Saturday, December 22, 2007

A Trade on CarMax (KMX)

Dear fellow options traders :

Noted that CarMax (ticker : KMX), which operates as a retailer of used vehicles in the United States, would be reporting its Q3 earnings on 19 Dec 2007 before market opened.

From Feb 2007 till now, investors have experienced the market going up and down from the credit crunch due mainly to the subprime mortgage crisis. Over the past few months, we've also witnessed investment banks wrote-off billions of bad debts tied to subprime mortgages exposure which have, sadly, led to the resignation of a number of CEOs from a few investment banking companies. With the dark clouds of the credit crunch looming and inflation kept creeping up, in particular the price of crude oil, I felt that CarMax (KMX) might encounter a challenging 3rd quarter if consumers were unwilling in spend in such an economic environment.

Since CarMax also make loans to car buyers, I was also concerned that consumers might shun away from any types of loans due to the widespread default of mortgages.

I've read that in the Q2 earnings quarter conference, CarMax CEO reported that sales were slowing down but margins were on the rise!! This was a bit different from what he mentioned a few days ago in an investors' conference that CarMax intended to trade margins for market share. I was thus cautious how the margins-for-market share plan would be executed in the Q3 earnings quarter.

I've also read in an analyst report that industry-wide demand for new cars has been very weak all year. This would create a spill-over effect on demand for late-model used cars. Slow traffic continued to create headwinds for CarMax (KMX) retail sales as well as trade-in/appraisal offer volumes. Same-store sales in Q3 and probably in Q4 were projected to be negative.

With an understanding that CarMax (KMX) doesn't have a big gapping range after earnings, I bought a just in-the-money (ITM) Dec 22.50 Put option for $170.00 per contract on 18 Dec 2007 when KMX was trading around $21.50.

On 19 Dec 2007, CarMax (KMX) reported Q3 earnings of $0.14 per share, $0.03 worse than the consensus of $0.17; revenues rose 37.2% year/year to $1.89 Bln vs the $1.89 bln consensus. Co issued downside guidance for FY08, expecting EPS of $0.87-0.93 vs. $0.95 consensus, prior guidance $0.92-0.98. CarMax Auto Finance was being negatively affected by the unstable credit mkts, making it harder for the company to profitably fund its receivables through the asset-backed commercial paper market. In the near-term, the uncertainty in the credit markets as well as the challenging economic environment would continue to cloud the earnings outlook for CarMax.

The share price of KMX gapped down -$1.20 to $20.47 on 19 Dec 2007 when market opened. The share price attempted to move up during the conference call. Listening to the conference call while at the same time observing the chart pattern, trading volume and Level II code activity, I noticed the share price started to dip when the car loans were mentioned, I sold my options position for $230.00 when KMX touched $20.40.

You might want to take note that Mr Warren Buffet have bought shares of CarMax after last quarter's report. He might have seen value in the company and confident that the company would turn around when the economic conditions improve.

I would like to also take this special festive occasion to Wish You and Your Family a Very, Very Special Merry Christmas. I sincerely wish that You would have a Prosperous & Profitable Options Trading Year in 2008 (and beyond!!). Good Luck, Everyone : )

Yours Truly,

Tony Chai
Options Trading Resources

P.S. The Options University is celebrating it's 1-Year Anniversary and is offering its most in-depth & comprehensive "Options Mastery Course 2007" options trading course to its subscribers for a very limited-time offer at $200 off the retail price of $1,779.00. Unfortunately, I'm not sure whether the offer is still available when you see this blog entry.

But if you've really missed out on this special off, I'm very glad to inform you that the Options University has kindly provided me a special link where you could get this quality options trading course at a very Special Price of $1,397.00. Don't miss this opportunity!!

Sunday, December 16, 2007

Companies reporting earnings this week (17 Dec to 21 Dec, 2007)

Dear Fellow Options Traders :

Do take note of the following companies reporting earnings this week (17 Dec to 21 Dec 2007) which have good gapping history, in the order of Company's Name, Ticker Symbol, Industry Sector :

17 Dec 2007 (Monday)

Adobe Systems Inc (ADBE) - Application Software, Technology = reporting AMC

18 Dec 2007 (Tuesday)

Best Buy Co. Inc (BBY) - Electronic Stores, Services = reporting BMO
Goldman Sachs Group Inc (GS) - Investment Brokerage, Financial = reporting BMO

19 Dec 2007 (Wednesday)

CarMax Inc (KMX) - Auto Dealership, Services = reporting BMO
Joy Global, Inc (JOYG) - Farm & Construction Machinery, Industrial Goods = reporting BMO

Healthways Inc (HWAY) - Specialized Health Services, Healthcare = reporting AMC
Nike Inc (NKE) - Apparel Footware & Accessories, Consumer Goods = reporting AMC

20 Dec 2007 (Thursday)

Bear Stearns Companies Inc (BSC) - Investment Brokerage, Financial = reporting BMO
FedEx Corporation (FDX) - Air Delivery & Freight Services = reporting BMO

Research In Motion Ltd (RIMM) - Diversified Communication Services, Technology = reporting AMC

BMO : Before Market Opens
AMC : After Market Close

Yours Truly,

Tony Chai
Options Trading Resources

Note : The above companies listed are for your reference only and not my stock recommendations. Please check back or the company official web-site for any changes to the earnings reporting dates.

Friday, December 07, 2007

Options 101: From Theory to Application

Dear Fellow Options Traders :

In order to use options successfully through, investors must understand what separates them from stock. Options 101: From Theory to Application steps you through all the necessities for a firm foundation into the exciting world of options.

You are introduced to options at the most basic level and gradually moved through pricing principles, profit and loss diagrams, market mechanics, volatility, and basic strategies that you must understand to trade options like a professional. You'll even discover how Gordon Gekko from the hit movie Wall Street could have greatly enhanced his stealthy trades after reading the chapter on put-call parity.

Options University teaches you how to make your world less risky by introducing you to ours - the world of managed risks through options.

Here's a complimentary chapter from the book to give you a better idea of what the book is about.

For anyone who bought the book between Friday (7 Dec 2007) to Sunday (9 Dec 2007), Options University would throw in $350 worth of bonuses.

Here’s what you’ll get with a book purchase:

Bonus #1:

Bill Johnson's Beginner Options Trading Classes ($197 Value).

(4 Nights of recorded live web classes, normally $397 to attend!)

Bonus #2:

OU's one hour 'Introduction to Options' video ($97 Value)

Bonus #3:

OU's Options Strategy Guides I & II ($47 Value)

BUT there’s just one catch...

To get all three bonuses, you must order on Friday.

After each day passes, a bonus disappears.

- Order on Friday, and you get Bonus #1, 2 and 3.

- Order on Saturday, and you get Bonus #2 and 3.

- Order on Sunday and you only get Bonus #3.

The Options University guys are doing this to “jump-start” the process to get Bill’s book to the #1 spot on the Bestseller List this weekend at Barnes & Noble and Amazon.

Anyway, here’s how it works:

1) On Friday, Saturday or Sunday, place an order for the book from this link:

2) Once you get your email receipt, forward it to the guys over at Options University at

3) OU will then send you an email with instructions on how to receive your bonuses.

That’s it!

Yours Truly,

Tony Chai
Options Trading Resources

Saturday, December 01, 2007

A Trade on (PCLN) - Q3/07 earnings

Dear Fellow Options Traders :

Noted that (PCLN), an online travel company that provides various travel services, including airline tickets, hotel rooms, car rentals, vacation packages etc, would be reporting Q3 earnings on 8 Nov 2007 after-market-close. (PCLN) price gapping characteristics for earnings announcement has been remarkable.

On 8 Aug 2007 when PCLN reported a knock-out Q2/07 earnings beating EPS (earnings per share) estimates by 21 cents, the stock price gapped up +$12.00 to $77.00 and went up +$2.00 intra-day to close at $79.00. Similarly, when PCLN reported Q4/06 on 12 Feb 2007 beating EPS estimate by 18 cents, on 13 Feb 2007 (Tuesday), PCLN already went up +$4.27 to $50.20 by 10.00am EST.

