the chart if Samsung rolls over and settles with RMBS prior to the AT Trial scheduled to start next week.  If that happens, or if anyone else jumps in to settle ahead of Samsung, we could easily see $60, perhaps even $80 - $100 before the year is out.

YEEEEEEEEEEEHAAAAAAAAAAAAA…………….!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

It really could be the MONSTER GORILLA trade of the decade, if not the Century, should the dominos start to fall.  Once they start falling there’s no telling how high RMBS may go.  We believe that RMBS is perhaps a $10 - $25 BILLION dollar company in market cap, especially if settlements and licenses start rolling in this year, as we expect they will… so that’s anywhere from 5 - 10x its current price.  YIKES…!!!  The estimates are truly mind-boggling.  We’ll be happy with $60, but $80 - $125 is certainly in the ballpark, just for this year…!!!

BUT, then again… its still RMBS… So anything can, AND WILL, happen.  We’ll talk more about the outlook tomorrow along with our strategy.

Everyone have a great evening.  It is so very good to be writing once again.

Coach BD   

Goodbye February…!!!

Unfortunately this week most decidedly did NOT end on a good note.  The DOW closed the week at its lowest level since OCT 1997…!!!  The S&P closed at its lowest level since APR 1997…!!!  And while the NAZ is not yet getting too close to its NOV 2002 lows, if we see more weakness in the weeks to follow I would imagine those lows will fall like a knife through soft butter.

Most discouraging however was that the DOW accelerated in volume as it passed below its recent lows to the tune of more than 50% over last week and was the highest volume clear down week since the week of OCT 6th…  OUCH…!!! 

It is very ugly out there folks, and where things stand right now, these markets could plunge at any time.  Hopefully this would be the kind of huge panic sell-off that could set the stage for a reliable reversal bottom.  It’s certainly no time to get trigger happy feeling like things can’t get worse.  They can.

So keep your powder dry and wait it out.  We may be nearing the big event we have all been expecting for quite some time.  On any LT Long positions in your portfolios, keep them tightly hedged at or near Neutral… at the very least.  Look at your trends, if some of your winners, like IDCC for example, look like they are rolling over, like IDCC does, tighten up, buy some Puts and manage your LT position as an Income generating trade rather than a LT appreciation trade until the signs, and the trends, turn upward once again.

Patience and Risk Management are the keys for the current conditions.  There aren’t any heroes out there right now, but there is a whole lot of scared BIG MONEY.

Well… there may be one or two heroes out there…  Pretty much everything appears to be going RMBS’s way these days and we could see Settlements and/or Compulsory License Terms from Judge Whyte over the next couple of weeks.  He ordered a final settlement opportunity for RMBS and Hynix on MAR 4th which will take place in Seoul, and he wants to see a settlement on the 9th (I believe).  Otherwise, he will impose the Compulsory Rates on Hynix for all of the newest memory technologies, based on expert testimony heard during the trial, which was fairly compelling for a larger rate (9 - 12%) for the newer memory architectures.  There are a wide berth of opinions, but it appears to be somewhere between 4.25% - 11%… but like everything RMBS, you never know.

Have a great weekend.

Coach BD 

IDCC Update - 2/18

Definitely not the action we had hoped for, but we are still looking for the reversal upward, however, if the stock breaks below last Thursday’s low ($31.41) on another high or higher volume day like today, we will be looking for some added protection of our LT position.

Coach BD

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IDCC - 2/17

It appears we may have finally seen the significant test of IDCC’s 20-Day MA and reversal to the upside that we wanted to see before considering an add-on, or new entry, that we discussed last week.

We held off last week because although the price action met our add-on/entry criteria, the volume was very anemic.

Today we saw some real volume off the bottom to close well into the upper half of the day’s range and near the 20-Day MA. This is the kind of test we like to see. The next couple of days should tell the real story of whether or not the continuing uptrend is still in place. The Weekly trends are also looking very good for a continuance of the uptrend.

Now looking for a big volume confirmation to the upside above today’s high ($32.53), or the recent high ($33.69)… stay tuned for action on this strong performer in a very weak market.

Coach BD

SOLF

We have made an adjustment to one of our LT Solar Option trades in SOLF, as well as adding a Mid-Term (MT) Hedge and a ST upside Spec Trade.

We executed the following… (Equal lots of each)

ROLLED - JAN 2010 - 5 Calls >>> JAN 2011 - 2.5 Calls, for a $1.15 DEBIT

BOUGHT - SEP 2.5 Puts @ $.70

BOUGHT - MAR 5 Calls @ $.20

We believe that the Solar trade in general will thrive over the next year plus, and will carry many with it, including SOLF.  We are also looking at opening new positions in several other solar trades and creating a basket of these stocks that will, in our opinion, benefit from the new administration’s commitment to alternative energy.   We will post a list of those we are watching closely after the close.

