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Vertex Pharma (VRTX)Trade Alert (11/29/12): When we issued the bearish trade idea on VRTX below on Nov 13, the stock was trading at $44. While the overall market has continued to run higher, VRTX has continued to go lower as expected. The stock now trades at $39.72. I mentioned that technically we could see a retest of gap fill around $37.50. The low of yesterday was $38.80. Close enough!
- If you sold Dec 49/48 bull put spread as an income trade, nothing to do, just let it expire worthless to book full gains on expiration.
- If you bought Jan 45/35 put spread for $2.80, it is now going for $5.30 (up nearly 90%). Take full profits here.
- If you bought Apr/Dec 45/40 diagonal put spread for $4.30, it is going for $5.90 (up some 37%). Stick with the trade, there is more Theta decay to come out then close the trade.
- If you bought straight Apr 45 puts. Still got plenty of time, so just hold or convert this into diagonal put spread by selling Dec out of money puts and collecting some credit.
Fundamentally, I think VRTX is done going down yet. This will likely keep gradually rolling over until mid 20's, given serious deterioration (see full analysis below). I expect management to cut guidance when they report next time.
Phillips 66 (PSX)Trade Alert: I have already mentioned several times before that I am long this refiner ever since we learned that Warren Buffet acquired 27 million shares through the spin-off from Conoco.
On August 7, 2012 I pointed out the following: "One bullish trader bought 40,000 contracts of Jan'13 48 calls for 55 cents debit. Approx $2.2 million bullish bet."
Every other week or so, the bulls have continued to make money bullish bets in PSX since early August. If you're not already long and want to get in, follow the trade listed above.
Update (8/29/12): Buy Feb 48 calls for $1.50
Update (1/29/13): Close the trade for $7.60 (up 410%).
China ETF (FXI)Trade Alert (12/6/12): Keeping this one short and sweet. Thinking along the same line as EMB, please note that the biggest trade today was buyer of FXI January 39/42 call spread 30,000 times for 56 cents debit. Approx $1.6 million bullish bet on China. Please note that the catalyst here will likely be the set of data coming out on the weekend. On Saturday we are going to get China CPI and PPI. And on Sunday we will get China retail sales numbers.
Trade: Buy January 39/42 call spread for 60 cents debit.
Update (12/31/12): Close the trade for $1.80 (up 200%).
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