CROX – Adjustment Alert

10/04/2011, at 1:11 pm

With CROX bouncing off of its 200-Day MA we decided to take short-term profits on our short stock hedge.  The hedge we put on at $28.00 was covered at $22.77 for a $5.23 profit on the hedge, an 18% return on the 60-Day hedge.

In order to reestablish our regular income strategy, we replaced the short stock hedge with a NOV 21/18 Put Spread:

BUY -  NOV 21/18 Put Spread @ $.95

To finance this new hedge we also sold covered calls at the 26 strike in NOV:

SELL -  NOV 25 Calls @ $1.45

In the current downtrend that CROX is in, we sold the covered calls at the overhead resistance near $26.00  These short calls pay for the ST put spread and produce an additional $.50 in income through NOV expiration.  The position remains near neutral to slightly short over the ST as we expect continued weakness along with the market.

Members can view the new position structure in the Model Portfolio after today’s close.

Coach BD

RMBS Alert

09/29/2011, at 4:10 pm

The jury in the RMBS anti-trust case against Micron and Hynix has been deliberating for 3+ days now and a verdict could come at any time though it now appears that the jury will continue deliberations into next week.  As I understand it the jury will not work on Friday.

The potential damages that could be awarded range from 1 – 4 Billion with the possibility of trebling.  A positive verdict for RMBS could result in a very big move to the upside.

Coach BD

RMBS Alert

09/23/2011, at 4:12 pm

The RMBS Anti-Trust case against Micron and Hynix is close to completion as the case goes to the jury for deliberations.

The news coming out of the courtroom has been largely positive for RMBS and the recent price action would tend to indicate that the market is taking notice.  However, as with all things RMBS, until the verdict and damage award is out… anything can, and usually does, happen.

As we approach a verdict there could still be a stock price manipulation, which has happened during past litigation.  There could also be a settlement.  Or there could be something totally unexpected… that’s just the nature of the RMBS story.

In any case, there is potential for a huge move in either direction based on the verdict and damage award.

Stay tuned to RMBS for an excellent trade opportunity.

Coach BD

NFLX – Exit / Expiration Alert

09/19/2011, at 4:13 pm

We got a bit lucky with our NFLX Short trade by keeping it through expiration.

With the recent news that NFLX was going to split its rental and streaming businesses the stock plunged and sent our expiring short trade to its maximum profit of $21.15, or a nearly 150% gain for this 4-month trade.

NFLX is our 2nd big winner Short trade since we launched our new portfolio in the 2nd quarter (LULU was the other @ 200%), and a good example of how your analysis of a trade may take longer than expected.

Always buy at least 2 months of extra time to give your trades a better chance for success.  Members may view the position in the Model Portfolio.

Coach BD

LULU – Exit / Expiration Alert

After trying to exit our LULU short trade position for almost 2 weeks ahead of expiration @ 90%+ of its maximum profit potential, we wound up letting the trade expire at its Maximum profit potential.

The SEP 85/65 Put Spread expired at $14.90, or close to a 200% gain on this mid-term short trade.

Members may view the position specifics in the Model Portfolio.

Coach BD