Here are some updates on the trades we are following.

AutoZone (AZO, $86.93, down $7.32)

November 95 puts (AZOWS, $8.60, up $4.80) were profiled at 90 cents and traded as low as 75 cents on Tuesday. Sell them right now. If you were brave enough to roll with these November put options your return is up over 800%. Close them today as the contracts expire on Friday.

December 95 puts (AZOXS, $14.70, up $3.30) were profiled at $5.40. Sell 75% of your position today and let the other 25% ride. The return is 175%.

December 75 puts (AZOXU, $6.20, up $1.70) were going for $1.80. I said to buy them up to $2.00 and if you got into this trade, you can bank the 250% return. Close 75%, keep the other 25% open.

Baidu.com (BIDU, $106.05, down $5.69)

November 100 puts (BDQWT, $5.40, up $1.90) were going for $2.50. Close the trade.
December 100 puts (BDQXT, $16.70, up $2.00) are up from $8.75. Close the trade.

Although we were on the sidelines with Baidu, some of you may have rolled the dice on this one. Take your profits and run to the hills.

Abercrombie & Fitch (ANF, $14.75, up $0.20)

The stock made another fresh 52-week low yesterday and this trade is pretty close to reaching max potential.

November 22.50 puts (ZWRWX, $7.80, up $0.30) were profiled at $3.30. Close the entire position today.

December 17.50 puts (ZWRXW, $4.00, up $0.30) are up from $1.70. These put options were our main focus and we have done well with them. We are up 135%. You could set stops at $3.40 but you would be giving up profits if ANF reverses course.

Apple (AAPL, $80.00, down $6.29)

I mentioned Apple last Thursday and although it has taken a little longer than expected, the stock is breaking down like a rented mule. The December 80 puts (QAAXP, $8.00, up $2.40) are up 57% from our entry price of $5.10. Set atops at $7.65 to ensure a 50% return.

Google (GOOG, $270.00, down $10.18)

On November 12, I had mentioned the November 280 puts (GGDWP, $16.00, up $7.40) at $6.00 and they traded above $12. We had set stops at $11.00 and we were stopped out of the trade earlier this week.

The December 240 puts (GOUXH, $15.00, up $3.70) were trading at $6.60 and we had set a stop of $9.00 for the position. Raise the stop to $12-$13 and sell 75% of the position if these levels are hit today.

The market looks like it is going to test its low as the Dow is down over 100 points to 7,820. The thing to watch for here is a bounce off the October 10 low of 7,773. If we don’t get a convincing bounce then we could be setting up for a faded rally. If we test the low, bounce, and come right back down then we can expect more weakness.

The market is at a pivital point and we should get a clear direction of which way we are heading by Friday’s close.

Rick Rouse
Rick@OptionsMentoring.com

Google (GOOG, $304.92, down $6.54) has been hovering the $300 mark for the past couple of days and it looks as though it’s just a matter of time before the stock falls below this level. Google is at a three-year low after a couple of analysts downgraded the stock this week amid the global slowdown.

Shares of Google started its slide on Monday after Goldman Sachs trimmed their growth forecast and target price. Goldman still rates the stock a “Buy,” but expects the company’s current quarter revenue will grow just 1% sequentially, down from an earlier expectation of a 4% quarter-over-quarter increase. The new price target for the stock is $475, down from $520.

Not do be outdone, Citigroup cut its earning estimates for the company but also kept a “Buy” rating on the stock. Their new price target for Google is $450. Citigroup’s channel checks are revealing the same information Goldman has learned. One, ad revenue is being curbed by corporations and two, consumer clicks on paid advertisement links are declining.

On Tuesday, the stock hit $300.52, its lowest point since 2005. The question with Google is can it do well in other markets beside search and search advertising? The company has its finger in a lot of pies and although phone and video are some great platforms, I don’t think Google has the muscle to overtake Apple (AAPL, $92.17, down $2.60) but then again, you can never underestimate what Google might have up its sleeve.

Wall Street rode Google to a high of $724 and has since abandoned ship. Looking at the chart, if Google fails to hold $300 then it could get nasty. The “floor” for Google appears to be $200 where there is a solid foundation. I’m not saying Google gets a straight drop to $200 but I do think the stock breaks below $300.

Short-term traders are targeting the November 280 puts (GGDWP, $6.00, up $1.00). The puts have traded as high as $7.20 and have a shot at $10 if Google continues lower. The November puts expire next Friday.