But on 9 May 2007 (Wednesday), (PCLN) did gap down -$2.00 to $62.00 and went down intra-day another -$4.00 to $58.00 when they reported Q1/07 earnings which was in-line with a upside pre-announcement made earlier.

With an understanding that (PCLN) has good gapping range after earnings announcement, I monitored PCLN development closely towards announcement day. From, I noted a number of target price upgrades by research analysts. On 8 Aug, PCLN announced the "Name Your Own Price" and "Published-Price hotel services". From what I've read, I was most confident of's robust growth in the European online travel market and felt that it should provide a positive impetus to their Q3/07 earnings.

Thus, I paper-traded a Nov 85 Call on 8 Nov 2007 for $540.00 per contract when PCLN was trading around $85.00. I understand that it was a little risky to buy a call when the market was rather bearish. In fact, the Dow Jones Index lost more than 350 points on 8 Nov 2007!! But on the other hand, if PCLN could report another stunning earings quarter, the stock price would move up tremendously either by institutions shifting their money into the better performer or from covering by the short-sellers.

On 8 Nov 2007, (PCLN) reported Q3 (Sep) earnings of $1.58 per share, excluding non-recurring items, $0.29 better than the Reuters Estimates consensus of $1.29; revenues rose 33.7% year/year to $416.9 mln vs the $386.6 mln consensus. The company also provided upside guidance for Q4 EPS of $0.77-0.85 vs. $0.77 consensus; ad expect Q4 revenues up 22-26% (roughly $317-328 mln) vs. $323.53 mln consensus.

It was another knock-out earnings for (PCLN). I expected PCLN to do well for its European market but in this quarter there was also a significant increase in domestic booking rates. On 9 Nov 2007, PCLN promptly gapped up +$14.00 to $98.00 and moved up another +$4.00 to close at $103.00.

I sold the Nov 85 Call at $1,140.00 for a profit of $570.00 (including commissions).

With (PCLN) having gapped up more than $10.00 in this recent earnings quarter, the time value of the options would definitely price in this amount of gapping range (ie. $10.00) for the next earnings quarter. So, be aware that options would be expensive if you intend to trade PCLN for the next quarter's earnings announcement. Also, if you observe high expectations building towards PCLN next earnings announcement and the share price keeps going up in the few days leading to earnings announcement, be careful that the stock might not perform phenomenally if the share price has moved up too much before earnings or PCLN did not report spectacularly in the next earnings quarter.

Yours Truly,

Tony Chai
Options Trading Resources

Thursday, November 15, 2007

Can't Sit In-Front of the Screen All-Day Long To Monitor Your Trades???

Dear Fellow Options Traders :

Good News!

If you missed Thursday night's webinar on Options University Strategist (OUS), or you were simply not able to attend, you have one more chance to see it!

But you have to jump on this now!!.

Options University says that to keep the service manageable and to be fair to options traders who took up the service early, they will have to take down the Options University Strategist (OUS) Service as soon as all 100 spots are taken.

So, for one last time, here is that webinar replay page again!

If any slots are still available, you'll learn how to get started with OUS by viewing the webinar.

So now you have one last chance to get in on what's already being called ""the last options trading service you'll ever need."

Here is the link again!

Grab the introductory price and you'll lock in this price forever!! If you wish to sign up straight away just click here!!

I wanted to let you know of a new service coming out from The Options University called The Options University Strategist or OUS for short.

Specifically, the service will provide you :

* Daily / Weekly option picks, trade alerts, trade updates of existing postions, and POSITION MANAGEMENT..

* Breakdown of options they recommend to trade, the exact positions for you to enter into your broker platform..

* Immediate email and direct computer alerts every time they recommend a change in a position! (Special Proprietary Scanning & Filtering Software included)..

* How they handle the "morphing" and/or roll-out of the position..

* How and when to close out the position for the maximum gain..

The Service is suitable for options traders with different option trading styles (conservative/premium collector/directional trader etc..). It's especially suitable for Options Traders who have a Day-Job and could not sit in-front of the screen all day long to check their trades.

The preview video would give you a good idea what the service is all about..

Here's the link to that video ...

Also, there will be hosting a Special Webinar THIS Thursday night (15 Nov 2007) at 9:00 PM Eastern. It will cover OUS in much more detail, and answer any questions you might have about the service.

Here's where to get all the details for this Special OUS Webinar

Yours Truly,

Tony Chai

Tuesday, November 13, 2007

A Trade on Polo Ralph Lauren Corp's (RL)

Dear Fellow Options Traders :

Noted that Polo Ralph Lauren Corp (Ticker : RL), a designer & manufacturer of lifestyle products like apparel and accessories, would be reporting on 7 Nov 2007 before market opens.

Polo Ralph Lauren Corp's (RL) stock price has been beaten down quite badly. As of 5 Nov 2007, RL has reached a new 52-Week low of $66.00. For the past 3 quarters, RL had also gapped down after earnings announcement either from missing EPS estimate (Q1/08) or had provided downside guidance during Q4/07 & Q3/07 earnings announcement.

From past earnings, I observed RL have a price gapping range (in either direction) of around $3.00 to $4.00 after earnings announcement. I paper traded a slightly in-the-money Nov 65 Call on the eve of earnings announcement ie. 6 Nov 2007 when RL was trading around $66.00. From past experiences, I have found that trading a call option for earnings announcement of a company which has already reached 52-Week low would yield a hgher probability of success (BUT not always the case though).

On 7 Nov 2007 (Wednesday) before market opens, RL reported Q2 (Sep) earnings of $1.09 per share, comparable to Reuters Estimates consensus. Revenues rose 11.3% year/year to $1.3 bln vs the $1.27 bln consensus. However, RL projected Q3 revenues to grow at a mid single digit percentage range. Polo Ralph Lauren Corp's (RL) also issued guidance for FY08; expected EPS of $3.50-3.60, might not be comparable to $3.70 consensus; expected Y08 revenues to increase by a low-teen percentage.

On 7/11/07 (Wednesday), RL gapped down -$1.60 initially to $64.73 when market opened. But the stock price started to move up gradually with good volume so I started to chart resistance lines as the price went up, reminding myself to sell the position once the stock price crossed the latest resistance line (please refer to following diagram). I sold the position at around 10.10am EST when the red candle cut the highest resistance line coupled with heavy selling (represented by the red volume bar at the bottom of the chart).

Yours Truly,

Tony Chai
Options Trading Resources

Sunday, November 04, 2007

Here's A Second Chance To See What You Missed At The Recent Options Intensive Workshop ....

Dear Fellow Options Traders :

The recent Options University "Options Intensive Workshop 2007" held in the beautiful San Francisco was quite an event, with over 300 excited attendees held at rapt attention as some of the finest stock and options traders on the planet revealed their most guarded trading secrets.

If you have missed the event, the good news is - all is not lost!!

Fortunately for you (and the many others who were interested in attending the live event but just couldn't make it), Options University had the entire 3-day workshop (including the extra Bonus Day) professionally recorded on both CDs and DVDs.

So you now have a second chance to see and hear the workshop presentations from these superstar traders:

* Larry McMillan - The "Expert's Expert" on Options, revealed some insider techniques for using volatility in successful options trading.

* Tom Sosnoff - Options Expert, Former Floor Trader and Co-Founder of ThinkOrSwim (tm) - made a rare appearance at there seminar where he revealed little-known options trading techniques and tactics that will take your trading to the next level.

* Price Headley - "Top 10" Stock Market Timer and Options Trader (Voted the #1 Speaker by Attendees), let the workshop attendees in on some of his top strategies for trading "tricky", choppy markets - like the one we're in now.

* David “FirstWave” Elliott – Technical Analysis Wizard – Twice Voted World’s #1 Market Timer - held the attendees spellbound as he demonstrated trading techniques so powerful, he had them trademarked!

