MorningUpdate - Options Trading Email
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MORNING UPDATE: PriceWatch Alerts for MA, EBAY, MU, and More...
May 29, 8:30 AM ET - Before the open... PriceWatch Alerts for MA,
TPX, LO, AEO, PAY, EBAY, MU, ZNGA, INFY, and TKR, Market Overview,
News Leaders and Laggards, Today's Economic Calendar, and Index
Support & Resistance Levels.
New PriceWatch Alerts for MA, TPX, LO, AEO, PAY, EBAY, MU, ZNGA,
INFY, and TKR
American Eagle Outfitters (NYSE: AEO) has been chosen by
InvestorsObserver analysts as a candidate for a new covered call
today. Selling the July $20.00 call while at the same time buying
AEO stock for $199.99 will produce a new covered call with a target
return of -89.9%. Based on recent data, this trade will cost about
$198.84, which is also the covered call's breakeven point. At that
price, this covered call has 0.6% downside protection, while
seeking an assigned return of -89.9% return in 53 days. If AEO is
higher than $20.00 on 7/21/2012, we are assured that simple return.
For comparison purposes only, that equates to an annualized return
rate of -616.9%.
Lorillard (NYSE: LO) has been selected by InvestorsObserver
analysts as a stock that is an ideal candidate for a new covered
call today. Buying the stock for $124.84 while simultaneously
selling the September $125.00 call will result in a new position
with a target return of 5.2%. Based on recent prices, this position
will cost about $118.84, which is also the trade's breakeven point.
At that level, this covered call has 4.8% downside protection,
while still providing a 5.2% return in 116 days as long as LO is
above $125.00 on 9/22/2012. For comparison purposes only, this
Lorillard covered call aims for an annualized return rate of 14.6%.
MasterCard (NYSE: MA) has been identified by InvestorsObserver
analysts as being well-positioned for a new covered call today.
Buying the stock for $413.96 while selling the June $410.00 call
will produce a new covered call with a break-even point around
$391.96. At that price, this position has a target return of 4.6%.
This trade will have roughly 5.3% downside protection, while still
aiming for a 4.6% return in 18 days. It will lock in that return as
long as MasterCard is above $410.00 on 6/16/2012. For comparison
purposes only, this MA covered call aims for an annualized return
rate of 91.3%.
Verifone (NYSE: PAY) has been selected by InvestorsObserver
analysts as a stock that is a strong candidate for a new covered
call today. Selling the July $38.00 call while simultaneously
buying PAY stock for $38.03 will result in a new position with a
break-even point around $35.38. At that price, this position has a
target return of 7.4%. This trade has 7.0% downside protection,
while still providing a 7.4% return in 53 days as long as PAY is
above $38.00 on 7/21/2012. For comparison purposes only, this
Verifone covered call targets an annualized return rate of 47.5%.
Tempur-Pedic (NYSE: TPX) has been selected by InvestorsObserver
analysts as a stock that is an ideal candidate for a new covered
call today. Buying the stock for $48.97 while simultaneously
selling the July $48.00 call will result in a new position with a
target return of 8.2%. Based on recent prices, this position will
cost about $44.37, which is also the trade's breakeven point. At
that level, this covered call has 9.4% downside protection, while
still providing a 8.2% return in 53 days as long as TPX is above
$48.00 on 7/21/2012. For comparison purposes only, this Tempur-
Pedic covered call aims for an annualized return rate of 54.8%.
eBay (NASDAQ: EBAY) has been identified by InvestorsObserver
analysts as being well-positioned for a new covered call today.
Buying the stock for $40.35 while selling the July $40.00 call will
produce a new covered call with a break-even point around $38.06.
At that price, this position has a target return of 5.1%. This
trade will have roughly 5.7% downside protection, while still
aiming for a 5.1% return in 53 days. It will lock in that return as
long as eBay is above $40.00 on 7/21/2012. For comparison purposes
only, this EBAY covered call aims for an annualized return rate of
32.9%.
Infosys Technologies (NASDAQ: INFY) has been chosen by
InvestorsObserver analysts as a candidate for a new covered call
today. Selling the October $40.00 call while at the same time
buying INFY stock for $42.46 will produce a new covered call with a
target return of 7.6%. Based on recent data, this trade will cost
about $37.16, which is also the covered call's breakeven point. At
that price, this covered call has 12.5% downside protection, while
seeking an assigned return of 7.6% return in 144 days. If INFY is
higher than $40.00 on 10/20/2012, we are assured that simple
return. For comparison purposes only, that equates to an annualized
return rate of 18.3%.
