Stillwater Mining Company (SWC) engages in developing, extracting, processing, smelting, refining, and marketing palladium, platinum. It also explores for all different types of metals such as: nickel, copper, gold, and silver ores. We have seen very bullish call buyers over the last 2 weeks in SWC and I think the stock is headed higher.  When I am trading using the Ichimoku Cloud there are always several different ways I can set up my entries and exits.

Aggressive Long Set-Up: Buy Stock at $14.98 with a $14.14 Stop
Target #1: $15.39
Target #2: $15.98
Target #3: $16.49

Aggressive Pull-Back Trader Buy Stock at $14.24 with a $13.24 Stop
Target #1: $14.74
Target #2: $15.24
Target #3: $15.74

Mild Pull-back Buyer: $13.24 with a $12.50 Stop
Target #1: $13.54
Target #2: $14.04
Target #3: $14.54

Allergan, Inc. (AGN) operates as a multi-specialty health care company primarily in the United States, Europe, Latin America, and the Asia Pacific. This stock has been on fire recently and is breaking through its 52 Week highs. Today we saw a very interesting trade where a trader bought 1,000 AGN July 140 calls for $5.84 and then sold 1,000 July 115 puts to reduce the cost of the trade. This is known as a “risk reversal.”  A trader will get long 100,000 shares at two different levels: $115 and $140. This trader has a breakeven at $142, but let’s break this down a little further.

The Trade: Trader bought 1,000 AGN July 140 Calls and Sold July 115 Puts for $2.00 debit
Their Risk: $117,000
Their Reward: Unlimited
Breakeven: $142

Between $115-$140: Trader will lose Cash outlay of $200,000

Under $115 and Above $140, Trader will become Long 100,000 Shares of Stock

PACCAR Inc (PCAR) is a company that manufactures medium and heavy duty trucks under several different nameplates. The company’s stock is currently trading around $65.95 in a 52 week range of $47.12-$66.46. The stock has been outperforming the market this year with shares gaining over 11% year to date. Options activity during today’s session would suggest that traders believe this trend will continue through May expiration. Earlier in the session a trader bought 5,000 PCAR May 66.60 calls for $2.05 to $2.10. This is a very bullish trade that requires this trader to invest around $1 million in premium. PCAR is also trading above the Ichimoku Cloud, suggesting the stock has more room to the upside. With order flow this strong and a bullish chart set up we believe PCAR is setting up well for a long.

Trade Setup: Buying the PCAR May 66.6 Calls for $2.10
Risk: $210 per 1 lot
Reward: Unlimited
Breakeven: $68.70

Yesterday, Andrew Keene Tweeted that he may be starting to like KNDI as a speculative play. Andrew, welcome to the KNDI bandwagon.  I am very bullish KNDI.  Last December, I chose KNDI as my favorite stock play for 2014.  It is up almost 65% since then.

I still like it and think it will go much higher.  I own both shares of stock and call options.

KNDI is an electric vehicle company in China, and has been soaring.  Here are some important KNDI points to consider:

1.  In his State of the Union last month, China’s Premiere Li stressed fighting smog.

2.  When the Chinese government wants to do something, it does it.  There is no political stalling like the US.

3.  The Chinese government provides subsidies to KNDI customers. These were just enhanced and extended, and they could increase further.

4. There are many enormous cities KNDI is not yet in.

5. KNDI is a microcap; thus it has enormous growth potential.

6.  Wait ‘til all the TSLAites discover KNDI.

7.  KNDI has electric battery patents.  These alone could be worth more than the current market cap.

8.  The biggest risk in a Chinese stock is normally fake numbers.  Here that doesn’t matter, because you’re buying growth potential, not earnings or revenue.

I have also made the following subjective observations with regard to the stock and option prices.

KNDI’s options have wide spreads, but offers in the middle frequently fill.  Option volume seems to be increasing lately.  Still, day trading the stock may be more lucrative than options.

KNDI is very volatile.  Can be up or down a point or more quickly intraday.  This creates trading opportunities.

KNDI seems to go up or down intraday not on news but on volume.  On many volume spikes (which are frequent) KNDI will move up or down hard.