* Ron Ianieri – Professional Options Floor Trader, Market Maker And Expert Options Trainer - dazzled the audience as he revealed coveted techniques of a battle-hardened Philly Exchange floor trader who's made millions for himself and his ecstatic clients.

* Bill Johnson – Director of Education at Options University - covered crucial concepts beginner options traders have to know to be successful, plus some unusual techniques in using volatility to enhance trading gains.

* Stephen W. Bigalow - Noted Author and Candlestick Trading Expert - shared a handful of his all-time favorite candlestick patterns that almost always lead to giant-size trading gains

Quite a lineup, don't you think?

Anyway, if you'd like to get your hands on this valuable information and access it from the comfort of your recliner at your leisure, you now have the chance.

But the bad news is ...

Options University have just a limited quantity of the DVD/CD packages available.

In fact, the production crew only ran 100 sets. And at the special prices that they are letting these go for, they will most probably sell out well before our ordering deadline - which is November 15, 2007.

So if you want to get your hands on this unique, cutting-edge workshop package, or you'd like to get more background information first, I'd advise you to head over to this special web page as soon as possible...

"Options Intensive Workshop 2007" CDs and DVDs

Yours Truly,

Tony Chai

P.S. This may be the last time that these stock and options trading superstars will share the stage at the same time. Since you were
not able to attend the live event, the DVD/CD package will be the next best thing!

P.P.S. And don't forget, there will only be 100 available packages at this special price! Don't delay - check out the special link below for more details...

"Options Intensive Workshop 2007" CDs and DVDs

Saturday, November 03, 2007

A Trade on Buffalo Wild Wings Inc (BWLD)

Dear Fellow Options Trader :

I have shared in a previous post where Buffalo Wild Wings Inc (BWLD), a restaurant operator, gapped down -$7.00 to $36.50 On 1 Aug 2007 when it reported Q2 earnings which fell short of market expectation (after multiple quarters of upside results).

From, I've researched and saw an analyst's comment that BWLD valuation was still being held back by a few lingering concerns: 1) slowing growth rates and difficult back-half comparisons; 2) potential 1Q08 repricing of the fresh chicken wing contract; and 3) any difficulties with franchisees obtaining financing to open their restaurants.

I also checked back the script of Buffalo Wild Wings Inc (BWLD) Q2 Earnings Conference Call held on 31 Jul 2007 and noted that although July 2007 same store sale rebounded to +11%, there would be more difficult comparisons coming in the final 5 months of 2007.

I paper traded a slightly in-the-money Nov 40 Put on 30 Oct 2007 when Buffalo Wild Wings Inc (BWLD) was trading around $39.00.

On 30 Oct 2007 after market closed, Buffalo Wild Wings Inc (BWLD) reported Q3 same-store sales from co restaurants of 8.3% vs 6.5% est and Q3 revs of $82.4 mln (above est of $81.1 mln). Despite better revenue, EPS came in lower than expectaed at $0.24 vs. consensus of $0.26. The miss was mainly attributable to higher costs incurred from cost of goods and pre-opening expenses. The company could be facing a challenging environment ahead.

On 31/10/07 (Wednesday), Buffalo Wild Wings Inc (BWLD) gapped down -$8.00 to $31.33. I sold the put for a $550.00 profit.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Friday, November 02, 2007

A Losing Trade on CROCS Inc (CROX)

Dear Fellow Options Trader :

For the past 2 earnings quarters, CROCS Inc (CROX) was a stunning performer.

On 27 July 2007, CROX gapped up +$9.00 to $59.21 when they reported their Q2 earnings quarter where EPS was $0.14 better than the Reuters Estimates consensus and revenues rose 162.0% year/year to $224.3 mln.

On 4 May 2007, CROX gapped up +$12.00 to $69.00 when they reported Q1 earnings of $0.61 per share, $0.12 better than the Reuters Estimates consensus of $0.49; revenues rose 216.7% year/year to $142 mln. The company also announces 2-for-1 stock split.

I checked through the research analysts comments for the past 1 month or so and most were positive, expecting CROX to beat Q3 earnings with upside Q4 guidance anticipating a strong holiday season ahead. Besides, channel checks at the co's retail store also indicated sales to be exceptional.

After 2 blow-out earning quarters, expectation must be running high for CROX to perform exceptional well this quarter. as can be seen from the 9 points rise a few days before earnings announcement before the plunge on 1 Nov 2007.

CROX options are also expensive due to build-up of implied volatility leading to earnings announcement as you can see that the out-the-money Nov 75 Call still demand $6.10 per share.

Expecting CROCS Inc (CROX) to build on the momentum of the 2 previous blow-out earnings quarter, I paper traded a Nov 75 Call at $610.00 on the eve of earnings, 31 Oct 2007. After market closed, CROX reported Q3 earnings where EPS beat by a mere $0.03 while revenue was in-line. CROX raises FY07 guidance again but it was a mixed guidance as the company expect FY07 EPS to be $1.94-1.98 vs. $1.97 consensus while FY07 revenue to be $820-830 mln vs. $835.67 mln consensus. In the company conference call, CROX said they missed out on approx $10-15 mln this quarter due to delayed shipments.

On 1 Nov 2007 when market opened, CROX tanked -$20.00 to $53.60 and went down further -$6.00 to close at $47.74. The Nov 75 Call lost all its premium. It would now depend whether CROX would turn around these 2 weeks to fetch back at least some of the premium.

Yours Truly,

Tony Chai
Options Trading Resources

Wednesday, October 31, 2007

A Few Trades To Share

Dear fellow options traders :

Q3 earnings season has started and these were some of the paper trades that I've made.

Apple Inc (AAPL) - Have been following Apple Inc's development for a while and foresee them to beat their Q4 earnings as I expected shipment of the new Macs, iPod & iPhone to be strong during the quarter. AAPL would usually guide conservatively for next quarter's earnings. Thus when AAPL provided upside guidance for its Q1 EPS & revenue numbers, the stock gapped up +$14.50(!!), much higher than the average gap price of $6.00, when market opened on 23 Oct 2007 (Tuesday). I bought a Nov 175 Call on the eve of earnings and sold it on 23 Oct 2007 for a $645.00 profit.

Apollo (APOL) - Apollo is an education provider and has performed well in the previous earnings quarter. I expected them to report equally well this quarter thus I paper-trdaed a Nov 70 Call. Although EPS was in-line at $0.60, revenue rose 14.2% year/year to $713.9 mln vs the $701.8 mln consensus. The management also approved an additional $500 mln for share repurchases. On 23 Oct 2007 (Tuesday), APOL gapped up +$3.50 to $69.50 and intra-day went up +$3.00 to close at $72.50. I sold the Nov 70 Call for a profit of $150.00.

However, I encountered a losing trade with :

Illumina Inc (ILMN) - I expected Illumina to peform well for its Q3 earnings due to a major research analyst's upgrade of the Life Sciences sector on 5 Oct 2007. The company also announced a multi-million dollar agreement with the University of Virginia and the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) on 15 Oct 2007 and on 12 Sep 2007, ILMN signed a fourth genotyping service agreement with Cancer Research UK. I bought a Nov 60 Call on earnings eve. Altough Illumina reported a good Q3 earnings quarter beating EPS by $0.15 & also beat on revenues; the stock was punished when the company guided Q4 revenue in-line. Thus, On 24 Oct 2007 (Wednesday), ILMN gapped down -$4.00 when market opened and I sold the Nov 60 Call for a loss of $339.00.

Yours Truly,

Tony Chai
Options Trading Resources

Saturday, October 20, 2007

A Trade on SanDisk Corp (SNDK)

Dear fellow options traders :

3rd quarter earnings quarter has started. I understand that SanDisk Corp (SNDK), a maker of NAND flash storage products, would be reporting earnings on 18 Oct 2007 after-market-close.

From, I've noticed that a number of research analysts were optimistic that SNDK would report a strong Q3 quarter with solid guidance for Q4. But there were concern that the market had already priced in large upsides for the Q3 earnings, and that NAND supply would exceed demand in Q4.

