12:15pm (EST)
The bulls, and bears, are taking a small breather today following 2 days of incredible volatility and major price swings.
Economic news has capped the action to the upside as the ADP Employment Change report revealed private payrolls rose 139,000 in February. Analysts were expecting 155,000.
The ISM Non-manufacturing report also came in weaker-than-expected as the index fell to 51.6 in February, down from 54.0 in January.
The Fed’s Beige Book report is due out at 2:00pm (EST) and will likely set the tone for the close.
Despite the flat action, we have were able to lock-in profits of 100% on one of our current trades as we closed half of the call options on a stock that has been surging this week. Shares have zoomed 15% for the week and jumped another 3% on this morning’s open and where we cashed out half.
We are still looking for further gains from the powerful moves shares are making but we wanted to make sure we walked away with a profit as the options expire in a little over 2 weeks and they are still, technically, “out-of-the-money”.
We also have a New Trade we are getting into after locking in gains as there. Is another stock we are watching that could make similar types moves.
The Dow is down 34 points to 16,361 while the S&P 500 is up a point to 1,874. The Nasdaq is gaining 2 points to 4,354 and the Russell 2000 is lower by 4 points to 1,204.
Stay locked-and-loaded into the close as we could have additional Trade Alerts.
Do not risk more than 5% of your trading account on any one trade but do try to take ALL of the trades. Please remember, ALL “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any tradesor “Exit Orders” in your brokerage account unless we list one. We will send out a “Profit Alert” or “New Trade” if we want you to close a position OR if a new trade comes out. Otherwise, follow instructions at all times in the 9am and 1pm updates. Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames. Closed Trades for 2014: 22-8 – the Weekly Wrap is 9-2 for 2014 (94-9, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk.
New Trade
Aruba Networks (ARUN, $21.27, up $0.09)
Buy to OPEN April 23 calls (ARUN140419C00023000, $0.65, up $0.05)
Action: We believe shares could make a run past $25 and challenge its 52-week high of $26.26. We like these call options at current levels.
Current Trades
Opko Health (OPK, $9.45, down $0.01)
April 10 calls (OPK140419C00010000, $0.65, flat)
Entry Price: $0.65 (3/4/2014)
Exit Target: $1.30
Return: 0%
Stop Target: None
Action: We are expecting a surge past $10 over the next few weeks and a close above $9.50
Ingersoll-Rand (IR, $61.01, down $0.22)
April 62.50 calls (IR140419C00062500, $1.00, down $0.15)
Entry Price: $0.90 (2/27/2014)
Exit Target: $1.80
Return: 11%
Stop Target: 90 cents
Action: We have a near-term target of $64-$65. If reached, these options will easily double from our entry price. Support will try to hold at $60 on any pullback with $59 serving as backup. The April options have 44 days before expiration.
Discovery Laboratories (DSCO, $2.70, flat)
April 2 calls (DSCO140419C00002000, $0.85, flat)
Entry Price: $0.65 (2/24/2014)
Exit Target: $1.00-$1.30
Return: 31%
Stop Target: 60 cents
Action: Shares continue to climb higher after the break out of the symmetrical triangle but Friday’s close felt bearish. Support is at $2.50 but we are still looking for shares to test $3.
World Wrestling Federation (WWE, $26.31, up $0.07)
March 30 calls (WWE140322C00030000, $0.60, up $0.05)
Entry Price: $0.40 (2/18/2014)
Exit Target: $0.80 (3/5/14 closed half @ $0.80)
Return: 75%
Stop Target: 40 cents (Hard Stop on other half)
Action: We closed half of the trade shortly after the open as our limit order of 80 cents triggered when shares traded up to $26.96. We have set a Hard Stop of 40 cents on the other half of the trade.
Kodiak Oil & Gas (KOG, $12.28, down $0.16)
March 12 calls (KOG140322C00012000, $0.65, down $0.05)
Entry Price: $0.60 (2/13/2014)
Exit Target: $1.20
Return: 8%
Stop Target: None
June 13 calls (KOG140621C00013000, $0.90, flat)
Entry Price: $0.70 (2/13/2014)
Exit Target: $1.40
Return: 29%
Stop Target: None
Action: Close the March 12 calls at current levels.
As much as we hate to do it, we are going to close the March 12 calls for a slight profit. We still have the June calls to play a move higher but we wanted to take a little risk off if $12.50 holds as resistance.
Shares tested resistance at $12.50 and close just below this level. If cleared, a run to $13-$14 could be coming. We also believe the company is a takeover candidate and why we are also long the June calls.
Ariad Pharmaceuticals (ARIA, $8.65, down $0.10)
March 10 calls (ARIA140322C00010000, $0.30, flat)
Entry Price: $0.95 (1/28/2014)
Exit Target: $1.90
Return: -68%
Stop Target: None
May 11 calls (ARIA140517C00011000, $0.75, flat)
Entry Price: $1.05 (1/28/2014)
Exit Target: $2.10
Return: -29%
Stop Target: None
Action: We are expecting a pop to $10 over the next few weeks. Support is at $8 with $7 serving backup.
Revenues should grow during the current quarter with the re-launch of Iclusig in the U.S. The company could also have a new drug debut in the second half of 2014 and why we also suggested longer-term options on this trade as well.
The water cooler talk is that Eli Lilly has made a “friendly approach” to buy the company and is willing to pay up to $20 a share. GlaxoSmithKline is also in the hunt along with Shire.
We have said there is a HUGE gap to fill on the stock’s drop from $23 to a 52-week low of $2. Eli is trying to get the company for cheap as it currently has a $1.25 billion market-cap.
Exact Sciences (EXAS, $14.30, up $0.13)
April 19 calls (EXAS140419C00019000, $0.50, flat)
Entry Price: $0.88 (1/22/2014)
Exit Target: $1.75
Return: -43%
Stop Target: None
Action: Resistance is at $15 and a move above this level should get us back near even. Support is at $12.50.
The company should get some FDA news in March on its Cologuard drug. These are April options with 2 months until expiration and we plan to hold through the volatility because we want to be in when the March news is released. We do not have a Stop Limit listed.
Other 2014 Portfolio OPEN positions (5): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means we would not open any new positions. We are still keeping track of the trades and we will record the results, accordingly, when we close them or if the options expire. Click on the 2013Portfolio link in the Members Area to view ALL open/ closed trades.
Sony April 20 calls (from January 2014) – continue to HOLD
General Electric March 28 calls (from January 2014) – continue to HOLD
Caterpillar March 85 puts (from January 2014) – continue to HOLD
McDonald’s March 90 puts (from February 2014) – continue to HOLD
Apollo Education Group March 29 puts (from February 2014) – continue to HOLD
WATCH LIST SECTION
These trades are NOT recommendations. They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices. We try not to have more than 12-15 open trades at any one time and why we have a Watch List. We will not list entry prices because these stocks are on the verge of breaking out or they could sell off but these are the trades we are watching as new candidates.
We will update this section in the morning.