The December 240 puts (GOUXH, $6.60, up $1.22) are getting some activity as bears prepare for the drop below $300. The overall market sentiment is still down and Google has a big bull’s eye on its back. Bears are throwing darts looking to score…

Rick Rouse
Rick@OptionsMentoring.com

Yahoo (YHOO, $13.92, up $0.57) was back in the news again on Wednesday. The stock had a strong day despite the fact that Google (GOOG, $342.24, down $24.70) backed out of its advertising outsourcing agreement with the company. At one point, Yahoo traded as high as $14.84.

There were many on Wall Street who had speculated this deal would fall through mainly because Google didn’t want to have to deal with the anti-trust issues. That was loud and clear when Google’s legal rep had this to say:

“We’re of course disappointed that this deal won’t be moving ahead but we’re not going to let the prospect of a lengthy legal battle distract us from our core mission. That would be like trying to drive down the road of innovation with the parking brake on.”

Sweet analogy.

Of course the bulls and bears immediately began to battle as bulls are hoping for another bid from Microsoft (MSFT, $22.08, down $1.45) while the bears are saying this is the end for Yahoo. What? You think it’s a coincidence that Yahoo’s CEO Jerry Yang had this to say after the closing bell: “To this day, I believe the best thing for Microsoft to do is to buy Yahoo,” ..

Yeah, that dude is drowning and begging Microsoft for a life jacket. Yahoo had an easy $33 a share, or nearly $48 billion in its back pocket when Microsoft was really wanting to buy the company and Yang held out for a few dollars more a share. It’s amazing sometimes how egos can get in the way of doing what is right for a company. This is a clear example of why America needs more shareholder rights. Afterall, you are not just buying stock of a company, you own part of the company when you buy stock. Shareholders could have gotten $33 a share a few months ago, now they will be lucky to get $20. It is what it is but Yahoo blew its chance of doing what was right for its shareholders.

The January 17.50 calls (YHQAW, $1.25, up $0.35) were one the plays we had in our Lottery portfolio. These calls were profiled around the same price that they are trading at now but did trade as high as $1.40. The November 15 calls (YHQKC, $1.30, up $0.80) were certainly a huge winner as they advanced 150+%. They traded as high as $1.38.

Yahoo’s rally was driven, in part, by rumors that Yahoo and Microsoft are close to an agreement of $17 to $19 a share — speculation that both companies denied. I had mentioned that companies are getting “cheap” again that would could see some M&A (merger and acquisition) activity. Chesapeake Energy (CHK, $24.83, up $1.88) and Yahoo are making the rounds and there is even fodder that Disney (DIS, $24.23, down $1.79) should buy Electronic Arts (ERTS, $22.37, down $1.03). M&A is coming and when it does it could be fast and furious.

I think Microsoft will make another run at Yahoo and I would expect it to be sooner rather than later. Microsoft still wants Yahoo but is trying to get it as cheap as it can. Microsoft is a cash cow and it needs Yahoo’s search engine and huge audience if it ever wants to mount any serious threat to Google.

The November options are a big risk as time would be working against you waiting for this marriage to happen. The contracts expire in 15 days and I don’t think anything will get done that quick. It could but that is why we went out to the January options from the get-go. If Yahoo gets a minimum $20 bid then the January 17.50 calls would be worth at least $2.50 or a double from current levels if Microsoft comes in with that kind of bid.

Maybe by Christmas a deal gets done but I have been telling you the $33 bid from Microsoft six-months ago would continue to haunt Yahoo shareholders once Yang blew it.

Keep holding the Yahoo call options and remember that they are a lottery play. You could take the profits you have now but it would be like winning $5 on a $5 lottery ticket. We are at least trying to double our money.

Rick Rouse
Rick@OptionsMentoring.com

Google (GOOG, $353.02, up $13.85) turned in a fantastic report card after the bell on Thursday. The company beat Wall Street’s expectations by announcing earnings of $1.35 billion for the third quarter, up 26% from a year ago. Earnings per share were $4.92, which was 17 cents above estimates of $4.75. The stock was up over 10% in after-hours trading to $390 which could set us up for a nice open this morning.

The news is great for a number of reasons. I was anticipating good Google numbers but the market allowed us to play a strangle on Google which made us a sweet return.

The stock traded to a low of $309 on Thursday which allowed us to exit our October 290 puts (GGDVR, $4.10, down $0.10) at $9 or better as they traded to a high of $13. That was more than a 50% gain from our entry point on both the put and call option.

