• 	OPTIONSMART MORNING UPDATE: Soared on strong consumer confidence reading
  1. OUTLOOK:   Much stronger than expected consumer confidence data offset weak housing report and encouraged investors to jump back into the market after several down days. The rally was broad-based. However, this was just one number. We will have more important economic reports later this week. Apple rose 6% after analysts at Morgan Stanley upgraded the iPhone maker's stock. QQQQ's implied volatility dropped as large traders dumped put options and bet on an upswing. The market has more room to move higher this week. 2.  OUR OPTION REPAIR TECHNIQUE: ROLLING SPREADS No one can predict the direction of stock prices with 100% likelihood. That's why you need a backup plan to avoid losses. Rolling is a great technique to use when you want to hang onto a position you believe in. Rolling a spread refers to the process of closing both legs of an existing spread, and then opening two legs of a new spread using an option of the same type (call or put) at a different, typically more distant, expiration date and/or different strikes.   Here is a recent example from the "QQQQ Picks" Track record:   The chart above shows how did we repair the spread in early March by rolling the spread into April and paying extra 0.36. We found this roll reasonable because the general trend was up.
  Date  Action Opened on 02/09/09 Bought Mar 28/31 Debit Call spreads for 2.12 Rolled on 03/09/09 Closed Mar 28/31 Debit Call spreads and opened Apr 28/31 Debit spreads for extra debit of 0.36 Closed on 04/13/09 Sold Apr 28/31 Debit Call spreads for 2.85  wiith a 16% gain in 63 days! This technique works very good in almost any market environment. This advanced technique is a powerful toll to reduce risk for our portfolios. Learn more about our QQQQ Picks!  Take advantage of our special offer below!
  3. TRADING OPPORTUNITY: QCOM looks very attractive at this level. The stock is fundamentally undervalued (forward P/E (19) << trailing P/E(43)). The weekly technical chart looks bullish.
  4. OUR FREE MONTHLY TRADING RECOMMENDATION AUTO-TRADEABLE WITH OUR PARTNER BROKERAGES: to be published  in June.   Our most recent FREE pick has delivered a nice 11% gain just in 8 days!  It is absolutely free. Open your brokerage account, select OptionSmart as an newsletter publisher and Free Picks as a service. You will have our free monthly pick auto-traded. That's it!  You will like it and switch to our paid service very soon...
  5. WISDOM NUGGETS: Do not buy a stock because it is low priced (or sell because the price is high).
  6. SPECIAL OFFER: N/a Diversify your portfolio by receiving more frequent picks and trading alerts. Subscribe to our paid services!

  May 27th, 2009 at 3:09 am

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