12:40pm (EST)

I talked about a trading range developing into today’s Fed announcement and while there is a good chance it stays intact, it will depend on what Fed Head Janet Yellen has to say.

She will have to walk a fine line to keep the market happy and has done so for the most part during her short stint following the Bernanke regime.  When Yellen has spoken, the market usually gets a lift due to her “dovish” comments.

If she is “hawkish” today then there could be a continued pullback.  The Fed minutes come out at 2pm (EST) and Yellen will speak a half hour later.

There were a couple of solid earnings reports this morning from a few companies I regularly follow and have traded off-and-on over the years.

FedEx (FDX, $146.77, up $6.46) is up nearly 5% after beating estimates by 10 cents.  The options were too expensive for a possible earnings trade but I was following the option pits for Adobe Systems (ADBE, $73.05, up $5.51) to start the week.

Shares are zooming after a beat-and-raise quarter and I was tracking the June 70 calls (ADBE140621C00070000, $3.25, up $2.36) as a way to play the continuing breakout.  These calls were at 55 cents on Monday morning but nearly doubled after closing at $1.05.  This worried me a little as these options expired on Friday and it was a high premium to pay.

On Tuesday, they fell 15 cents and the “ask” was at 90 cents going into the closing bell.  Today, they are up 265% but have traded to $4.70, or 400% higher.

I like to take earnings trades from time-to-time but missed this one due to my timidness.  I do have an earnings trade for today and hopefully I can get a triple-digit return on tomorrow’s open.  I also have another trade on a stock that is on its way to 52-week highs again.

Ahead of the Fed, the market is trending lower with the Dow down 39 points to 16,769 while the S&P 500 is off a point to 1,941.  The Nasdaq is lower by 5 points to 4,331 and the Russell 2000 is slipping 4 points to 1,172.

Closed Trades for 2014: 51-30 – the Weekly Wrap is 15-4 (79%) for 2014 (100-11, or 90% 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.


BlackBerry (BBRY, $8.30, up $0.25)

Buy to OPEN August 9 calls (BBRY140816C00009000, $0.45, up $0.10)

Action:  Wall Street has counted this company out and left it for dead.  The company could surprise to the upside but another disappointment would be another nail in the company’s coffin.  I like the risk/ reward, however, as these options are cheap enough to play a run past $9.  A drop below $8 could come if they disappoint.

CVS Caremark (CVS, $76.61, up $0.41)

Buy to Open August 80 calls (CVS140816C00080000, $0.60, up $0.10)

Action:  Shares held the 50-day MA after a recent back test and should resume their march towards $80.  I like these call options at current levels.

Current Trades

Rambus (RMBS, $14.55, down $0.05)

August 15 calls (RMBS140816C00015000, $0.80, flat)

Entry Price:  $0.40 (6/13/2014)
Exit Target:  $1.20 Limit Order (Closed half @ 80 cents on 6/17/14)
Return:  100%
Stop Target:  50 cents (Stop Limit)

Action:  Shares have traded down to $14.35 but have rebounded to push positive territory.  A close above $14.70 keeps $15 in play.

Hercules Offshore (HERO, $4.88, down $0.10)

October 5 calls (HERO141018C00005000, $0.55, flat)

Entry Price:  $0.35 (6/11/2014)
Exit Target:  $0.70
Return:  50%
Stop Target:  None

Action:  A trip to $6 is in store if Hercules can hold $5.  Support is at $4.80.

Imax (IMAX, $28.10, up $0.04)

September 28 calls (IMAX140920C00028000, $1.45, flat)

Entry Price:  $0.60 (6/5/2014)
Exit Target:  $1.20 (closed half @ $1.30 on 6/16/14)
Return:  129%
Stop Target:  $1.10 (Stop Limit)

Action:  A run to $30 is in the works as long as $28 can hold.

Limelight Networks (LLNW, $3.00, up $0.02)

September 3 calls (LLNW140920C00003000, $0.40, flat)

Entry Price:  $0.15 (6/4/2014)
Exit Target:  $0.45
Return:  167%
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:  I would like to see a close above $3.25 this week.  Support is at $2.75.

Fortinet (FTNT, $24.23, down $0.11)

July 25 calls (FTNT140719C00025000, $0.65, flat)

Entry Price:  $0.25 (6/4/2014)
Exit Target:  $0.50 (closed half @ $0.45 on 6/11/14)
Return:  120%
Stop Target:  50 cents (Stop Limit)

July 24 calls (FTNT140719C00024000, $1.10, flat)

Entry Price:  $0.45 (5/30/2014)
Exit Target:  $0.90 (closed half @ $0.80 on 6/11/14)
Return:  111%
Stop Target:  90 cents (Stop Limit)

Action:  A run past $25 could be coming as long as $24 holds.

Twitter (TWTR, $38.31, up $0.29)

January 50 calls 2015 (TWTR150117C00050000, $2.30, flat) LEAP option

Entry Price:  $1.75 (5/8/2014)
Exit Target:  $3.50 (closed half @ $2.10 on 6/12/14)
Return:  26%
Stop Target:  $1.80 (Stop Limit)

Action:  A run to $40 is still in the works.  Support is at $35 and is moving up.

Bed, Bath & Beyond (BBBY, $61.00, up $0.45)

June 60 puts (BBBY140621P00060000, $0.20, down $0.05)

Entry Price:  $0.60 (5/14/14)
Exit Target:  $0.90 (Limit Order)
Return:  -67%
Stop Target:  None

August 55 puts (BBBY140816P00055000, $0.50, flat)

Entry Price:  $0.63 (5/14/14)
Exit Target:  $1.25 (Limit Order)
Return:  -21%
Stop Target:  None

Action:  The break even point on the June puts is at $59.40, technically, by Friday’s close as the entry price was 60 cents.  I do not want to carry the trade into Friday but might have too.  I have set Limit Orders to exit the trade at 90 cents.

The August puts still have plenty of time to wait for a continued breakdown.  Earnings are due out next week.

Other 2014 Portfolio OPEN positions (3):  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
Apollo Group – continue to hold
June 25 puts (from April 2014)
August 23 puts (from April 2014)