Stocks on my Radar

Its a holiday today, so I am taking advantage of a little extra time to analyze some stocks that are on my watch list. Here are the stocks on my list: STEC, DFS, AZN, RIG, DF, GME, GS, LLY, NLY, PDLI, UUP, SPX (index). Below are a few trade ideas I have for some of the names on my watchlist.

STEC is a name that I am pulling back out of past names that I have made money in before. Last time I played this I entered somewhere around $11-$12.50 and exited in the $15-$17 range. It continued its up movement to around $20 before pulling back. As you can see on the chart below I have level of support drawn on the chart around $14. STEC closed on Friday at $15.02. So we are about $5 off of the recent highs. I think $15 offers a good risk/reward entry with a stop below $14. I am looking for a retest of the high of $20.45 set on 1-13-2010.


Risk/Reward = 1:5

Entry = Around $15

Stop = Below $14

Bias = Bullish

Next Catalyst = Earnings 2-23-10


How to play it with options: I looked at three different plays with Mar '10 expiration: Long $15 Calls, Unbalanced strangle (long $15 calls, long $16 puts), and Long $15/$20 call spread. See Risk Profiles Below (Also note that I adjusted volatility downward by 15% as IV is traded at a premium to HV):

Unbalanced strangle:

Long Calls:












Call spread:












So I will be looking to buy the 2/1 unbalanced strangle 3 times for a total of 6 $15 calls and 3 $16 puts. Based on the closing prices of Friday this will cost $4.80 per spread for a total debit of $1,440.

SPX
 I actually have a trade idea inspired by the guys over at Onn.TV. I am looking to sell the Feb '10 1100/1110 call spread. SPX closed at 1075.51 on Friday. Based on closing prices from Friday I can collect about $1.60 for this trade. I chose 1100 as in the short term I think that this will act as resistance going into expiration on Friday. But I may adjust the trade by using the SPY to adjust my risk. This would mean selling the 110/111 call spread on the SPY, which on Friday would fetch $0.21.

These are the only trade ideas that I have right now for the names on my list. I am going to try and spend a little more time finding potential trade ideas for OPEX. But we will see.