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$ZAGG Another Strong January Coming?

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I have started to accumulate some $7 and $8 calls for $ZAGG as I see the stock running up to $10 into its late February earnings report. If you look at last January the stock has a powerful rally into the end of the month as it rallied from current prices to $10.00 a share.

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If we get this type of rally the calls will return a very nice profit. However if the stock falls I will look at the $6.50 long term support level as the line in the sand as far as opening any more positions.

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What does ZAGG do? ZAGG Inc is a leading mobile device accessories and technology company with products that protect, personalize and enhance a consumer's mobile experience. ZAGG differentiates itself as the preferred brand by offering creative product solutions through targeted global distribution channels, with the broadest product offering in its sector. With a brand portfolio that includes ZAGG® and iFrogz™, the company manufactures and markets a complete line of products to improve the functionality of portable gadgets, including keyboards, cases, audio and protective films, through direct, retail, specialty and international channels.

Why do I like this stock? First lets start with the bad. ZAGG's CEO stepped down last August after selling company stock to cover margin calls. A possible class action lawsuit has clouded the future of the company and this could cap gains until this is resolved. Class action suits can be costly and time consuming.

Now on to the good. The company is growing at a very healthy clip with revenue up 30% last quarter. The earnings report coming next month is usually the company's strongest quarter (it includes the holiday shopping season) and last year the stock rallied over 20% prior to its release.

The company announced a $10 million share buy back last month, which amounts to almost 5% of the current outstanding shares. They also favorably refinanced their debt reducing their interest expense by $2,000,000 annually. The stock rallied over 12% on the heels of this news in December, and while the stock has since fallen back to the mid $7.00's , this is good news for ZAGG shareholders.

ZAGG's January in the money options trade with very little extrinsic value and that is good for an option trader. For instance the $7 strike that I currently own trades within $.05 of the price of ZAGG. I think we could see a nice gain on the calls in January and February as the stock ZIG ZAGGS its way to higher prices.

FCX PUTS = Excellent Profits (VIDEO)

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I bought FCX puts on Tuesday based upon a weakening chart. Little did I know what lied ahead on Wednesday. My puts were valued at $.70 coming into the session and I had little hope for gains as futures were rallying over night. That all changed as FCX decided to branch out into the energy sector. Unbelievable! FCX closed at $39.28 on Tuesday and opened at $32 today hitting a lot of $31.72.

I sold those $.70 puts for $7.00. Thank you FCX!

Disney(DIS) Sprinkling Some Pixie Dust on Netflix(NFLX) Calls

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We have made some bullish calls on Netflix(NFLX) lately and we have been betting on more upside as negative sentiment over the company and stock subsided. It was only last week when we were calling for an 8-12%+ move in the stock coming soon. Why did we think that way? Well history does have a tendency to repeat itself, and we do have a very short memory. In October the stock rallied 13% on rumors of a buyout from Microsoft(MSFT). Then on that following Wednesday, after the market closure from Sandy, the stock rallied over 20% after a filing from Carl Ichan. Crazy moves for folks holding the stock, but insane moves for those in calls. Trading options can be very risky, but also can be extremely rewarding, especially for those in our chatroom trading Netflix(NFLX) over the past 6 months.

Here is what I had to say trading Netflix in the last few days in October:

Had a feeling stock may rally a bit as it held its ground after earnings and was treading higher. Bought the calls when the stock was at $60. Next day it shows some strength in the mid-morning and ramps higher the rest of the day on strong volume from a so-called buyout rumor from MSFT. Could have sold as high as $5.10 on the calls but settled for 2 filled. $382 could have been $15k instead sold for 6,682. 