Coach BD

IDCC

As we noted last week, we like the recent price action of IDCC, a LT Long Position in our portfolio. Under normal market conditions we would have added to our position last Friday as the stock finished at the top of its weekly range on a fairly strong BO.

However, do to the overall market conditions, we decided there may well be a consolidation phase with markets still very weak. Obviously that hasn’t happened… yet.  We are watching this week and if the stock stays strong, or has another high volume up day, we may indeed Add-On to our position… though we would rather see a healthy pull-back toward the now support trends before entry.

We see IDCC as a LT play so we aren’t in a hurry to make an Add-On entry without the confirmation upwards with the ideal consolidation on lower volume.

Coach BD

ATVI

Updated / Corrected…
Making a small adjustment on ATVI this morning, rolling the Short SEP 37.50’s down to the 35 strike, thereby exiting the ST SEP 35/37.50 Call Spread as an Upside Hedge. We are replacing that ST Spread with the same Spread in OCT.  ATVI has now failed 10 sessions in a row to break back above the ST resistance trends that are basically flat.

While we feel ATVI is a great LT Long, in this environment we will take every opportunity to collect as much ST premium as possible, reduce our risk and cost basis, and wait for whatever catalyst emerges to break the market out of this rut. In this case, we feel we should add a bit more time to this upside hedge to give it a better chance to work out in our favor.

Rolled out to OCT Net Debit of $.30

Coach BD

ATVID

Earnings After-Hours…

Earnings beat their pre-announcement estimates and the initial guidance looks very good and well above current estimates, at least in respect to revenues.

We don’t anticipate making any AH hedge adjustments but will monitor the price action as the CC progresses.

Coach BD

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7/31 - A.M. Update…

The newly merged Activision-Blizzard will report earnings after the close today.  We feel our position is fairly well positioned with a significant upside and an adequate downside hedge.

However, if the company’s report is not as strong as they earlier indicated in their 7/14 pre-announcement, or they offer cautious guidance, we will be prepared to strengthen our downside hedge by selling an appropriate number of shares short in the After-Hours market.

Our intial evaluation if the stock heads lower AH’s is that ~50 Shares SHORT/LT Long Contract in the position would offer us the best downside protection with the minimum amount of upside reduction if we were later forced to cover the SHORT sale on a reversal to the upside.

Coach BD

Today we made several adjustments as the market worsened during the day.  The majority of the activity involved rolling Short Calls down on several of our Core LT Long positions as well as a few other adjustments summarized below to reduce our risk and tighten many of our hedges.

• ATVI - Rolled our Short 35 Calls down to the 32.50 strike for a $.96 Credit
• ELON - Rolled down our Short 12.50 Calls to the 10 strike for a $.75 Credit and BOUGHT Long the 12.50 Calls as an Upside Hedge for $.15
• IDCC - SOLD our 25/22.50 Put Spreads for $.70 (Cost = $.48) and then SOLD the JUL 25 Puts Short for $1.10  We also BOUGHT 50% of the AUG 25/22.50 Put Spreads for $1.00  Finally, we SOLD our Long 30 Calls (Upside BO Hedge) for $.40 (Cost = $.35)
• HLF - SOLD our JULY 40 Calls (Upside BO Hedge) for $.65 (Cost = $.90)
• MVL - Rolled our Short JUL 35 Calls down to the 30 strike for a $1.83 Credit
• SOLF - Rolled our Short JUL 17.50 Calls down to the 15 strike for a $.65 Credit, and BOUGHT the JUL 12.50 Puts for $.50
• SNDA - Rolled our Short JUL 30 Calls down to the 25 strike for a $.76 Credit
• SNDK - BOUGHT a 50% Upside Hedge on the strong move up in a bad market with the JUL 22.50 Calls for $.20

We apologize for not being able to post these as we executed them but due to heavy client phone activity today we were forced to make most of these adjustments during the last hour as the market worsened and the combination of Member Trade Support and adjustments to our Core positions prevented us from posting until after the close.

This is another example of our intention and plan to lighten up on our Long Portfolio exposure by JULY expiration.  When you find yourself in the position of having to make regular adjustments to LT positions, that is a sign that you should cut back your exposure, raise cash, and wait for the market to make a definitive turnaround.

Coach BD

ATVI

We are also in the process of adjusting our LT Lon Option position in ATVI on its large volume BO.  Rolling our JUN Short Calls out to JULY 35 & 37.50 strikes, and adding JUN & JUL Hedges with the 35 Puts…

Back with details as they are completed or filled.

Coach BD