The October 400 calls (GOPJT, $6.10, up $2.10) were at $1.80 when Google hit its low for the day and we kept these open since the puts had already made our trade a winner. The market got a lift in the afternoon session and Google started to rebound which helped the calls recover. Expect a big, big move in these options if Google can hold its $37 after-hour gains. Even if you closed the puts at $10, the calls rebounded enough to already make this trade a double.

Our entry price for both options was $8.50 and we are looking at $16 before the market even opens ($10 for the puts, $6 or better for the calls).

The March 500 calls ($15.60, up $1.60) which I mentioned on Monday at $11.50 should also do well. The went on a wild ride yesterday, trading to a low of $9.80. Some of you may have even taken this trade again if you had a stop of $15.

The government may be printing money like its going out of style to help the market but its a great thing for option traders. This is the best option trading market we may ever witness. Take advantage of it.

Rick Rouse
Rick@OptionsMentoring.com

After taking one big step forward, the market took two steps back on Wednesday as the Dow fell 733 points, or 7.9%, to close at 8,577. Of course, we are not surprised because we have been preparing for it. Yesterday’s downfall was blamed on bad retail sales data as September sales tumbled 1.2% month-over-month. Biggest drop in three years. The news was a shocker for Wall Street as it was a larger than expected drop. Know-it-alls predicted a decline of 0.7%.

As far as the indexes, the Nasdaq took a 8.5% hit and finished lower by 150 points at 1,628. The S&P was hit harder than a Vegas hangover, falling 9%, or 90 points, and closed at 907.

The Dow’s low last Friday was 7,773. For the Nasdaq it was 1,542 and for the S&P it was 839. So far we’ve been right-on in calling this market and we have prepared for a bottom, played the bounce, and now we must get ready for the possibility of testing those lows again. Remember, I keep telling you October will continue to be like this. That is why we are taking half positions over the short-term/ long-term and cashing in on profits by keeping tight stops.

As far as the bounce, it was good for a quick trade in Microsoft (MSFT, $22.66, down $1.44), Google (GOOG, $339.17, down $23.54) and Johnson & Johnson (JNJ, $60.54, down $3.46), Morgan Stanley (MS, $18.13, down $3.81) and Goldman Sachs (GS, $113.15, down $8.75). Keep an eye on the calls I have mentioned. Some of them are still higher but they may get cheaper. So here is the game plan.

First, if you take any positions, only start with a half position. What that means is that if you normally buy 10 option contracts at a time, buy five. The market keeps showing signs of another breakdown and to me, that would be the best thing that could happen.

Of course everybody is going to question the bailout package but the market needed to do its own cleansing and needed to make its own low before Congress jumped in. The truth is that Bush didn’t want a crisis and they wanted to jump start the market because it was at multi-year lows. But the reality is the market has to make a bottom on its own.

I studied charts until I was light-headed last night and here is my best/ worst case synopsis. I’ve already been calling for this decline since August before we hit last Friday’s lows. In fact, in the October 7 blog with the Dow at 9,447, here was what I mentioned:

“I’m not making any predictions on how low the Dow can go because on any given day we could get some kind of “miracle news” that takes the Dow higher by 1,000 points but from my study of the chart for the Dow, it looks like we could test 8,300. That’s another 1,000 points lower. From there it gets real ugly.”

Well, we got that and then some, son. I only repeat myself a thousand times because, again, I want to make you aware of what type of market we are in. You have to have a quick trigger and know what is happening. Having said that, there is support at 7,200 for the Dow but that’s another 1,300 points lower.

Although the talking heads thought last Friday’s 7,700 level was “the” bottom, some research will shed a different light on the subject if you are willing to do a little homework. This market can float like a butterfly and sting like a bee, that’s for sure. But it’s up to you to stay on your feet so that you can beat the Street. Don’t fall in love with any positions (yet). We still have earnings and October options expire next Friday.

Drumroll please…it’s possible we test those lows for the Dow (7,200) by next Friday with the hope of the market rallying afterwards.

Rick Rouse
Rick@OptionsMentoring.com

The relief rally was on today as the Dow zoomed 936 points as bulls rushed in to buy stocks that have been beaten down 50%-80% in just over a month. If you read the blog that I posted over the weekend, then you could tell how excited I was to go long the market. There were a ton of positions that could have been bought at the open this morning and it felt like I was going Christmas shopping on the Friday after Thanksgiving. That day is the biggest shopping day of the year as consumers rush to the malls at 4am to get the best deals. That is exactly what was happening at the opening bell this morning.