10/25/2012 09:46:29 Bought 10 NFLX Oct 26 2012 65.0 Call @ 0.13 -147.66 
10/25/2012 14:00:36 Bought 23 NFLX Oct 26 2012 65.0 Call @ 0.09 -234.64 

Total Cost : 382.3 

10/26/2012 14:43:37 Sold 16 NFLX Oct 26 2012 65.0 Call @ 2.59 4,121.63
10/26/2012 14:51:17 Sold 17 NFLX Oct 26 2012 65.0 Call @ 1.52 2,560.91

Total Sale : 6682.54 

I then went and bought the $75 calls for next week as I the action looked extremely bullish irregardless of BS buyout rumors NFLX always has. Option prices were higher now then they were before earnings, which was very odd. Bought 50 @ .40 and they closed $1.25 an hour later. I held them through the weekend even though they were already a 3x bagger. 

10/26/2012 14:54:24 Bought 50 NFLX Nov 2 2012 75.0 Call @ 0.4 -2,048.34 

Of course Hurricane Sandy comes and the market is closed Monday and Tuesday. The odds of the market ever closing is minuscule and the fact that the option values decayed drove me nuts, but its the game we play and know the risks. Figured NFLX would open flat or maybe red and the calls would be .60-.80. Turns out Dealreporter comes out to squash the buyout rumor and NFLX opens down 4% on decent volume. Watched as the bottom fell out and the stock went to $65. Some reason my gut said the stock should be down more, and Fridays volume was a ‘tell’ for me that someone was bidding up the stock. So right near the bottom I bought 40 more the $75 call @ .14, even though they expire in less then 3 days and I would need the stock to move $10 to make some nice money. Also bought some of the 90 calls @ .24 

10/31/2012 09:39:06 Bought 40 NFLX Nov 2 2012 75.0 Call @ 0.14 -600.67 
10/31/2012 09:40:18 Bought 18 NFLX Nov 17 2012 90.0 Call @ 0.24 -455.80 

What i was saying in Chat that day before the ICHAN news that vaulted it from $70 to $85 in seconds: 

2012-10-31 02:30:22 PM jimmybob $75+ this wee 
2012-10-31 02:30:18 PM jimmybob we know interantional was going up expense wise... non event imho 
2012-10-31 02:30:27 PM jimmybob follow the money flow 
2012-10-31 01:34:35 PM jimmybob why you folks want NFLX to die? 
2012-10-31 01:34:52 PM jimmybob someones bidding her up last two days... dosnt need buyout rumors or other bs 

Of course i saw the volume and surge, stock was halted at about $76 for circuit breaker. Put my order in during the halt to sell some @ $4 

10/31/2012 15:04:40 Sold 50 NFLX Nov 2 2012 75.0 Call @ 4 19,951.21

I actually tried to change my order to $5 when it started up but it filled me right away. Stock then vaults all the way to $84.95, then gets halted again. The remaining 40 contracts are now worth $10 each x 40 = $40k. If had put an order in to sell all at $10 would have $90k sale. Instead I put my order in to sell the rest for $7 while the second halt is happening. They never fill and i have to drop to $6 to fill. 

10/31/2012 15:14:51 Sold 40 NFLX Nov 2 2012 75.0 Call @ 6 23,958.79 

Morale of the story is, if you read every where, 95% of folks are bearish and will give you 99 reasons why you should be short the stock...ect, Meanwhile i just took $2649.01and turned it into $43,910. 

If you add fridays trades it’s : $3031.31 into 50,592.54 in two trading days. It doesn’t always happen like this, and I have plenty of losers, but when they pay it can be very rewarding!

 

Now do you see why we continue to have Netflix(NFLX) on watch, and nibble some calls almost every week? Of course today was a day like any other, where we positioned ourselves for some upside as Netflix(NFLX) was getting a bid. Figured Netflix(NFLX) would put another dagger in the bears back so grabbed some calls on the early strength after the bounce from under $75(key support)

