1:20pm (EST)
Futures were showing a positive open throughout the night as we were doing our homework and updating our current positions. We weren’t too worried if Nonfarm Payrolls came in north or south of triple-digits (100,000) as any number would be blamed on the weather, good or bad. A good number could have been better while anything in double-digits would be blamed on Mother Nature.
To Wall Street’s surprise. Nonfarm Payrolls came in much higher than expected as 175,000 were created in February. Expectations were for 150,000 jobs added bit whisper numbers were in the double-digits.
Futures spiked on the news and lead to a higher market but the buzz has faded as we head into the second half of trading.
One stock on the move today is FootLocker (FL, $45.81, up $3.08) as shares are up 7% and have reached a peak of $46.80 on the open. The company topped analysts expectations after reporting a profit of $0.82 a share on revenue of $1.79 billion. The suit-and-ties were looking for $0.76 a share on sales of $1.76 billion.
We blamed the weather for keeping us out of a sweet call option trade that would have made us a fat triple-digit profit in less than 24 hours.
If you recall, we profiled the March 43 calls (FL140319C00043000, $2.75, up $1.55) in our Weekly Wrap and again yesterday. The options were at a buck ($1) and are up 129% but they have traded to a high of $3.63 for over a 250% gain.
Although we missed this trade, we had a slew of happy subscribers as some of our veteran traders braved the waters.
We do have another earnings trade we are currently in that has returned us 256% but it would have been nice if we could’ve bagged this elephant ahead of the weekend.
The euphoria at the open has waned as the market is mixed as we make the turn. The Dow is up 19 points to 16,440 while the S&P 500 is slipping a point to 1,876. The Nasdaq is down a double-deuce (22 points) to 4,330 and the Russell 2000 is lower by 2 points to 1,202.
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: 24-8 – the Weekly Wrap is 10-2 for 2014 (95-9, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk.
We are excited about the rest of the year as we said 2014 could be one of the best years ever to trade options, especially if there is another massive 10%-20% move higher, or lower, at some point this year. Thanks for your support!
Current Trades
Aruba Networks (ARUN, $21.71, up $0.41)
April 23 calls (ARUN140419C00023000, $0.80, up $0.15)
Entry Price: $0.65 (3/5/2014)
Exit Target: $1.30
Return: 23%
Stop Target: None
Action: We believe shares could make a run past $25 and challenge its 52-week high of $26.26. Support is at $20.
Opko Health (OPK, $9.20, up $0.21)
April 10 calls (OPK140419C00010000, $0.50, up $0.10)
Entry Price: $0.65 (3/4/2014)
Exit Target: $1.30
Return: -23%
Stop Target: None
Action: We are expecting a surge past $10 over the next few weeks and a close above $9.50 would be bullish. Support is at $9-$8.75.
Ingersoll-Rand (IR, $62.07, up $0.75)
April 62.50 calls (IR140419C00062500, $1.45, up $0.35)
Entry Price: $0.90 (2/27/2014)
Exit Target: $1.80
Return: 61%
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.
Discovery Laboratories (DSCO, $2.59, up $0.01)
April 2 calls (DSCO140419C00002000, $0.80, flat)
Entry Price: $0.65 (2/24/2014)
Exit Target: $1.00-$1.30
Return: 23%
Stop Target: 60 cents
Action: Support is at $2.50 but we are still looking for shares to test $3.
World Wrestling Federation (WWE, $30.42, up $0.62)
March 30 calls (WWE140322C00030000, $2.30, up $0.40)
Entry Price: $0.40 (2/18/2014)
Exit Target: $0.80 (3/5/14 closed half @ $0.80, 3/6/14 closed a quarter at $1.80)
Return: 256%
Stop Target: $1.20 (Hard Stop on other half)
Action: The calls have traded to a low of $1.55so our Hard Stop is holding up. Shares should hold $30 into the close and we would love to see $31 trigger. We are excited about the chart work we will be doing on this one over the weekend.
Kodiak Oil & Gas (KOG, $11.95, down $0.02)
June 13 calls (KOG140621C00013000, $0.70, flat)
Entry Price: $0.70 (2/13/2014)
Exit Target: $1.40
Return: 0%
Stop Target: None
Action: We believe the company is a takeover candidate that could get a bid north of $15. Resistance is at $12.50. Support is at $11.75 following the close below $12.
Ariad Pharmaceuticals (ARIA, $8.14, down $0.23)
March 10 calls (ARIA140322C00010000, $0.15, flat)
Entry Price: $0.95 (1/28/2014)
Exit Target: $1.90
Return: -84%
Stop Target: None
May 11 calls (ARIA140517C00011000, $0.60, flat)
Entry Price: $1.05 (1/28/2014)
Exit Target: $2.10
Return: -43%
Stop Target: None
Action: We are expecting a pop to $10 over the next few weeks but we are running out of time with the March calls. 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, $13.62, down $0.07)
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 on Monday with some fresh ideas.
We could have additional updates ahead of today’s close but if you don’t hear from us, we will be back Sunday night with the Weekly Wrap and Monday morning with the Daily. Until then, have a great weekend everyone!