The Dow was up a quick 400 points right off the bat and its 11% gain was ithe biggest since the Great Depression. For the record, the Dow officially closed at 9,387. The “dead cat bounce”, “relief rally”, “oversold rally” or whatever you want to call it also pushed the S&P 500 and Nasdaq higher by 104 and 195 points, respectively. The S&P 500 closed at 1,003 while the Naz closed at 1,844.

But can the rally be trusted? The key point I made over the weekend was that you should only be looking out 6-12 months and it is hard to say if this rally will hold. However, today was our shopping day and here is what I had on my Christmas list from the weekend for my Lottery Play Portfolio.

Microsoft (MSFT, $25.50, up $4.00). If you’ve been reading the blog then you know how much I’ve mentioned this stock. This company has over $20 billion in cash and no sub-prime exposure. Share buybacks, dividend distributions, and acquisitions have eaten away at the company’s coffers - two years ago they had nearly $60 billion but the company’s products still generate about $1 billion a month. The stock fell to a low of $20.65 Friday. This morning, the April 25 calls (MSQDE, $3.30, up $1.30) opened at $2.35 and closed 65% higher for the day. Even at $2.35, you still got a 40% gain if you bought at the open. The April calls are over 6-months out and expire on April 17, 2009. If these calls get back to this level, don’t hesitate to jump on the. If you got in today with a half or full position then you could set 25% stops in case the stock retreats.

Google (GOOG, $381.02, up $49.02) turned out to be a “Blue-Light” special as it rallied 15%. This stock was on sale at half-off from its 52-week high of nearly $750 and the March 500 calls ($19.40, up $6.20) opened at $11.50 and briefly traded over $20. Google still has earnings so if you got in early, set stops at $15 or so.

Yahoo (YHOO, $13.49, up $1.20) fell below $12 last Friday and although it didn’t get the big pop Microsoft and Google did, it still managed a 10% gain. I didn’t go too far out on Yahoo call options because I still think the company is a mess (not taking the $33 a share from Microsoft still haunts shareholders). Remember though, we are not trading on fundamentals for some of these plays, just on what appears to be cheap. The January 17.50 calls (YHQAW, $1.33, up $0.06) were the most active but I don’t expect much from this one. In fact, set stops 20% below your entry price instead of the usual 50%.

Johnson & Johnson (JNJ, $62.68, up $6.83) was a no-brainer and a really safe play. The stock was up over 12% and I had mentioned the big drop after hitting a 52-week high a month ago. The November 60 calls (JNJKL, $4.70, up $1.70) opened at $3.30 as volume came in at 4x open interest. I love this stock for the short and long-term which is why the April 70 calls (JNJDN, $2.00, up $0.50) looked like a down-right steal at $1.50 this morning. If you missed today’s jump you could start building half-positions even at these levels.

I didn’t like General Motors (GM, $6.51, up $1.62) and still don’t although the 33% rally today was very impressive. We rode Ford and GM all the way down to these levels a few months ago and while there may or may not be bankruptcy in their future, I just think there are better trades out there. If you are a die-hard bull, the GM 2010 January 5 calls (WGMAA, $3.65, up $0.50) saw a lot of action as nearly 5,000 contracts traded. The 7.50’s (WGMAR, $3.15, up $0.65) weren’t nearly as popular, trading only 200 contracts.

Arch Coal (ACI, $27.32, up $5.28). The November 25 calls (ACIKE, $5.20, up $1.60) opened at $4.50.

Massey Energy (MEE, $26.47, up $5.74). The November 25 calls (MEEJE, $1.85, up $0.75) opened at $1.00.

Patriot Coal (PCX, $19.50, up $4.90) also made a nice comeback. The November 20 calls (PCXKD, $3.60, up $1.40) opened at $2.40.

There were a couple of other energy stocks I mentioned but I didn’t want to go too heavy on the sector.

Morgan Stanley ($18.10, up $8.42) was a huge story today after the company nearly went bankrupt last week. The investment bank went through a zany week of trading as many on Wall Street pondered its future. Mitsubishi Financial Group of Japan was the knight in shining armor for Morgan as they made a $9 billion investment in the company. The October 15 calls (MSJC, $3.80, up $2.61) were up 220% today.

Goldman Sachs (GS, $111.00, up $22.20) has made up 40 points since hiting a low of $74 last Friday. What a steal it was below $100 or even $80 for that matter. Remember, Buffett is in at $5 billion with another $5 billion waiting in the wings. The October 100 calls (GSJT, $15.50, up $10.00) opened at $6.95. An easy double as the day went on. If you bought at the open, set stops at $11.00. The January 125 calls (GSAE, $11.60, up $4.35) didn’t have the banner day as the October calls did but still were up 60% for the day.