If you have been trading stock options based on earnings gapping for a while, you would realize that the stock price of company would usually gap up if the company reported good earnings with good upside guidance for next quarter's earnings per share (EPS) and revenue. I was a little wary about buying a call option for SNDK earnings because on the same day (ie. 18 Oct 2007) when SNDK would be reporting earnings, EBAY plunged over 2 points when they had reported good earnings with good upside earnings guidance for the next quarter.

By checking SNDK's past price gapping history after earnings, I realized that SNDK would gap an average $3.00 up or down after earnings. Thus, I decided to buy an ATM Oct 50 Put option on 18 Oct 2007 at $210.00 per contract when SNDK was trading around $50.30.

After market close, SNDK did report a great Q3 earnings quarter. The cmpany reported Q3 (Sep) earnings of $0.54 per share, excluding non-recurring items, $0.21 better than the Reuters Estimates consensus of $0.33; revenues rose 38.0% year/year to $1.04 bln vs the $0.93 bln consensus. The CEO also mentioned in the earnings conference call that demand in Q3 was exceptionally strong internationally.

But alas on 19 Oct 2007, SNDK still gapped down -$3.60 to $46.76 when market opened. As I understand that SNDK price gapping habit was about $3.00 after earnings and that price gap had already been achieved when market opened, I quickly sold my put option at $360.00 for a profit of $150.00 around 9.35am EST. SNDK went down -$7.60 intra-day to close at $42.71.

I understood that I would be rewarded with a bigger profit if I had hung on to my position. But I was quite satisfied with the profit that I've obtained and since my option would be expiring at the end of the day, I did not want to risk turning my position into a losing trade if SNDK reversed position and rallied during the day instead.

Yours Truly,

Tony Chai
Options Trading Resources

Saturday, October 13, 2007

Past Options Trades Arranged in Ticker Symbol Order

Dear fellow options traders :

My blog has grown quite substantially since I started blogging my options trades & experiences about 2 years ago. With too many blog postings, I understand that it's a bit difficult for bloggers to navigate my blog properly at times.

Thus, I've spent about 2 days revamping my blog with a new blog template which allows me to display the label tags.

I've tagged my blog in such a way that you can now zoom into specific trades (whether its a earnings gapping trade or momentum trade) based on specific stock ticker symbol. I hope you'll find the fundamentals / technical research that I've logged for initiating my option trades useful in guiding your own trading strategy.

Q3 earnings season has kick-started and big caps tech companies like YHOO, EBAY, GOOG would be reporting next week. Other companies worth keeping note include ISRG, SNDK, HWAY, CAT. These stocks have good price gapping history after earnings.

Have a Profitable Trading Week Ahead !!

Yours Truly,

Tony Chai
Options Trading Resources

Disclaimer : The stocks mentioned above are for your reference only. Do exercise due diligence in your stock research and trading decision. Thank You.

Monday, October 08, 2007

Breakfast at McDonald's

Dear Friends :

A few days ago, my former colleague forwarded an email with a wonderful story in it.

Here to share it with you :)


I am a mother of three (ages 14, 12, 3) and have recently completed my college degree.

The last class I had to take was Sociology.

The teacher was absolutely inspiring with the qualities that I wish every human being had been graced with.

Her last project of the term was called "Smile."

The class was asked to go out and smile at three people and document their reactions.

I am a very friendly person and always smile at everyone and say hello anyway, so, I thought this would be a piece of cake, literally.

Soon after we were assigned the project, my husband, youngest son, and I went out to McDonald's one crisp March morning.

It was just our way of sharing special playtime with our son.

We were standing in line, waiting to be served, when all of a sudden everyone around us began to back away, and then even my husband did.

I did not move an inch... an overwhelming feeling of panic welled up inside of me as I turned to see why they had moved.

As I turned around I smelled a horrible "dirty body" smell, and there standing behind me were two poor homeless men.

As I looked down at the short gentleman, close to me, he was "smiling".

His beautiful sky blue eyes were full of God's Light as he searched for acceptance.

He said, "Good Day" as he counted the few coins he had been clutching.

The second man fumbled with his hands as he stood behind his friend. I realized the second man was mentally challenged and the blue-eyed gentleman was his salvation.

I held my tears as I stood there with them.

The young lady at the counter asked him what they wanted.

He said, "Coffee is all Miss" because that was all they could afford. (If they wanted to sit in the restaurant and warm up, they had to buy something. He just wanted to be warm).

Then I really felt it - the compulsion was so great I almost reached out and embraced the little man with the blue eyes.

That is when I noticed all eyes in the restaurant were set on me, judging my every action.

I smiled and asked the young lady behind the counter to give me two more breakfast meals on a separate tray.

I then walked around the corner to the table that the men had chosen as a resting spot. I put the tray on the table and laid my hand on the blue-eyed gentleman's cold hand.

He looked up at me, with tears in his eyes, and said, "Thank You."

I leaned over, began to pat his hand and said, "I did not do this for you. God is here working through me to give you hope."

I started to cry as I walked away to join my husband and son. When I sat down my husband smiled at me and said, "That is why God gave you to me, Honey, to give me hope."

We held hands for a moment and at that time, we knew that only because of the Grace that we had been given were we able to give.

We are not church goers, but we are believers.

That day showed me the pure Light of God's sweet love.

I returned to college, on the last evening of class, with this story in hand.

I turned in "my project" and the instructor read it.

Then she looked up at me and said, "Can I share this?"

I slowly nodded as she got the attention of the class.

She began to read and that is when I knew that we as human beings and being part of God share this need to heal people and to be healed.

In my own way I had touched the people at McDonald's, my husband, son, instructor, and every soul that shared the classroom on the last night I spent as a college student.

I graduated with one of the biggest lessons I would ever learn: UNCONDITIONAL ACCEPTANCE.

Much love and compassion is sent to each and every person who may read this and learn how to ...


If you think this story has touched you in any way, please send to others.

There is an Angel sent to watch over you.

In order for her to work, you must pass this on to the people you want watched over.

An Angel wrote:
Many people will walk in and out of your life, but only true friends will leave footprints in your heart.

To handle yourself, use your head.

To handle others, use your heart.

God Gives every bird it's food, but He does not throw it into its nest.

Keep this going.


Yours Truly,

Tony Chai

Saturday, October 06, 2007

A Trade on Research in Motion (RIMM)

Dear fellow options traders :

If you have been trading options for earnings gapping announcement for a while, you would have known that Research in Motion (RIMM) would be reporting earnings on 4 Oct 2007 after-market-close.

Research in Motion (RIMM), maker of the BlackBerry Pearl and Curve Smartphones, gapped up almost 30 points back in 29 June 2007 when the company reported a mind-bowing Q1 earnings quarter with upside guidance topped with a 3 for 1 stock splits announcement.

RIMM made an impressive move of almost +$20.00 to touch $100.00 on 4 Oct 2007 since its post stocks-split day on 20 Aug 2007. Obviously, expectations have been running high towards another knockout Q2 quarter & upside guidance from RIMM and this is reflected in their expensive stock options, stuffed with rich, creamy fillings of high implied volatility.

I expected RIMM's stock price to run up higher towards the eve of earnings based on the past 2 months of research analysts' upgrades. Thus I paper traded a Oct 100 Call at $565.00 a contract on 3 Oct 2007 when RIMM was trading around $96.30. On 4 Oct 2007, eve of earnings announcement, RIMM went up intra-day around +$4.00 to touch $100.00. Since the position I bought had already earned $175 (excluding commissions) by 3.55pm EST, I decided to close the position without carrying the trade till earnings announcement.

My decisions for letting go of the position with a profit before earnings announcement were :-

1) Although there were a couple of research analysts' upgrades during the past 2 months, there were 2 research analysts' downgrades on 1 & 2 Oct 2007 respectively.

2) I noticed the piling up of the near ITM & OTM put options volume in comparison of the call option volume in the last trading hour and was a little concerned that the stock might not gap up after earnings.

