1:40pm (EST)

We mentioned there could be a positive catalyst this week with today’s bank stress tests results expected after the closing bell.  Although the Financial stocks were slow and steady last year, the market has been waiting on them to lead “the” next leg higher.

The current stress tests are conducted by the Federal Reserve on the largest US banks to determine how prepared they are to withstand another possible financial crisis if one were to happen.

The tests are required under the banking reform legislation the zombies passed after the 2008 financial crisis.  Last year, similar zombie tests showed 17-of-18 of the largest US banks could easily withstand a possible economic meltdown worse than the 2008 crisis.

Obviously, a perfect score would be super bullish but there are going to be 30 under the microscope after the close.  The impact of more than one or several banks getting a “F” might be bearish but overall we expect the sector to get an “A”.  The bigger tests are next week when the market will get a better clue on if the Financial stocks can raise their dividends.

Today’s results will impact Friday’s trading along with triple-digit witching day for options.  Volatility could pick up a notch, good or bad, but the market could be setting up for a sweet spot that we mentioned would once again have the fund managers chasing.

As we make the turn, the indexes are pushing resistance once again and a follow through on Friday could get fresh highs in play.

The Dow is higher by 121 points to 16,343 while the S&P 500 is gaining 12 points to 1,872.  The Nasdaq is jumping 19 points to 4,326 and the Russell 2K is advancing 4 points to 1,199.81.  The small-caps have traded to a high of 1,199.98 as we head to press and We would like to see 1,200 trigger in the second half of trading.  The S&P Volatility Index ($VIX, 14.70, down 50) is back below 15.

Subscribers, hit the Members Area as we are seeing some green on the first day of Spring!  We have a Profit Alert on a trade that is up 67% and we are ringing the register on a quarter of the position.  We also have a New Trade we are getting into.

Special Note:  We could have additional New Trades and/ or Profit Alerts this afternoon so stay locked-and-loaded into the close.


Closed Trades for 2014: 31-9 – the Weekly Wrap is 12-2 for 2014 (97-9, or 92% win rate, since 2011) and is designed for traders that want to use options with less risk.

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.


1:40pm (EST)


Finish Line (FINL, $28.09, up $0.35)

Buy to OPEN April 30 calls (FINL140419C00030000, $0.50, up $0.10)

Action:  We like these calls as we see shares making a possible surge past $30.


Current Trades 

Ingersoll-Rand (IR, $58.72, up $0.59)

April 60 calls (IR140419C00060000, $0.95, up $0.20)

Entry Price:  $1.05 (3/18/2014)

Exit Target:  $2.10

Return:  -10%

Stop Target:  50 cents

Action:  Near-resistance is at $59.75 and the 50-day MA.  A close above this level will get $62-$63 in play and where we are looking to exit the trade for a 100%-200% return.  Support is at $57.


Morgan Stanley (MS, $32.41, up $0.60)

April 33 calls (MS140419C00033000, $0.70, up $0.20)

Entry Price:  $0.42 (3/17/2014)

Exit Target:  $1.00+

Return:  67%

Stop Target:  None

Action:  Close a QUARTER of the trade at current levels.

We are expecting a trip to $33-$33.50 if the Financial stocks can show some strength.  There is risk down to $30.75-$30.50 and we will stick with the trade as long as $30 holds.


Valero Energy (VLO, $55.17, up $0.83)

April 57.50 calls (VLO140419C00057500, $1.10, up $0.25)

Entry Price:  $1.05 (3/14/2014)

Exit Target:  $1.50-$2.00

Return:  5%

Stop Target:  50 cents

Action:  Fresh 52-week highs are north of $55.38.  Support is at $54-$53.50.


Zynga (ZNGA, $5.24, up $0.10)

April 5.50 calls (ZNGA140419C00005500, $0.20, flat)

Entry Price:  $0.55 (3/12/2014)

Exit Target:  $1.10

Return:  -64%

Stop Target:  None

Action:  There is further risk to $5.20-$5 but we feel as though shares are on the verge of clearing $6.  A close above $5.80 should lead to a breakout that could take shares to $8.

From our Weekly Wrap:  The company has some new games coming out over the next few months including a slick new version of Zynga Poker.  We believe the company is a takeover target based on the potential revenue poker could bring to the company although Zynga doesn’t plan to monetize anytime soon.  Perhaps Carl could shake up the board because there is billions to be made if Zynga can monetize their poker app.


Opko Health (OPK, $9.74, up $0.02)

April 10 calls (OPK140419C00010000, $0.50, flat)

Entry Price:  $0.65 (3/4/2014)

Exit Target:  $1.30

Return:  -23%

Stop Target:  None

Action:  A close above $10 could lead to some short-covering up to $12-$13.  Support will try to hold at $9.50.


Kodiak Oil & Gas (KOG, $11.85, flat)

June 13 calls (KOG140621C00013000, $0.60, flat)

Entry Price:  $0.70 (2/13/2014)

Exit Target:  $1.40

Return:  -14%

Stop Target:  None

Action:  We believe the company is a takeover candidate that could get a bid north of $15.  Support is at $11.  Resistance is at $11.75-$12.


Exact Sciences (EXAS, $14.56, up $0.11)

April 19 calls (EXAS140419C00019000, $0.65, flat)

Entry Price:  $0.88 (1/22/2014)

Exit Target:  $1.75

Return:  -26%

Stop Target:  None

Action:  The company should get some FDA news in next Thursday on its Cologuard drug.  Shares traded to a high of $15.60 yesterday but ended flat.  The options reached a peak of 95 cents and got us back in the green before also ending flat.  We have said we believe shares clear $20 on the news but there is risk if more data is needed or their drug gets rejected.


Other 2014 Portfolio OPEN positions (6):  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 mkh jb√ 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

Ariad Pharmaceuticals March 10 calls (from January 2014)

May 11 calls (from January 2014)


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



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 but we are looking at adding an index trade into the close if we like the action.