There were a slew of other good trades, too many more for me to list but you got the idea. Keep an eye on some of the calls I have mentioned. They may get cheaper and they may not. It’s too early to call this a rebound and there is no way of predicting where we are headed over the next few days. Remember, earnings are on tap and they will certainly sway the market.

Rick Rouse
Rick@OptionsMentoring.com

Words can’t describe the excitement we’ve seen in the market over the past few weeks and Friday was a classic example of what could be described as “running for the hills”. Wall Street was in full fledged panic mode Friday as the Dow went back and forth in a 1,000-point range, hitting a low of 7,882 and a high of 8,901.

The last hour of trading was a toe-to-toe battle between the bulls and the bears that left both sides bloody. It was awesome. By the final bell the market had mixed results as the Dow fell 128 points to 8,451, while the S&P 500 slipped 11 points to 899. The Nasdaq held its own and managed to finish in the green, up 4 points to 1,649.

The final score for the week was a clear victory for the bears, however, as they hit the Dow and S&P 500 for 18%, while the Nasdaq slid 15%.

As a result, a lot of companies went on sale, at least in my mind. More on that in a minute. While it is extremely hard to predict a market bottom, there are signs that at least we are getting close. I still don’t trust October but as bad as the month has been historically, it is often the best time to buy when looking at long-term stocks or options if there has been a correction.

Yeap, it’s gonna be hard to go long right now, but with a game plan you can advantage of everyone’s elses fear. Take a look at how some of these big names traded on Friday.

Microsoft (MSFT, $21.50, down $0.80) hit a low of $20.65. Are you kidding me? Back in April when Microsoft was trading at $30 did you ever think you would have the chance to buy it at $20?

Back in May, Google (GOOG, $332.00, up $3.02) was at $600. Yesterday it traded as low as $310. At half-price, is it a Blue-light special?

How stupid does Yahoo (YHOO, $12.29, down $0.36) look now for not taking Microsoft’s $30+ a share offer? Yahoo may not be worth $30 but it does look cheap at $12.

Johnson & Johnson (JNJ, $55.85, down $1.73) was at a 52-week high less than a month ago and hit a 52-week low of $52. Crazy. Just crazy, man.

General Motors (GM, $4.89, up $0.13) got chopped in half after after Standard & Poor’s Ratings Services said the company’s credit could drop further.

Energy companies have taken a whippin’ as oil prices fell 10% to a 13-month low of $78 a barrel. That’s the lowest its been in a year. Gas is going for $2.99 a gallon here on the east coast. Remember our Energy Watch list from June?

Arch Coal (ACI, $22.04, up $0.49) was at $70.

Massey Energy (MEE, $20.73, down $1.15) was at $84.

Patriot Coal (PCX, $14.60, down $0.23) was at $154. There was a 2-for-1 stock-split in August at $100. Still, the shares have fallen from $154 to $28 ($14 split-adjusted)? Incredible.

Peabody Energy (BTU, $28.65, down $0.93) was $77.

Joy Global (JOYG, $28.88, down $2.09) was at $85.

I profiled quite a few of them on June 4 and two weeks later they had returns of 100%-300% as the call options exploded when the stocks were hitting new 52-week highs. Click here to view these blogs.

The VIX (^VIX, 69.95, up 6.03) blasted through the 60’s and nearly hit 77. On Tuesday, the VIX was at 52 when I said that the 60’s look like a good bet.

The point I’m trying to make is that some stocks ran too high too fast and now some of them have gone too far to the downside. Somewhere in the middle is where they may be fairly valued but we are more worried about the options on these stocks, not the funadamentals. I still don’t trust the financial stocks but there will be some winners out there once the dust settles.

The credit crunch, President Bush, the press and the talking heads have scared the be-Jesus out of everybody and nothing seems to be working to restore faith in the market. Remember what I have said about not following the herd. Yes, the market is tanking and there’s more downside risk. But everybody needs to quit beating the horse. It’s already dead. Now is the time to start buying for 6-12 months down the road.

I’m working on a “Lottery Portfolio” this weekend and I will be picking some stocks and sectors that may be worth a gamble. The market is open for business on Columbus Day although banks will be closed. Right now Wall Street can’t see the forest for the trees and hopefully by doing a Lottery Portfolio, I will be able to show you the bigger picture.

