9:00am (EST)

The bears got their 2-straight win on Thursday following continued geopolitical tensions concerning Iraq and slightly disappointing economic news.  The indexes closed below near-term support that served as prior resistance and the bulls will need a good Friday to regain their momentum.  Hopefully 13 is their lucky number.

The Dow declined 109 points, or 0.7%, to close at 16,734.  The blue-chips traded down to 16,703 and the close below 16,800 gets 16,600-16,500 back in play.  A close back above this level keeps 17,000 in the mix.

The S&P 500 fell 13 points, or 0.7%, to finish at 1,930.  The index tested a low of 1,925.78 and I mentioned any dips below 1,940 could lead to a back test to 1,925.  There is further risk to 1,909-1,900 on a close below this level.  A 0.5%-1% move higher gets the bulls back near 1,940-1,950.

The Nasdaq dropped 34 points, or 0.8%, to end at 4,297.  Tech tried to recover the opening barrage and hold the 4,300 level but the bears pushed a low of 4,284 late in the day and got the close below support.  I talked about risk to 4,275-4,250 on a finish below this level and today’s close will be crucial to both sides as to how next week might play out.

The Russell 2000 fell 7 points, or 0.6%, to settle at 1,159.40.  The small-caps traded to a low of 1,156 and in between the downside targets of 1,160-1,150 I have talked about this week.  The is “stretch” to 1,140 on extreme selling but a close below 1,150-1,140 might suggest a short-term top is in.  The bulls need to clear 1,175 today or Monday and why both days will be super important on determining how the rest of June might play out.

The S&P Volatility Index ($VIX, 12.56, up 0.96) traded to a high of 12.81 and finished just above the 12.50 level.  I have talked about risk to this level all week and a continued close above 12.50 would be bearish going into next week.  There could be a stretch to 13.50 but the bulls cannot afford to go there today.  A finish below 11.50 would be a good sign continued all-time highs are in store for the market.

There are some important trade updates this morning as I have placed Hard Stops on a few of our trades to ensure the positions remain profitable.  I could also have a New Trade today with an early alert or midday update so check you emails throughout the morning.

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.

Kodiak Oil & Gas (KOG, $13.64, up $0.23)

July 14 calls (KOG140721C00014000, $0.50, up $0.10)

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

Action:  Kodiak traded to a high of $13.84 on Thursday and 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 another Profit Alert today.  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, $4.79, up $0.13)

October 5 calls (HERO141018C00005000, $0.40, up $0.05)

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

Action:  Shares kissed $4.83 yesterday and 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, $26.81, down $0.11)

September 28 calls (IMAX140920C00028000, $0.95, down $0.05)

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

Action:  Imax traded down to $26.64 before bouncing back to nearly traded into positive territory.  Support is at $26-$25.50.

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

Limelight Networks (LLNW, $2.92, down $0.06)

September 3 calls (LLNW140920C00003000, $0.30, down $0.05)

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:  Shares traded to a low of $2.90 yesterday.  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 day Tuesday 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, $23.43, down $0.35)

July 25 calls (FTNT140719C00025000, $0.45, down $0.05)

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, down $0.10)

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, $36.79, up $1.25)

January 50 calls 2015 (TWTR150117C00050000, $1.90, up $0.30) 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:  I suggested closing half of the trade yesterday after shares traded to a high of $37.27.  The options reached a peak of $2.33.

When I first recommended the trade, share were forming a bottom but unfortunately, there was an 8-day pullback afterwards.  Although I wasn’t “worried” about the position as it is a longer-term play, I felt it was prudent to lock-in some gains in case there is a pullback after the $5 run this month.  Shares could still make a run past $40 if $37.50-$38 clears as long as support at $35 holds.

If the options fall to $1.50 on a pullback I will likely close the other half of the trade to protect profits.

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 as shares are nearing a closed below $100 yesterday.  The options are back up to 35 cents
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)