Micron Technology (NASDAQ: MU) has been selected by
InvestorsObserver analysts as a stock that is an ideal candidate
for a new covered call today. Buying the stock for $5.96 while
simultaneously selling the January $6.00 call will result in a new
position with a target return of 25.3%. Based on recent prices,
this position will cost about $4.79, which is also the trade's
breakeven point. At that level, this covered call has 19.6%
downside protection, while still providing a 25.3% return in 235
days as long as MU is above $6.00 on 1/19/2013. For comparison
purposes only, this Micron Technology covered call aims for an
annualized return rate of 36.5%.
Timken (NYSE: TKR) has been selected by InvestorsObserver analysts
as a stock that is a strong candidate for a new covered call today.
Selling the July $47.50 call while simultaneously buying TKR stock
for $49.15 will result in a new position with a break-even point
around $44.95. At that price, this position has a target return of
5.7%. This trade has 8.5% downside protection, while still
providing a 5.7% return in 53 days as long as TKR is above $47.50
on 7/21/2012. For comparison purposes only, this Timken covered
call targets an annualized return rate of 36.5%.
Zynga (NASDAQ: ZNGA) has been selected by InvestorsObserver
analysts as a stock that is an ideal candidate for a new covered
call today. Buying the stock for $6.61 while simultaneously selling
the December $6.00 call will result in a new position with a target
return of 21.0%. Based on recent prices, this position will cost
about $4.96, which is also the trade's breakeven point. At that
level, this covered call has 25.0% downside protection, while still
providing a 21.0% return in 207 days as long as ZNGA is above $6.00
on 12/22/2012. For comparison purposes only, this Zynga covered
call aims for an annualized return rate of 36.5%.
*Annualized returns are shown for comparison purposes only
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NEWS LEADERS AND LAGGARDS
Stocks pointed higher this morning include Peabody energy (BTU),
Alpha Natural Resources (ANR) and CONSOL Energy (CNX). Pointed
lower this morning are Western Digital Corp. (WDC), American Tower
(AMT) and Carnival Corp. (CCL). Analyst upgrades this morning
include L-3 Communications (LLL), Intersil (ISIL) and ArcelorMittal
(MT). Analyst downgrades this morning include Cross Country (CCRN)
and Exxon Mobil (XOM).
MARKET OVERVIEW
Asian markets ended higher across the board today, building on
Monday's positive momentum. Stimulus hopes buoyed stocks on the
mainland, after Chinese Premier Wen Jiabao pushed legislators to
place a "greater emphasis on growth." Over in Tokyo, Panasonic
paced a rally in tech stocks, with the electronics giant reportedly
eyeing significant job cuts. By the close, South Korea's Kospi and
Hong Kong's Hang Seng each gained 1.4%, China's Shanghai Composite
climbed 1.2%, and Japan's Nikkei added 0.7%. European equities have
pared their gains at midday, bogged down by familiar concerns over
Spanish debt. Yields on the country's 10-year notes are hovering
near an anxiety-inducing 6.5%, which has sparked selling pressure
on financial stocks. However, mining issues have advanced,
bolstered by optimism over China. At last look, the German DAX is
up 0.7%, the French CAC 40 has tacked on 0.4%, and London's FTSE
100 has edged 0.2% higher.
The U.S. dollar index is pointed south ahead of the bell, with the
greenback 0.2% lower at $82.28. Crude oil is on track to pare some
of last week's losses, with crude for July delivery 0.4% higher at
$91.23 per barrel. Gold futures, meanwhile, are up 0.2% at
$1,574.50 an ounce.
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PUT/CALL RATIO
Equity option activity on the Chicago Board Options Exchange (CBOE)
saw 746,798 call contracts traded on Friday, compared to 496,611
put contracts. The resultant single-session put/call ratio arrived
at 0.66, while the 21-day moving average was 0.78.
SUPPORT & RESISTANCE LEVELS
The S&P Depository Receipts (SPY) show support in the neighborhood
of $131.35 with resistance near $132.85. The Nasdaq 100 (QQQ) has
shown support around $61.70 and resistance around $62.70.
TODAY'S ECONOMIC CALENDAR
9:00 a.m. March Case-Shiller 20-City Index
10:00 a.m. May Consumer Confidence
EARNINGS EXPECTED TODAY
No major earnings releases expected today
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