On 4 Oct 2007, Research in Motion (RIMM) reported in-line Q2 (Aug) earnings of $0.50 per share and revenues rose 26.8% year/year to $1.37 bln vs the $1.36 bln consensus. But the Co. issued upside guidance for Q3, expecting EPS of $0.59-0.63 vs. $0.55 consensus and Q3 revenues of $1.60-1.67 bln vs. $1.52 bln consensus. Subscriber account additions in Q3 are also expected to be approximately 1.65 million.

Alas, on 5 Oct 2007, RIMM gapped up +$7.70 to $107.60. The Oct 100 Call closed at $13.95 on 5 Oct 2007, rising a total of about +$5.80 intra-day.

Yours Truly,

Tony Chai
Options Trading Resources

Thursday, September 27, 2007

A Trade on Resources Connection Inc (RECN)

Dear fellow options traders :

Resources Connection Inc (RECN) is a company which provides outsourced professional services to corporate clients in the United States.

I checked that it would be reporting earnings on 25 Sep 2007 after market close.

There were not much news at for my fundamentals research on RECN but at the Yahoo Finance web-site I saw a report dated 4 Sep 2007 Market Spotlight: Staffing Companies where research analysts were forecasting tougher times for staffing companies. They felt that the slowing economy might significantly depress job creation in coming months due to tighter credit and problems in the housing sector.

Some of the staffing companies that have seen their share prices tumble recently include Robert Half International Inc., which had declined around 13 percent in the past three months. Shares of Kelly Services Inc. had lost around 19 percent, while Korn Ferry International, which reported fiscal first-quarter results recently, had also shed nearly 22 percent.

In another report from The Motley Fool, even a Motley Fool CAPS All-Stars Player frown upon this 5-Star Stocks Leader.

Based on the weakening of the staffing companies sector, I paper traded 2 contracts of Oct 30 Put @ $185.00 each on 25 Sep 2007 when RECN was trading around $29.30.

On 25 Sep 2007 after market closed, RECN reported Q1 (Aug) earnings of $0.23 per share, including stock based compensation expense and tax benefits, which might not be comparable to the Reuters Estimates consensus of $0.28; revenues rose 17.6% year/year to $194.1 mln vs the $197.4 mln consensus.

On 26 Sep 2007 before market opened, there were 5 downgrades of this stock from analyst and RECN gapped down -$5.50 to $23.83 when trading began. I observed the price, volume, and Level 2 data carefully before I close the position for $760.00 per contract, netting a profit of $1,120 after deducting commissions.

Related Trade in my Stock Options Trading Blog

A Resource Connection Q3 2007 Earnings

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai
Options Trading Resources

Friday, September 21, 2007

High Search Engines' Ranking for Your Blog/Web-Site

Hi friends :

Really appreciate Mr Edmund Ng, CEO of, for showcasing my options trading blog to demonstrate that the application of good white-hat SEO (search optimization) techniques can enable my blog to achieve high ranking in search engines like Google & MSN.

Edmund was kind enough to give a complimentary 3 full-days internet marketing workshop to a group of physically challenged members (including myself) at the Handicaps Welfare Association back in Feb 2007. He taught us the step-by-step techniques on how to go about setting up an online internet business from scratch and went on to show us all the SEO skills to optimize & how to drive traffic to our web-site. We were also very grateful to Edmund for giving us the 29 Steps Internet Marketing videos for free.

For a preview of his next Internet Marketing Seminar, you can go to this Link. If you want to find out more details about the 29 Step-by-Step Internet Marketing Videos DVD, you can Click Here.

In my opinion, the Internet Marketing Seminar conducted by Mr Edmund Ng and the Internet Marketing Videos DVD are both affordable, practical and useful. If you want to achieve higher search engines' ranking for your blog/web-site with good, no non-sense white-hat SEO techniques, I highly recommend that you check out Edmund's internet marketing seminar and DVD.

Yours Truly,

Tony Chai

P. S. The Internet Marketing Seminar & the 29 Step-by-Step Internet Marketing Videos DVD comes with a 1,000% money-back guarantee. That's how confident Mr Edmund Ng felt that Your internet business would be positively impacted by his white-hat SEO techniques. Edmund is also providing 6 months post support if you signed up for the seminar or buy the DVD.

Wednesday, September 19, 2007

A Trade on Best Buy (BBY)

Dear fellow options traders :

Checked that Best Buy (BBY), a specialty retailer of consumer electronics & related services, would be reporting earnings on 18 Sep 2007 before-market-opened.

Researched through and found that :-

1) On 9 Aug 2007, Best Buy (BBY) re-affirmed its 2008 outlook, as it foresee an 8.5% increase in revenues to $39 billion and same store sales to increase between 3%-5%. Earnings per share should range from $2.95 to $3.15, reflecting 6%-13% growth, and should benefit from the company's $3 billion accelerated share repurchase program, part of management's authorized $5.5 billion plan.

2) On 27 Jun 2007, Best Buy (BBY) authorized $5.5 bln share repurchase program. With lesser shares outstanding in the market, this might bring about an effect of higher EPS.

3) BBY is trading near its support of around $44.00 thus any good news like good earnings could lift the stock.

4) BBY is constantly compared to Circuit City (CC), another electronic products retailor, and BBY tends to stand out from CC's weakness.

5) There were some insider buying from company's executives in early Aug 2007.

Paper traded 2 contracts of Oct 45 Call on 17 Sep 2007 @ $140.00 each when BBY was trading around $44.30.

On 18 Sep 2007, Best Buy (BBY) reported Q2 (Aug) earnings of $0.55 per share, $0.11 better than the Reuters Estimates consensus of $0.44; Revenues rose 15.1% year/year to $8.75 bln vs the $8.45 bln consensus. The Co. reported Q2 comparable store sales +3.6%, driven by higher revenue from computers, flat-panel televisions, video gaming and mobile navigation.

Sold the 2 contracts @ $230.00 for a profit of $150.00 (excluding commissions).

But the biggest news has to be the larger-than-expected half percentage point cut of the Fed Funds Rate that the market so eagerly anticipated. The Dow Jones industrial average reacted by surging 335 points!! -- its biggest one-day point jump in nearly five years. Many quality stocks like Master Card (MA), Intuitive Surgery (ISRG), Foster Wheeler (FWLT) etc. rallied like rockets after the good news were announced.

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai
Options Trading Resources

Monday, September 10, 2007

2007 “Options Intensive” Live Trading and Investing Bootcamp

Dear fellow options traders :

LATEST : The Options University have just confirmed that a new speaker, Mr Tom Sosnoff, would be making a special appearance in the upcoming Option Intensive Workshop October 12-14th, 2007 in San Francisco, CA.

Mr Tom Sosnoff has traded options since his early days as a floor trader in Chicago, and bring with him many years of experience...

He's also the co-founder of a leading options trading brokerage, thinkorswim, Inc. .. so he knows a lot about what you need to know in order to be successful with options!

In a RARE public appearance, Mr Tom Sosnoff will be covering some little-known options tactics, and showing you some new cutting edge technology that will help you trade stocks and options more successfully.

To find out more, go HERE now ...

Last year, The Options University hand-picked some of the world's leading experts in critical areas of trading and investing – candlestick trading and technical analysis.

We're not talking about the same old re-hashed indicators and strategies that everybody else is already using. No, they taught new and powerful techniques and strategies that only a handful of people knew about, and almost no-one else was teaching...

They had attendees come to them in droves and tell them how much they got out of the event. But they wanted more...

So this year Mr Brett Fogle, President and CEO, and Mr Ron Ianeri, Co-Founder and Chief Options Strategist for The Options University, are taking it even a step further!

The Result Is The 2007 'Option Intensive' Workshop

A 3-Day Bootcamp / Workshop For Investors, Focusing on Options Trading and Finding the Best Opportunities to Trade Them.

Look, learning the basics are obviously important. But that will only get you so far. The bottom line is, you don't want (or need) a one-size-fits-all theory plan.

You want a detailed but straightforward blueprint to putting strategies into play no matter what the trading scenario...

* You want to know how to identify the right trading opportunities for you to get into.