KNDI is often very volatile (up or down big) before the bell and in 1st half hour, creating stock trading opportunities. It often seems to move back to the norm during the day.

The above are just a few thoughts to consider.  But KNDI remains my stock pick of the year.

Follow me on Twitter @USKOTM

(DISCLAIMER: The above is my subjective opinion only and NOT investing advice or suggestions in any form. I am not a registered advisor of any kind. I own KNDI stock and call options.)

Encana Corporation (ECA), together with its subsidiaries, is engaged in exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids in Canada and the United States.  This is not the first time we’ve seen bullish activity in ECA and it seems that this trader has been right in the past.  Today a trader bought 15,000 ECA Oct 23 Calls for $.85.  This gives the trader the right but not obligation to buy 1.5 Million Shares of ECA at $23 between now and October.  Let’s break-down their trade a little easier.

Their Risk: $85 per 1 lot
Their Reward: Unlimited
Their Breakeven: $23.85
Cash Outlay: $1.275 Million

Restoration Hardware Holdings, Inc., together with its subsidiaries, engages in the retail of home furnishings. It provides bedroom, dining, upholstery, home office, and media furniture products and has over 2,100 full-time employees in the services sector.  Today we saw a trader sell their long March 55 calls and roll them to the Apr 65 line. This is a bullish trade and I think the stock will move higher on this unusual options activity.  This block also represented volume over 4 times the average daily option volume in RH.  If I did not want to put on an options trade I could buy the stock with a $6 stop, under the Ichimoku Cloud.

Possible Trading Ideas:
Buy Stock: $65.38
Stop: $59.38
Target #1: $68.38
Target #2: $71.38

Stop at Breakeven when Target #2 is hit:
Target #3: $74.38
Target #4: $77.38

YPF SA, an energy company that engages in the exploration, development, and production of crude oil and natural gas in Argentina.  I have traded this stock in the past, but I currently do not have a position.  Today we saw a trader buy 2,000 of the Jan 2015 30-40 bull call spreads for $2.85. This is a cash outlay of over $500,000.  A trader sees that YPF is breaking the Ichimoku Cloud on the daily chart and thinks it can move higher. This trader is likely expecting a slower more sustained move higher in YPF. If they were expecting a parabolic move higher they would have bought outright calls instead of call spreads. This is a bullish trade and this trader will make almost 300% returns if YPF closes above $40 on Jan 2015 expiration.

FuelCell Energy Inc. (FCEL) together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants and I think that this sector will do very well this year.  However, the stock has doubled in the last 2 weeks.  I would be more inclined to buy a pullback  than to get long the stock here.  The stock has sold off 6 of the last 8 quarters on earnings.  Technically the chart looks great and I think it will go higher but I do not want to be buying inflated front month volatility so my trade will be:

Buy the July-March 3 Call Calendar Spread for $.60 debit

Risk: $60 per 1 lot

Reward: Unlimited if stock closes under $3 on March expiration, I will be long the July 3 Calls for $.60

The Bank of New York Mellon Corporation provides various financial products and services around the globe. The stock has been under performing the market, but I think it is time to rip to the upside. Today we saw a trader buy almost 10,000 BK Sep 35 Calls for $1.08 which was over 6.0 times the average daily options volume and controls over 1 million shares of stock. We continue to see bullish activity in the KRE, the regional banking ETF, and several other financial names. I bought these Calls for $1.09 as this trader is making over a $1 million bet in this stock.

Hawaiian Holdings, Inc (HA) is a company who maintains sole ownership of Hawaiian Airlines Inc. The company’s stock is currently trading around $13.60 in a 52 week range of $5.18-$13.80. The stock has had a great year so far with shares rallying over 41% year to date. Options action has been very bullish in HA throughout this year and yesterday a trader made a bet on the close that HA will continue higher through March expiration. Shortly before yesterdays close a trader bought 4,015 HA Mar 13 Calls for $0.45. HA was upgraded this morning at Deutsche Bank and the stock opened higher by over 4%. The calls the trader bought yesterday traded as high as a dollar so this trader doubled his money overnight on a 4% move in the stock. HA is selling off some after the close but this trade is still hugely profitable. This is a great example of how unusual options activity can telegraph moves in stocks.