General Options Blog

CME (CME GROUP Inc)

CME (CME Group) stock has been ripped to shreds the past few weeks, on the MF global disaster. Rumors out there that CME will be on the hook for some of the losses.

I dont think that will be the case. Either way, CME looks ready to bounce from the $220 level. $240 should come in short order on the $230 break.

Huge volume this morning. Playing the JAN 21st $240 calls currently asking .75.

MAKO… Not the shark…

Everyone is always looking for the next Apple, the next NFLX, the next AMZN... the next revolutionary company that is currently trading under the radar. The next stock that will turn your 401k into an 801k. The one that will turn your thousands into hundreds of thousands. Just type a search into google for the next big stock, and you will see there are many others on the same mision. And of course, many folks who already advertise a stock as the next big thing.

One of those stocks we were alerted to was MAKO, a medical device company that markets its advanced robotic arm solution and orthopedic implants for orthopedic procedures. Is this the next big stock? Well how could it be, as there is already a market leader in ISRG (Intuitive Surgical, Inc.).

But what we do have with MAKO, is a company that is really starting to grow and turn profitable. MAKO is up from the high 20's over the past 2 weeks, on some nice revenue news as well as the JP Morgan medical conference of 2012. We recommended the $30 calls last week, and like MAKO to test the $40 range in the next week.

 

The HERD

Sometimes you need to step back from trading for a minute, realize your are human... a mammal actually, then go back to your desk and trade accordingly. What does this mean? Well lets take a look at one of the more common behaviors of a mammal... herding. We all know what a herd is. Lets look at the definition more closely:

When an association of animals (or, by extension, people) is described as a "herd", the implication is that the group tends to act together (for example, all moving in the same direction at a given time), but that this does not occur as a result of planning or co-ordination. Rather, each individual is choosing behaviour that corresponds to that of the majority of other members, possibly through imitation or possibly because all are responding to the same external circumstances.

 

 

Now take a look at a stock like GOOG (GOOGLE) over the past few days. Yes, it did break to new highs recently. But yesterdays sell-off, and todays weakness is more folks following the herd then anything else. Sometimes following the herd can be very profitable, if your looking for long term holds. But as a short term trader, following the herd can be very frustrating.

Timing the herd is the key to profits. This means finding where GOOG will bounce off support and get in before the herd takes it to $700+. That may have happened today, as GOOG bounced off its 50DMA on high volume.

We are going long the calls. Check out our chatroom for the trade ideas.

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SINA (SINA.COM) / GMCR (Green Mountain Coffee Roaster, Inc.)

Seems like all the beaten down, piece of shit stocks want to run today. SINA (SINA.COM) is a beaten down china ADR that is getting some legs on the FMCN news today, just like all the other ADR's. SINA (SINA.COM) does have a tendency to explode after being beaten down, like it did in October. SO play accordingly.

 

 

GMCR is continuing its breakout today, after getting an afternoon pop yesterday. Looks like a combination of some NPD rumor news, as well as short covering??? Hate the stock, but play the play, and GMCR can be profitable trading on both sides.

Volatility is an option players friend!

Happy Trading!

DNDN (Dendreon Corp)

We wrote about DNDN in early December, after they released news of a royalty sale for $125 million. Sometimes that can be the sign of a desperate company, especially one that has been burning through cash at a high rate. But we thought the opposite and that the calls would be a nice play going forward, as we wrote here.

DNDN
DNDN

Turns out those have been quite a profitable trade, as DNDN has surged more then 50% from the December lows closing at $13.31 today. It's anyones guess if this current 3 day monster run continues on the pre-announcement of "better-than-forecast fourth quarter 2011 revenue ". DNDN still has a questionable future, and will be in trouble if its only revenue driving drug fails.

For now, its best to play the hype, and lock in profits when you can. Its usually the people looking at the chart, waiting for a retest of the stocks highs, that are holding the bag a few weeks later wondering what happened.

Figure short term top of $15-17 to lock in profits, and hold some calls for possible $20 test.

dndn 1-9
dndn 1-9