* You want to know the right strategies to use in taking a position–not in theory, but ones that actually work in the real world. With real-world examples and specifics to draw from.

* And if something in the market should turn unfavorable towards your position, you want to be able to make intelligent changes on the fly that turn losing trades into winners. Or at the very least minimize your loss as much as possible.

The list of Super-Star Speakers lined up for this year 2007 'Option Intensive' Workshop would include ...

* Larry McMillan - The 'Experts' Expert on Options, Author of "Options As a Strategic Investment" & "McMillan On Options"

* Tom Sosnoff - "Options Expert, Former Floor Trader, and Co-Founder of Think or Swim, Inc.

* Price Headley - “Top 10” Stock Market Timer and Options Trader

* David “FirstWave” Elliott - Technical Analysis Wizard, and Twice Voted World's #1 Market Timer

* Stephen W. Bigalow - Candlestick Trading Expert

* Bill Johnson - Charles Schwab's "Expert For The Experts"

* And a few others...

including Mr Ron Ianeri himself, and they are going to cover all of that plus a whole lot more ...

But as I understand from Options University, it's going to be a very small event, just over 100 seats.

And they're gonna fill up quick.

That's why I don't know how long his site is going to be up. I recommend you check it out now before it's too late!!!

The 2007 'Option Intensive' Workshop

Just imagine when you have the right tools and strategies to select the best options for your goals–without dread or fear of losing money. Because you have the confidence and proven strategies to come out on top.

With the right road-map and a little time in the trenches, there's no reason why you can't pick the winners from the losers. To take up positions that match perfectly with your long and short-term goals.

And it doesn't matter whether you're spanking new to options trading, or if you're a twenty-year veteran.

If you trade options (or want to learn how to trade them more profitably), I urge you to go here now to find out all the details at :

The 2007 'Option Intensive' Workshop

Yours Truly,

Tony Chai

P.S. Brett and Ron also offer the best 'no-questions-asked' guaranty I've ever seen. They'll refund every cent if the workshop isn't everything they say it is, just for disappointing you...

And they'll also pay you $500 towards your travel expenses too.

So what do you have to lose? Hurry, seats are filling fast!!

The 2007 'Option Intensive' Workshop

Testimonials from Attendees of the 2006 Online Trading and Investor's Super-Conference ...

After being exposed to Options University I realized I have been taught options the wrong way. This has been a very rewarding weekend for me, as a matter of fact I learned quite a couple of things that I'm going to go back and work on that I have picked up from the conference this weekend.

- Joe Renno, Dallas TX

The conference has been more than I've expected, it's been phenomenal. We've had a great range of speakers and I've been trading options for a while.

I started with Options University a while back, got into the Options Mastery when it first came out and I've been rereading it religiously. You gotta continue going to learn, to minimize my risk.

That's another thing I picked today, just to be more attuned to how much I'm risking and how much I'm gonna profit. It's just phenomenal. As I said again the Speakers are great, they made me consider more of how I'm what I'm trading and how I'm trading and I fully expect the experience is going to be beneficial.

- Jesse, Detroit MI

Friday, September 07, 2007

A Trade on Guess? Inc. (GES)

Dear fellow options traders :

Checked that Guess? Inc. (GES), a renown maker of apparel and accessories for men, women, and children, would be reporting earnings on 4 Sep 2007 after-market-close.

According to a recent snippet in dated 27 Aug 2007, "Guess boasts a booming retail and wholesale business in Europe and is expanding operations in Asia and other parts of the world. For eight straight quarters, earnings and sales have grown by at least 67% and 16%, respectively. Guess is poised to keep up the pace when it reports fiscal 2008 second-quarter earnings on 4 Sep 2007."

On Friday, 31 Aug 2007, a few days before earnings announcement, GES even went up +$2.53 to close at $53.00.

I checked back GES most recent earning quarters & subsequent price gapping action after earnings announcement and found out that :-

1. Q1 earnings announcement on 5/6/07
On 6/6/07, GES gapped up about +$2.50 to $49.89

2. Q4 earnings announcement on 14/2/07
On 15/2/07, GES gapped up +$6.00 to $80.50 and went up another +$3.00 to close at $83.60.

3. Q3 earnings announcement on 1/11/06
On On 2/11/07, GES gapped up +$5.00.

4. Q2 earnings announcement on 2/8/06
On 3/8/06, GES gapped up +$2.00.

Noticed that GES has already gapped up 4 times after its earnings announcements mentioned above. I was a bit cautious trading a call towards GES earnings announcement this round because based on past experiences, some stock gapped down in the next earnings announcement after encountering around 3 straight gap-up following their earnings announcements.

For instance ..

Buffalo Wild Wings Inc (BWLD)

1. Q1 earnings announcement on 1/5/07
On 2/5/07, BWLD gapped up +$7.00 to $72.00.

2. Q4 earnings announcement on 15/2/07
On 16/2/07, BWLD gapped up +$4.85 to $54.84.

3. Q3 earnings announcement on 24/10/06.
On 25/10/06, BWLD gapped up +$7.00 to $48.00.

On the most recent Q2 earnings announcement on 31/7/07, BWLD gapped down -$7.00 to $36.50 after announcement. This gap down occurred after the 3 price gap-up followed by earnings announcement indicted above.

Another instance ....

Priceline.Com Inc (PCLN)

1. Q3 earnings announcement on 12/2/07
On 13/2/07, by 9.22am EST, PCLN reached +$3.64 to $49.57. By 10.09am EST, PCLN has climbed +$4.27 to $50.20.

2. Q2 earnings announcement on 8/11/06
On 9/11/06, PCLN gapped up +$3.00 to $43.40 but intra-day dropped back to close at $39.80.

3. Q1 earnings announcement on 7/8/06
On 8/8/06, GES gapped up +$3.40 to $29.80.

On its Q4 earnings announcement on 8/5/07, PCLN gapped down -$2.00 to $62.00 and went down intra-day another -$4.00 to $58.00 on 9/5/07.

The reason why a stock might gap down after experiencing a few successive quarters of gapping up from good earnings could be due to the high expectation that was built into the stock to perform better & better for every subsequent earnings. Thus, when the company did not report an "outstanding" earnings quarter together with upside guidance, the market would react negatively towards the earnings announcement and would sometimes punish the stock price ruthlessly.

After GES 4 previous gapping up due to good earnings, I expected high expectation to be built into the earnings this round. On 4 Sep 2007, I paper traded a Sep 50 Put @ $155.00 per contract when GES was around $53.50. Noticed how expensive the premium of the Sep 50 Put was, inflated with high implied volatility and it was out-the-money by a whopping $3.50!!!

On 4 Sep 2007 after market closed, GES reported Q2 earnings of $0.40 per share, $0.07 better than the Reuters Estimates consensus of $0.33; revenues rose 48.2% year/year to $388.3 mln vs the $345.6 mln consensus.

The company issued in-line guidance for FY08, expecting EPS of $1.79-1.84 up from $1.75-1.80 prior guidance vs. $1.83 consensus; expecting FY08 revs of $1.56-1.60 bln vs. $1.57 bln consensus.

As you can see, GES did not report a bad Q2 quarter. But the market might have reacted badly to its in-line EPS & Revenue guidance for FY08. On 5 Sep 2007, GES gapped down -$3.50 to $49.80. I sold the Sep 50 Put for $220.00 with a profit of just $35.00 (after deducting commissions).

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Wednesday, September 05, 2007

Trading Secrets of Top Wall Street Floor Traders

Dear Fellow Traders :

For the first time in Singapore, Mr Ron Ianeri, co-founder of The Options University, and Chief Options Strategist for The Options University, is giving a FREE Options University Introductory Workshop on the 5th to 7th September, 2007 at the Amara Hotel, Singapore, Ballroom 1 Level 3.

In the free workshop, you'll learn to :

# Find explosive money making opportunities within minutes a day
# Make huge profits even as the market crashes
# Make consistently monthly profits
# Learn to Trade successfully and safely directly from the experts on Wall Street
# Learn options strategies like covered calls, spreads, straddles and strangles the right way

The exact strategies and techniques that Mr Ron Ianeri is going to share with you have created millions and millions of dollars of wealth for his client's accounts. And he is holding absolutely nothing back in his live classes!