12/04/2012 09:57:47 Bought 3 NFLX Dec 07 2012 82.5 Call @ 0.31 -95.31
12/04/2012 09:57:47 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.31 -31.77
12/04/2012 09:57:47 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.31 -31.77
12/04/2012 09:57:47 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.31 -31.77
12/04/2012 09:57:47 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.31 -31.77
12/04/2012 09:57:47 Bought 4 NFLX Dec 07 2012 82.5 Call @ 0.31 -137.06
12/04/2012 10:01:05 Bought 4 NFLX Dec 07 2012 82.5 Call @ 0.35 -143.07
12/04/2012 10:01:05 Bought 2 NFLX Dec 07 2012 82.5 Call @ 0.35 -71.54
12/04/2012 10:01:05 Bought 4 NFLX Dec 07 2012 82.5 Call @ 0.35 -143.07
12/04/2012 10:01:05 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.35 -35.77
12/04/2012 10:01:05 Bought 2 NFLX Dec 07 2012 82.5 Call @ 0.35 -71.54
12/04/2012 10:01:05 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.35 -35.77
12/04/2012 10:01:05 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.35 -35.77
12/04/2012 10:01:05 Bought 10 NFLX Dec 07 2012 82.5 Call @ 0.35 -367.66
12/04/2012 10:02:28 Bought 2 NFLX Dec 07 2012 82.5 Call @ 0.4 -81.54
12/04/2012 10:02:28 Bought 4 NFLX Dec 07 2012 82.5 Call @ 0.4 -163.07
12/04/2012 10:02:28 Bought 4 NFLX Dec 07 2012 82.5 Call @ 0.4 -163.07
12/04/2012 10:02:28 Bought 2 NFLX Dec 07 2012 82.5 Call @ 0.4 -81.54
12/04/2012 10:02:28 Bought 3 NFLX Dec 07 2012 82.5 Call @ 0.4 -122.31
12/04/2012 10:02:28 Bought 3 NFLX Dec 07 2012 82.5 Call @ 0.4 -122.31
12/04/2012 10:02:28 Bought 1 NFLX Dec 07 2012 82.5 Call @ 0.4 -40.77
12/04/2012 10:02:28 Bought 11 NFLX Dec 07 2012 82.5 Call @ 0.4 -458.43

We were also in our chatroom, on stock twits, and on our audio explaining the thought process and alerting the trades we made. Of course luck plays a part as Disney(DIS) & Netflix(NFLX) deal is announced and the stock ramps from $78 to low 80s in 20 seconds. This is when we put on the headphones and tune out the noise. Holding 66 calls avgd at about .36 are now worth $2, or $2k is now work $13k. Netflix is now $82 and climbing. Any sane person is selling but I was saying it on audio, this is a big deal. Kept reading and re-reading the PR and then I put my limit in for half of my calls @ $5.00 even though they were worth $2.37. Netflix(NFLX) ramps to $84.50, then falls down to 82.98. Almost panic but stick to my guns. Finally stock bolts higher and breaks $85... then 86... calls are 4.70 with 1 hour left. The stock could fade the rest of the day, but stuck to my guns... 5 minutes later the order fills:

12/04/2012 15:06:17 Sold 1 NFLX Dec 07 2012 82.5 Call @ 5 489.22
12/04/2012 15:06:24 Sold 2 NFLX Dec 07 2012 82.5 Call @ 5 998.43
12/04/2012 15:06:27 Sold 1 NFLX Dec 07 2012 82.5 Call @ 5 499.21
12/04/2012 15:06:53 Sold 14 NFLX Dec 07 2012 82.5 Call @ 5 6,989.10
12/04/2012 15:06:55 Sold 12 NFLX Dec 07 2012 82.5 Call @ 5 5,990.65
12/04/2012 15:06:55 Sold 3 NFLX Dec 07 2012 82.5 Call @ 5 1,497.65

Now i can sleep tonight. I am a very risky options trader and there have been many times positions like that have gone against me and expired worthless, but there have been many more this year that have run 2000%+.

I think Netflix(NFLX) continues it's bull run tomorrow and breaks over the $90 we have been calling for by the end of December. I guess we will see tomorrow.

We still hold $82.50 and 100 weekly calls.