Date: 8/3/11
Symbol: CHRW
Action: Open
Position: Long Nov-11 70/75 Call Spread
Open: $2.30 Debit

With the turbulence in the markets, this position floundered for several weeks, but with a nice breakout above the 20 and 50 day moving average over the last 3 days, we now believe is a prudent time to exit this trade for a profit. While further upside is possible, we do not like the pressure the current price is exerting on the upper Bollinger Band, and frankly, further weakness in the overall market can quickly reverse this position back into negative territory.

So today we are closing this position for a credit of $2.65 for a $0.35 and 15% gain.

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We are opening a credit call spread position on VXX (S&P 500 Volatility Index). VXX has had a huge run on the decreasing market (VXX is inversely correlated to the S&P) and now is oscillating in a more narrow range. As the VXX touches the upper Bolinger band, it is likely to retreat to at least the lower band. We will want to take advantage of this decline and put on a bearish call spread for a small credit.

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We are opening a call spread position on CHRW (C.H. Robinson Worldwide). CHRW has dipped significantly since its missed earnings target on 7/26/11 and has now settled on a strong support level at the current price at around $71.50. We believe that the drop was over-amplified by the recent overal market drop and that CHRW will slowly begin to recover to its level above $75. We are giving this position a few months to do so.

Max upside for this position is $2.70. Maximum downside is $2.30, i.e. the cost of the trade, if at November expiration CHRW trades at or below the $70 short call strike price.

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Date: 5/27/11
Symbol: CERN
Action: Open
Position: Long Sep-11 120 / Sep-11 125 Call Spread
Open: $2.40 Debit

On 6/27 CERN went through a 2:1 stock split. As a result our position was automatically updated to double our quantity at half the price of each position. We are now:

Long Sep-11 60 / Sep-11 62.5 Call Spread at $1.20 Debit

Today, CERN announced better then expected earnings and JP Morgan raised Cerner’s price target to $76 from $60 . At this time, and given the overall market instability, we feel it is wise to close this bullish position and strengthen our cash reserves.

We have closed the position today at $2.25 credit, for a an overall profit of $105 and an 87.5% profit margin.

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We are opening a call position on TEF (Telefonica SA) based on a review of positive option activity in this stock. TEF has bounced off of a strong support level and e expect the value of Telefonica to rise.

Max upside for this position is unlimited. Maximum downside is $0.95, i.e. the cost of the trade, if at December expiration TEF trades at or below $25.95.

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Date: 5/27/11
Symbol: CERN
Action: Open
Position: Long Sep-11 120 / Sep-11 125 Call Spread
Open: $2.40 Debit

Over this past weekend CERN went through a 2:1 stock split. As a result our position has been automatically updated to double our quantity at half the price of each position. We are now:

Long Sep-11 60 / Sep-11 62.5 Call Spread

Currently, our stock market quotes provider is not providing us with quotes for the 60 Call, so our Open Trades does not accurately reflect the value of this position. We anticipate this will be resolved shortly.

We are staying in this position, as the split has nicely reduced our risk exposure and reduced the amount of recovery we need in order for this position to be profitable. We will stay with this trade for now.

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On 5/23/11, we bought back the short side of this position for a $1.85 debit expecting that SRCL would recover. However, with the market action of the last week, we no longer see this as a viable profit opportunity and we choose to sell our remaining long August call position and close this entire trade.

This trade went completely against us and unfortunately the downturn was fast and furious, leaving us little time to react. With the market indicators as they currently are (breached support levels), this is not a good time to be holding on to bullish trades and its best to clear our slate.

On 5/5/11 we are bought the FLEX Oct-11 6 put for a net debit of $0.31 per position. We anticipated FLEX to continue to fall.

On 5/15 FLEX was upgraded by Raymond Jones to “outperform” which broke the stock’s downward momentum. We observed the stock for several days thereafter, as not all upgrades are recognized by the market. In this case however, we now see an steady break out from the downward trend and feel this position no long meets our holding criteria. We are closing this position for a 16 cent credit back to our account.

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We are opening a bullish position on SPN (Superior Energy Services) by buying the Jul-11 40 Call for a net debit of 1.00 per contract. SPN has been trading in a bound range between 36 and 42 and is currently at the lower end of that band, moving higher. It is currently trading at $37.20. Note that this particular option is very lightly traded and you need to be patient to get a fill at your bid price.

Max upside for this position is unlimited. Max downside is $1.00 per contract if at expiration SPN trades at or below $40. Break-even for this trade occurs if SPN is trading at $41 at expiration.

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We are buying the HWD (Harry WInston Diamond Corp) Aug-11 17.5 Call and at the same time selling the Aug-11 20 Call for a net debit of $0.93 per contract. HWD has a confirmed breakout from a flag pattern. We anticipate HWD to quickly rise to just short of $20, which will produce a profit gross margin in the range of 50% to 55%. We do not anticipate holding this position any longer then the completion of the formation of the remaining leg of the flag pattern. HWD is currently trading at $17.60.

Max upside for this position is $157 per contract and is achieved if at expiration the underlying price of HWD is at or above $20. Max downside is $93 per contract if at expiration HWD trades at or below $17.5. Break-even for this trade occurs if HWD is trading at $18.43 at expiration.

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