He understand that some of the concepts that he teach may seem totally foreign to you. Don't worry about that. Mr Ron Ianeri has a knack for making things very simple and easy to understand. Even fun!

As this is his very first and exclusive seminar in Singapore, seats are limited and are filling up fast! Just give him 3 hours of your time and he’ll show how you can make an impact to your life!

Hurry! Register now!! Don’t miss out this opportunity!

Yours Sincerely,

Tony Chai

Wednesday, August 29, 2007

FREE Option Trading CD

Dear Fellow Option Trader :

Happened to find the following link where you can claim a FREE copy of Options 101 from Stock Options Guru - Bernie Schaeffers.

Options 101 CD

Claim it while it's still available!!

Yours Truly,

Tony Chai

Friday, August 24, 2007

A Trade on Blue Coat Systems Inc (BCSI)

Dear fellow stock options traders :

Have been observing Blue Coat Systems Inc (BCSI) development for the past 2 years.

This company provides WAN optimization hardware appliances and software for controlling and securing Web-based communications in the secure Internet gateway and WAN application delivery markets worldwide.

Between Nov 2005 to Feb 2006, BCSI has dropped from a high of $51.00 down to about $23.00 when the company guided EPS and revenue lower due to substantial slowdown in pipeline during that period.

Situation has turn around for BCSI since the beginning of 2007 as the company has regained leadership in the WAN optimization market. Confidence was restored as substantial insider buying were observed between Feb to Mar 2007.

I've traded a call back in end May 2007 for BCSI Q4 earnings but it didn't move much as it was met with Shanghai index drop of 6.3% earlier in the day.

This time, I've observed the momentum of BCSI share price going strong towards its earnings announcement date on 22 Aug 2007. I've also checked that a few analysts have upgraded the stock based on growing demand within the wide area data services market.

Thus, I paper traded a Sep 60 Call at $440.00 per contract on 21 Aug 2007 before market close.

On 22 Aug 2007, BCSI didn't disappoint and reported Q1 earnings of $0.43 per share, $0.08 better than the Reuters Estimates consensus of $0.35. Revenues rose 71.4% year/year to $62.4 mln vs the $58.8 mln consensus. BCSI also issued upside guidance for Q2, expecting EPS of $0.43-0.50 vs. $0.37 consensus; expecting Q2 revs of $67-70 mln vs. $61.65 mln consensus.

The earnings report resulted BCSI to gap up +$8.00 to $68.00 on 22 Aug 2007. The share went up further 9 points to close at $77.31.

I sold the Sep 60 Call at $960.00 around 9.40am EST for a profit around $490.00.

Related Trade in my Stock Options Trading Blog

A Blue Coat Systems Inc. (BCSI) Q4 Earnings

A Blue Coat Systems Inc. (BCSI) Q3 Earnings

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Friday, July 27, 2007

A Few Winning Trades

Dear fellow stock options traders :

The 2nd Quarter Earnings Season in the US has started about 2 weeks ago.

It's a busy week as I honed my trading skills further using the earning gapping analysis technique.

The few companies that I've used this technique to trade options when they were reporting earnings were :-
1) Pharmaceutical Product Development Inc. (ticker : PPDI)
2) Columbia Sportswear Company (ticker : COLM)
3) CROCS Inc. (ticker : CROX)
4) Apple Inc. (ticker : AAPL)

Reasons for entering above trades

Pharmaceutical Product Development (PPDI)
On 13 Jul 2007, Jefferies downgraded Pharmaceutical Product Development (PPDI 39.82) to Hold from Buy, noting PPDI's development revenue growth is decelerating. Thus, put options were intiated.

Columbia Sportswear Company (COLM)
On 25 Jul 207, Caris reported COLM had experienced several years of significant operating margin declines. Trading at 17x forward ests valuation, COLM appeared steep for current growth rates and expectations. Thus, put options were initiated.

CROCS had a spectacular quarter when they reported Q1 earnings back in 3 May 2007. Boosted by the announcement of the 2-for-1 stock split, CROX gapped up almost $12.00 on 4 May 2007. I expect the momentum to carry on for the Q2 earnings thus I bought call contracts for their earning announcement this round.

Apple Inc. (AAPL)
Been following Apple's development for the past few months and understood from a news in back in 25 June 2007 that the Mac notebooks secured 14.3% of all notebook sales in the U.S. versus 12.5% in April, 2007 (almost two full percentage points in mid-spring). Apple didn't disappoint when they announced their Q3 earnings on 26 July 2007. Mac shipments were 1.76 mln vs the 1.7 mln street expectation. Gross margin was outstanding at 36.9% vs roughly 32.7% street expectation. Call options for Apple were very expensive due to the built up of high volatility leading to earnings announcement. However, the +$7.00 gap up after earnings announcement and ample time value helped maintain some profit for the near the strike call options.

Important : The above option positions were NOT initiated based on single news brief. I've been following these counters for some time and have kept abreast of their development. You need to dedicate time, research and accumulate a certain level of experience in order to pick out some of the stocks which could make a substantial price movement after earnings announcement, from amongst the hundreds of stocks reporting earnings every week. It takes much hard work to achieve this but the rewards are certainly worth the efforts.

As I was writing this entry, the US market was rather shaky. It has already shed more than 300 points on Thursday (26 July, 2007), mainly due to the cloud of uncertainty around pending LBOs (Leveraged Buyouts). The delayed deals for DCX, Alliance Boots in Europe, CSG and WCI - which have surfaced recently, signaled the tightening of the credit markets which made deals less attractive to the debt issuers.

Be sure to monitor your positions closely if you're call options buyers.

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Friday, July 06, 2007

Big Announcement That Ron Ianieri Just Confirmed On the Phone With the Vice President of the Nasdaq

Fellow Options Traders :

There's going a major shift that is coming in Q3 of this year that will change how savvy investors trade forever.

Armed with the information that Mr. Ron Ianieri is about to share with you, you'll be centuries ahead of 99.99% of all other traders when it comes to making 'Pirate-sized' profit.s, even while protecting your portfolio.

Today at 12PM Noon EST (12 Jul 2007), the Options University is re-releasing their 2007 Edition Options Mastery Series, which has sold out on each of the last two limited releases.

That's because options trading is about to go 'mainstream' and you now have a rare chance to learn from one of the best in the business.

Listen to what some of the other experts in our industry have to say about Mr. Ron Ianieri and the Options University :

==> "The Options Mastery Series"

So let 'Today be the Day' you take the first step towards finding your personal fortune. In the coming months and years ahead, trading options in the 'new market' environment may just be the fastest and easiest way.

Will YOU be ready?


Here's where to go at 12PM Noon Today (12 Jul 2007) to find out:

==> "The Options Mastery Series"


(If you go there before Noon, you'll see a brief video of Mr. Ron Ianieri and a countdown timer for when you can get all the information and check availability)

whether you're trading options yet or not, I recommend that you go to this page today at Noon, and at least find out what it's all about...

Take Care,
Tony Chai


Options University has just put up a complimentary chapter of the "Options Mastery Series" for you to view online (No strings whatsoever).

And it's not just the highlights, it's a full subject from the best-selling "Options Mastery Series", entitled:

The Greeks: Delta

Now for those of you who don't already know this, 'Delta' is one of the most important Greeks you can know when trading options.

Knowing the 'sweet spot' of an options Delta can make all the difference in the world...

It can make the difference between success and failure!

You can watch this entire session on Delta now, (and discover the 'sweet spot' of any option's Delta) by visiting HERE.

P.S. Remember, the last two times the 'Mastery Series' has sold out of all available copies, and the last time they even pulled it down early. With the Nasdaq about to start listing options, NOW is the best time in history to learn how to trade options.