Rick Rouse
Rick@OptionsMentoring.com

Google (GOOG, $322.99, down $58.01) ought to have an interesting day. Check this out. The stock folded like a bad poker hand Tuesday, finishing 15% lower for the day. But wait. In after-hours trading the stock was up $90.56 to $413.55. Talk about the potential for a wipe-out as far as trading goes. If you were trading Google three minutes before the market closed and two minutes afterwards, consider those trades mulligans.

It seems there were some “erroneous orders” in the stock which have been cancelled by the Nasdaq. The erroneous orders routed to the Nasdaq from another market center were the culprit. I’ve read conflicting stories where Google’s low for the day was $26 and $212. If the stock hit a low of $26, that would have been a $350+ drop! Even at $212, the stock was down $170? Give me a break. And you wonder if there is market manipulation going on. The proof is in the pudding.

Tuesday’s closing price for Google was adjusted to $400.52, up nearly $20 from Monday’s close.

Something’s in the air with Google. I’m taking a look at the October 330 puts (GGDVF, $4.10, down $4.55) and the October 480 calls (GOPJI, $4.95, up $0.85) but the quotes for these two options may vary and I want to see what Google does before trying a strangle trade and to make sure the options aren’t skewed.

This is not your normal market and these aren’t your normal rules. There is so much action out there that we are going to have to pick and choose our battles carefully. The last thing you want to do is get caught up in the euphoric or panic mood that Wall Street seems to be displaying on a daily basis. Google should be releasing earnings sometime this month but there is no announced date, yet. The October options expire on the 17th.

Hold off on Google until things get clearer as we might have to go to the November options. Either way, Google could be setting up for a 100-point move one way or the other.

Rick Rouse
Rick@OptionsMentoring.com

Research in Motion (RIMM, $97.84, down $5.60) fell back below $100 on Monday ahead of its scheduled earnings report on Thursday. The stock has been making $10 swings almost on a daily basis which leads me to believe the stock will make a substantial move by the end of the week.

There are some analysts who expect RIMM to post solid quarterly results, with revenues of $2.6 billion and earnings-per-share of $0.87. Although early October’s availability of the company’s 3G Bold and Kickstart have acted as a near-term catalyst, there’s a report out that says RIMM’s September sell-through numbers are looking “slightly disappointing” ahead of the new product launches. This was on top of a “flat” August.

There are too many variables to consider a trade for RIMM, especially with earnings coming out. To me, it is looking as though RIMM’s new products are going to have a bigger impact on the company’s next quarter, not this one.

Worldwide smartphone sales grew nearly 16% in Q2 from a year earlier and smartphones control about 11% of the mobile device market. That’s good news for RIMM because it shows there is still plenty of market share to capture. However, with so many competitors coming into the fray, RIMM will be fighting for that market share with the likes of Apple (AAPL, $131.05, down $9.86) and even Google (GOOG, $430.14, down $19.01).

The stock hit a low of $88 on September 18 which tested multi-year support. I profiled a RIMM strangle option trade earlier this month that netted us a 35%-40% profit. I would almost go out on a limb and recommend the same trade but it’s just too risky. The recent low has me leaning towards RIMM testing those lows again but a good earnings report may help the shares from sinking.

Rick Rouse
Rick@OptionsMentoring.com

Google (GOOG, $418.66, down $1.29) succumbed to the market’s downfall despite some good news yesterday. We learned that Google’s new Chrome web browser is already making waves and a deal with NBC Universal had the stock moving higher right out of the gate but by the end of the day, the stock finished in the red.

I said if we could get into the September 460 calls (GOPIL, $1.70, down $0.15) at $2.00-$2.25 Tuesday morning, “we may be able to ride them higher for the rest of the week”. Well, how about riding them for about a half an hour? Google opened at $423 and jumped another $9 to $432 within the first 20 minutes of trading. The calls opened at $2.00 and hit a high of $3.30 which gave us a quick 50% profit.

Remember, we are in a volatile market which means you can get whipsawed in-and-out of trades. Instead of looking for the homeruns, take what the market is giving you. The homeruns will also come but never pass up 50% profits in a day or in this case 30 minutes. At the very least, sell half the position. That has been working extremely well for us lately.

I still think Google will rally a little by the end of the week, maybe even this morning. The good news is that the shares were up $3.34 in after-hours trading. Hopefully Google can get back to the $430 level so that these calls can return another 50% or more.

Rick Rouse
Rick@OptionsMentoring.com