Tag Archives: puts

The Crossroads – Where are we headed?

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On April 4th, the market hit a 4 year high as the $SPY touched $142.21. If you had told someone last October that the market would be up nearly 40% 6 months later, they would call you crazy. But that is exactly what happened from the 107.43 low on October 4th. Amongst all the negative sentiment, the market mysteriously found a bottom and rallied furiously, squeezing all the bears... the ones who watched the riots in Greece with glee, the ones who were hoping for someone else's pain to give them glory. We have seen this story over and over. The Eurozone debt situation is not a new problem. The market has been dealing with it for 3 years. We have seen this before, and it will not be the cause for a larger sell off in equities. May's decline has been somewhat orderly. The trading days have lacked the 1-2% swings we became accustomed to in August and October. This is no panic sell-off, its profit taking.  Yes, the USD has been on a major tear, trading up for 14 straight days at one point... the most since 1985!

Looking at that data point alone, I woud assume the markets had a massive sell-off. Yet we are not even in 'correction' territory. It's buy the dip time for me. With the election coming, there is no way the market is allowed to fall any further. Well we shouldn't call it a market, since the Obama administration will pull out all the stops to ensure the "economy" is not the cause for Romney winning. And to make that happen, we will need to have a nice summer rally.

Best way to make money trading, is to be ahead of the curve. Here is what I am doing to ensure I am:

Expect some "buy the pullback" upgrade to come out on your favorite momentum stock. Stocks like Priceline.com(PCLN), LinkedIn(LNKD), Buffalo Wild Wings (BWLD), Panera Bread(PNRA), Chipotle Mexican Grill(CMG), Intuitive Surgical(ISRG), and Starbucks(SBUX).

Buy out of the money calls on those plays to maximize the impending short squeeze. The dumb sheep are the ones who are shorting it based on the chart, and will be covering when they start getting squeezed.

Second, expect some sort of China stimulus. They are missing the talks of their growing economy and want to be back in the spotlight. China can be the key for a nice recovery alone, and China sure knows how to manufacture fake growth to inspire folks to load up on China stocks like Sina.com(SINA) and Baidu(BIDU) as well as the oversold commodity stocks.

We will have more on our watchlist tomorrow, but we are banking on a nice rally coming in the next few weeks. By the time you blink, we will be back over the April highs. Most folks will be scratching their eyes wondering what happened. Here at OptionMillionaires we will be counting our profits.

Take a look at the chart below. Lets have a great week!!!

SINA Corporation (SINA)

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Sina Corporation (SINA) has been an Optionmillionaires favorite over the past few months.There is nothing that an option trader likes more than a volatile stock, and SINA Corporation (SINA) sure fits the bill. SINA Corporation (SINA) reported earnings after hours, and the stock rose nearly 7%. Folks were expecting a loss, which they got, but revenue was above expectations. With all the bad press as of late, it was almost a relief that SINA Corporation (SINA) expects to still generate revenues with the China censorship crackdown.

It's one of the reasons we think there will be some serious upside upgrades tomorrow. SINA Corporation (SINA) pulled in just over $100 mil in revenues for the past quarter, yet has over 300 million users of its twitter like service. If they are able to just pull in $.50-$1 per user, they will experience some SERIOUS growth. Smart "Growth Companies" sacrifice short term profits, for long term growth. Looks like Sina CEO Charles Chao is continuing to do that, which is great news in our opinion:

Sina CEO Charles Chao said: "China's macroeconomic weakness in the first quarter the Company's brand advertising business growth moderate. We expect the macroeconomic aspects of the resistance will continue until the second quarter, however, we have begun to test the water micro- Bo brand advertising business. this advertising product recommendation engine driven by the map-based social interest, is expected to be in the second half of the year for our brand advertising business real impact. the current the microblogging advertisers preliminary feedback is encouraging, we believe that to continue major investment is necessary for social media and related projects. "

 

Of course there are the folks looking at the news release tonight seeing this headline:

Sina Corp could see further losses due to Weibo: CEO

The market is forward looking, and think this view is very short sighted. With the penetration they have, in a market with few competitors, I think SINA has much more upside then folks are giving her.I guess we will see tomorrow. Here is what we were saying on our watchlist this morning and monday:

SINA – 60 calls before the close for me, think earnings will not be too good, but the outlook and china restrictions will be the key.

SINA – reports this week as well, with RENN. Hard to figure, but I still like SINA. Not sure of the strikes yet and may wait till Tuesday AM.

 

Happy Trading!!

 

Disclosure: we hold $57.50 and $60 MAY calls

Groupon needs a Groupon for an accountant

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Anytime you see an accounting scandal from a company thats reporting earnings for the 2nd time in it's history, you run... and run far away. I was just imaging getting an email in the morning from Groupon for an accountant... how ironic would that be?

Groupon (GRPN) reports earnings after the bell, and we have positioned ourselves with puts. The stock ran nearly 20% as folks are banking on a strong quarter. But earnings can be short lived, whereas scandals have longer memories.

Time will tell, but we think it will take sometime for Groupon(GRPN) to revisit it's IPO price of $20.