1:20pm (EST)

The bulls started the week on a good note and are trying to end it on one as the market is rebounding today.  However, the bears are on track for weekly win as the damage they did in between Monday and Friday should be enough to get the job done.  There is still another half of trading to go and the bulls are trying to recover prior resistance levels but this battle will likely continue into next week.

The fireworks are there for continued volatility and I mentioned the market could see some wild price movements in June.  With the geopolitical concerns heightening, a 2-day Fed meeting and June option expiration next Friday there could be a continued breakout to higher highs or a further breakdown.

Wall Street hates being long over the weekend with the threat of war in the air or possible air strikes but a huge rebound could be in store if the situation in Iraq starts to simmer.  Doubtful but let’s hope so.

The market usually cools off when the heat in Washington is turned up and the zombies are back in the picture again given everything happening this week.

Despite the volatility, the current trades have done phenomenally well.  Some positions have locked-in half profits and are assured of being winners while others are up double-digits.  There are a couple of put option trades that are so close to exploding higher and I’m hoping those trades can be cashed out next week.

I had planned to come to press a little earlier but I wanted to watch the action before issuing a New Trade today.  It’s on a stock that is on the verge of making a huge run from $14 to $20 over the next 6 months and I have the perfect option play to get us through the upcoming volatility.

This is a play on a fundamental story I have been following for years and the company is in turnaround mode after years of litigation risk.  These issues are now behind them and they are signing deals left and right.  Shares are near 52-week peaks.

As far as the indexes, the Dow is up 20 points to 16,754 while the S&P 500 is adding 3 points to 1,933.  The Nasdaq is gaining 7 points to 4,305 and the Russell 2000 is up a deuce to 1,161.  The VIX is at 12.07, down 0.49.

Closed Trades for 2014: 50-29 – the Weekly Wrap is 15-3 (83%) for 2014 (100-10, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk.  All trades are dated and time stamped so new subscribers can look at our past history to see how the trades have played out.

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 trades or “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 12pm-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.

New Trade!!!

Rambus (RMBS, $13.62, down $0.07)

Buy to OPEN August 15 calls (RMBS140816C00015000, $0.40, down $0.10)

Action:  Rambus is a current Weekly Wrap holding and I have covered the company’s litigation issues over the years.  The outlook has improved over the past 6 months with profitable quarters and a recent deal with Qualcomm.

Shares are pushing fresh 52-week highs and the option pits have been exploding.

Current Trades

Kodiak Oil & Gas (KOG, $13.66, up $0.02)

July 14 calls (KOG140721C00014000, $0.50, flat)

Entry Price:  $0.35 (6/11/2014)
Exit Target:  $0.70
Return:  43%
Stop Target:   None

Action:  A close above $14 would be bullish and get 52-week highs in play.  I may close a quarter or half the trade once $14 clears so there could be a Profit Alert today into the close if there is a continued rebound.

The trade has been a rocket in just 2 days and its usually best to lock-in some gains following these types of breakout gains.

Shares recently cleared the 50-day MA and the close above $13 was bullish.  The stock could be setting up for a run to $15 that would easily double or triple these call options.  They would be worth at least 70 cents if $14.70 is triggered by mid-July and $1-$1.05 if $15 is reached.

I have recommended this stock along with options over the past few years and a breakout appears to be on the horizon.

Hercules Offshore (HERO, $4.77, down $0.02)

October 5 calls (HERO141018C00005000, $0.40, flat)

Entry Price:  $0.35 (6/11/2014)
Exit Target:  $0.70
Return:  14%
Stop Target:  None

Action:  A run to $5-$6 could be in the works over the summer.  I wanted to give the trade plenty of time to play out and why I went 4 months out.  Open Interest is over 6,000 contracts.

Imax (IMAX, $26.92, up $0.11)

September 28 calls (IMAX140920C00028000, $0.95, flat)

Entry Price:  $0.60 (6/5/2014)
Exit Target:  $1.20
Return:  58%
Stop Target:  65 cents (Hard Stop)

Action:  The close above the 50-day MA was bullish and should get $28-$30 in play.  Support is at $25.50.

Limelight Networks (LLNW, $2.85, down $0.07)

September 3 calls (LLNW140920C00003000, $0.30, flat)

Entry Price:  $0.15 (6/4/2014)
Exit Target:  $0.45
Return:  100%
Stop Target:  None

December 3 calls (LLNW141220C00003000, $0.50, flat)

Entry Price:  $0.20 (6/4/2014)
Exit Target:  $0.60
Return:  150%
Stop Target:  None

Action:  Support is at $2.75.  A close above $3 would be bullish for continued gains.

Roth Capital lifted its Price Target for Limelight Networks to $4.50 from $3 following its recent court win against AKAM.  I have already covered the acquisition appeal of the stock and Captain Obvious echoed those comments with the late dayTuesday comments on the stock.  In any event, it is good to see the suit-and-ties start to jump on board as analyst upgrades are good for a company’s stock.

If shares make a run to $3.50, the return should be 200% for each trade.  A close above $4 would make both calls worth $1 and an even bigger payday.  Support is at $2.75.

Fortinet (FTNT, $23.50, up $0.07)

July 25 calls (FTNT140719C00025000, $0.45, flat)

Entry Price:  $0.25 (6/4/2014)
Exit Target:  $0.50 (closed half @ $0.45 on 6/11/14)
Return:  80%
Stop Target:  25 cents

July 24 calls (FTNT140719C00024000, $0.75, flat)

Entry Price:  $0.45 (5/30/2014)
Exit Target:  $0.90 (closed half @ $0.80 on 6/11/14)
Return:  72%
Stop Target:  50 cents

Action:  Support is at $22.50-$22.  I have Stop Targets to protect the other halves of the trades but they are not Stop Limit orders, yet.

I still believe a run to $25 and fresh 52-week highs are coming as long as support holds.  The current 52-week high is at $23.93.

Twitter (TWTR, $36.57, down $0.22)

January 50 calls 2015 (TWTR150117C00050000, $1.90, flat) LEAP option

Entry Price:  $1.75 (5/8/2014)
Exit Target:  $3.50 (closed half @ $2.10 on 6/12/14)
Return:  14%
Stop Target:  $1.50

Action:  Continue to hold.

Other 2014 Portfolio OPEN positions (4):  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 2014 Portfolio link in the Members Area to view ALL open/ closed trades.

iShares Russell 2000 June 103 puts (from May 2014) – continue to hold
McDonald’s July 95 puts (from May 2014) – continue to hold
Bed, Bath & Beyond – continue to hold as shares could still make a break below $60 by next week.
June 60 puts (from May 2014)
August 55 puts (from May 2014)
Apollo Group – continue to hold
June 25 puts (from April 2014)
August 23 puts (from April 2014)

I have been doing a ton of homework over the past two weeks and have big issues of the Weekly Wrap and Daily coming out on Sunday night and Monday morning.  Until then, have a great weekend everyone!