4 Stocks I’m Watching Going Into Options Expiration

After the close yesterday Abercrombie and Fitch
(
ANF |
Quote |
Chart |
News |
PowerRating) came out with negative
news pertaining to their earnings. ANF had closed at 61.23. After the news
release to the public, the price crossed down to 56.50 and traded as low as
55.01 in aftermarket trading. Hewlett-Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating) on the other hand,
released strong earning news. It had closed at 23.60. In the aftermarket trading
it traded as high as 25.60.

Hewlett-Packard opened this morning at 25.74. This was .74 higher above its
52-week high. When a stock opens up like this, I feel there are two possible
trades. The first is the short to fill in the gap. Price targets would be $25.00
(the prior 52 week high) and the previous day close of 23.60.

The second is the long and I believe the stronger of the two trades. Remember
the trend is your friend. When HPQ failed to sell off I began getting long at
$25.80, $25.90, and $26.00. As HPQ traded up to 26.20, I placed a protective
stop at 26.12. I was stopped out of my whole position at 26.12.

The reason I placed a stop at 26.12 was because there was a large bid in the
NYSE openbook at this price. I felt it was a great level of support. If a seller
came in at this point I would want to take my profit and be out of the trade.

ANF was a different story. ANF opened down this morning at 56.80. Two thoughts
entered my mind. ANF could continue selling off down to yesterday’s aftermarket
low of 55.01 or it could fill some of the gap to the NYSE close of 61.23.

I was definitely leaning short for the same reasons I was leaning long with HPQ.
The trend continuation was most likely. ANF was choppy for the first 20 minutes.
I could not get a complete feel on which direction it was going to move. I took
a number of trades both long and short for small gains. ANF failed to sell off
and due to some tape reading and large bids coming into the NYSE openbook I was
able to get enough confirmation to go long and stay long. I took positions at
57.05, 57.25, and 57.50. I was stopped out of the whole position at 57.65 for a
nice gain. A few hours after the open ANF showed up on my scanner as a buy
through the $58 level and once again through the $58.20. Because this was later
on in the morning you had to take quick profits for .10 to .15.

If you read my Article last week on IPO’s you would have been aware of the
success I have been having trading IPO’s this month. This morning was no
exception. ROC opened at 19.72 and sold off to 19.55. By correctly reading the
tape I was able to identify a large buyer that began coming into the market at
the 19.60 level. I was able to get long at 19.65 and again when the stock broke
its day high of 19.72. ROC ran up through the 20.00 to 20.28. Using a .10
trailing stop I was out of my whole position at 20.10.

For tomorrows markets lets continue to keep an eye out for the stocks that have
been successful for us all week. Remember it is Options expiration so stocks
will be moving around a little tricky. I will keep my focus on ANF, DE, HPQ, and
DKS.

FDC Spiked up over a point at the end of the day so look for it too continue to
the upside if we have a strong market. 52 week high in FDC is 44.30.

Before founding Evolution Capital LLC., Michael began his career on the floor of
the CBOE. Mr. Kestler was previously a Mid-Cap and Nasdaq Market Maker.