P.P.S. You can also read more 'rave reviews' of the Mastery Series below from other traders like yourself, getting results:

==> "The Options Mastery Series"

"This is powerful information that will impact my trading results immensely. I'm excited!"
- Eric Jackson, Kansas City, MO

"Not only did I learn a how I can start to supercharge my trading, I also learned a lot about the market overall."
- Laura Fleming, Ocean City, NJ

"Thank you for sharing this, no-one else is talking about this anywhere, but I'm glad I heard it first... Thanks, keep up the good work!"
- Fred Rolden, Grand Rapids, MN

"Wow, this is big news... and I love your passion! As a very experienced trader of 24 years, I can hardly wait for this to happen!"
- Alan Gardner, Burlingame, CA

Saturday, June 23, 2007

Do you know why Bill Gates drop out of Harvard....

Dear fellow stock options traders :

I am not sure whether you know Mr Bill Gates dropped out of Harvard, but he pulled his best friend, Steve Ballmer to drop out of Business School.

I think our parents will be shocked at such an outrage if we ever drop out of such a prestigious school before getting the coveted degree, not to mention pulling our close friend along - talk about Bad Influence!!!

The thing is Bill got his hands into something so powerful that it was supposedly banned by the Catholic Church more than 50 years ago... It has recently re-surfaced and those who know about it try to keep it from the masses. These powerful secrets are revealed to those who are wealthy and powerful including their close associates.

* The 1st World War broke out in 1914. Those who knew "the secret" were protected.

* The Great Depression crippled the nation in 1929. Those who knew "the secret" prospered.

* Fast forward to the 21st Century, who knows what will happen to you, if you possess this powerful tool that Bill Gates has....

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A Winning Trade on Best Buy (BBY)

Dear fellow stock options traders :

I have previous experience trading Best Buy (BBY) and understood that it would be a good candidate for the earnings gapping analysis technique.

Best Buy (BBY) would be reporting earnings on 18 June 207 after-market-close. After some research of the recent development of this company, I found that on 14 June 2007, Stifel adjusted their model on BBY to reflect softer comps. They expected BBY's 1st Quarter domestic comp to fall below their previous est of 3.0%. Over at Motley Fool, an article stated that although 13 of the analysts felt Best Buy would outperform the market going forward; it was kind of strange when you noticed that over the last 52 weeks, the stock has in fact underperformed the S&P 500 by more than 33 percentage points.

That prompted me to paper-trade 5 lots of July 47.50 Put at $160 each on 18 June 2007 (eve of earnings announcement) when the stock price was around $48.00.

After the market close, BBY reported 1st Quarter earnings of $0.39 per share, $0.11 worse than the Reuters Estimates consensus of $0.50; although revenues rose 13.9% year/year to $7.93 bln vs the $7.83 bln consensus. Co also issued downside guidance for FY08.

On 19 June 2007 (Tuesday), BBY gapped down -$2.10 to $45.90 when market opened. I observed the Level 2 Code, intra-day chart & volume movement and sold my positions for a paper profit of around $285.00 around 10.00am EST.

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Saturday, June 16, 2007

A Close-Shave Trade on Goldman Sachs (GS)

Dear fellow stock options traders :

The trade on Goldman Sachs (GS) was initiated due to a discussion started by my buddy, Redyellowblackdog, at myLot entitled "Oversold Stocks?"

Redyellowblackdog happened to screen out a list over-sold stocks that he felt might rebound. By the way, he has a stock analysis web-site at PolyDimensional Analysis

That prompted me to take a look at Goldman Sachs (GS) daily chart. I observed that GS happened to close higher on the day ie. 8 June 2007, the day that Redyellowblackdog initiated the discussion, after a series of down days beginning from 1 June 2007.

On 11 June 2007, GS closed higher again, giving confirmation of GS's continued uptrend. I also understand that GS would be reporting earnings on 14 June 2007, and I believed that would fatten the options premium due to the increase in implied volatility.

That prompted me to paper trade 2 nos. of June 230 Call at $410.00 each on 12 June 2007. I observed the closing hours and decided to hold on to the position till the next day ie. 13 June 2007.

On 13 June 2007, GS gapped up about +$2.00 to $229.00 when market opened. I'd decided to observe GS's reaction to the release of Fed Biege Book later in the afternoon and the build-up of implied volatility leading to earnings announcement to determine whether to exit the position.

After the release of the Fed Biege Book, the stock market rallied. I also observed that GS started to move up strongly about +$2.00 to $233.00 after 3.30pm EST. That really fattened the implied volatility & intrinsic value of the June 230 Call as it became in-the-money. After observing the Level 2 Code and making a quick decision whether GS call option could fetch at least $500 a contract if it reported good earnings on 14 June 2007, I decided to close my position & sold the contracts for $530.00 a piece.

On 14 June 2007, although GS reported 2nd quarter earnings of $4.93 per share, $0.17 better than the Reuters Estimates consensus of $4.76, the stock plunged more than $6.00 when market opened due to some concerns over the sub-prime mortgage business. The June 230 Call could now fetch less than $50.00 per contract.

Related Trade in my Stock Options Trading Blog

A Winning Trade - Goldman Sachs Group Inc. (GS)

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai

Friday, June 08, 2007

A Losing Trade - The Cooper Companies Inc. (COO)

Dear fellow stock options traders :

Understand that The Cooper Companies Inc. (COO) would be reporting earnings on 5 June 2007 after market close.

I've bought a ATM June 55 Call for $210.00 on 4 June 2007 when COO share price was hovering around $55.80 due to the following findings :-

1) I've researched that COO share price has gone up about $5.00 between 15 May 2007 to 21 May 2007 due to rumor of possibly being acquired. On 16 May 2007, Bausch & Lomb Inc. (BOL), a company belonging to the same industry, was acquired by a private equity .

2) At the same time, I've checked that companies like Align Technology Inc. (ALGN) and Patterson Companies Inc. (PDCO), which also belonged to the same industry (Medical/Dental-Supplies), have gapped up in their recent earnings announcement thus I felt COO might follow suit too.

However, I've made the following mistakes :-

1) I've bought the June 55 Call too early, about 2 days earlier to be exact. By 5 June 2007, COO has dropped more than -$1.50 to close at $54.10. I saw my call option premium shed to about $140 from my initial purchase price of $210 per contract. Lesson learned : Do not buy the option too early. At least wait till the eve of earnings announcement day to buy.

2) Since the share price of COO had started to weaken 2 days towards the earnings announcement day, that should have hinted me it was risky to hold on to the call option. A look at the past gapping history of COO revealed that on 12 Dec 2006 (eve of earnings), COO ever gapped down followed by forming an intra-day -$1.50 red candle. On 13 Dec 2006, COO plunged -$6.00 to $43.10 after earnings announcement. Lesson learned : study the chart movement carefully before buying the stock option contract.

On 5 June 207, COO reported 2nd Quarter (Apr) non-GAAP earnings of $0.48, comparable to the Reuters Estimates. Revenues rose 6.7% year/year to $225.5 mln vs the $227.7 mln consensus. The company also issued in-line guidance for FY07, expecting FY07 revenue of $927-967 mln vs. $929.14 mln consensus; the company also reaffirmed FY07 EPS guidance of $2.90-3.05.

On 5 June 2007, the market did not react favorably to COO's earnings results and COO promptly gapped down -$3.70 to open at $51.84. I looked at the Level 2 Code, price and volume and realized that the buying side was still strong. So I held on to my losing call option position and sold my contract around 3.55pm EST when it could still fetch back $80 and COO's price was $54.10.

Options premium would usually drop dramatically after earnings announcement due to the collapse of implied volatility. The option would only gain value if there's a substantial gap/down in the share price in the anticipated direction after earnings announcement.

Related Trade in my Stock Options Trading Blog

A Losing Trade on Mastercard Incorporated (MA) - 10 Feb 2007

If you've managed to find out about the Live Freely! Seminar from my stock options trading blog and subsequently sign up for it, I hope you could do me a kind favour and mention Mr Tony Chai from Batch 14 as the referrer. Thank you for your kindness.

Wishing you Profitable in your Options Trading too.

Yours Sincerely,

Tony Chai