Dear Momentum Options Subscriber,
Futures were pointing towards a decent pullback throughout the night and into this morning’s open, as Wall Street welcomes in the last month of trading for the year. I mentioned that this week could be a little rocky following six weeks of gains and, with tax-selling season underway, the bears are enjoying their moment.
Near-term support is holding, but I wouldn’t be surprised to see lower levels of support come into play. This will create another long opportunity for us, and we just have to be patient.
There is some “Fed speak” happening today, but much of the pullback can be blamed on weak economic numbers.
Heading into the second half of trading, the Dow is down 25 points to 17,802, while the S&P 500 is declining 11 points to 2,055. The Nasdaq lower by 53 points to 4,738, and the Russell 2000 is getting hit for 15 points and is trading at 1,158.
I have a number of Profit Alerts on five current trades, which will create plenty of room for us to add new trades once the pullback is complete. I’m also closing two trades that have been on hold.
I could have additional Trade Alerts later this afternoon, so stay close to your email inboxes. For new subscribers, be sure to sign-up for Text Alerts, as they will keep you posted on new actions the minute I go to press.
Momentum Options Play List
Closed Momentum Options Trades for 2014: 95-56 (63%). All trades are dated and time stamped so new subscribers can look at the 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 I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
All prices given in this update are current as of 1:15 p.m. EST.
Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.
Veeva Systems (VEEV, $31.75, down $1.10)
VEEV December 32 calls (VEEV141220C00032000, $1.05, down $0.90)
Entry Price: $0.50 (11/25/2014)
Exit Target: $2.25-$3.00 (closed half at $1 on 11/26/2014)
Stop Target: $1.05 (Stop Limit)
Action: The Stop Limit of $1.05 has triggered on the second half of the trade. The calls opened at $1.35, but the backtest to $30 forced us out.
There will be another opportunity to go long VEEV with call options if $30 holds as support.
PowerShares QQQ (QQQ, $105.06, down $0.95)
QQQ December 105 calls (QQQ141220C00105000, $1.25, down $0.60)
Entry Price: $0.80 (11/18/2014)
Exit Target: $1.60 (closed half at $1.15 on 11/25/2014)
Stop Target: $1.15 (Stop Limit)
QQQ January 106 calls (QQQ150117C00106000, $1.40, down $0.50)
Entry Price: $0.98 (11/18/2014)
Exit Target: $2.00 (closed half at $1.30 on 11/25/2014)
Stop Target: $1.30 (Stop Limit)
Action: The $1.15 Stop Limit on the QQQ December 105 calls has tripped, as has the $1.30 Stop Limit on the QQQ January 106 calls.
Diamond Foods (DMND, $30.12, up $0.33)
DMND December 32 calls (DMND141220C00032000, $0.70, flat)
Entry Price: $0.87 (11/18/2014)
Exit Target: $1.75
Stop Target: None
Action: Near-term resistance is at $30.50. Support is at $29. Earnings are due out on Monday, Dec. 8, after the close.
You can read my detailed write-up on DMND in the Nov. 19 Mid-Market Update.
Hilton Worldwide Holdings (HLT, $25.56, down $0.66)
HLT January 26 calls (HLT150117C00026000, $0.70, down $0.35)
Entry Price: $0.80 (11/14/2014)
Exit Target: $1.60
Stop Target: $0.85 (Stop Limit)
HLT December 26 calls (HLT141220C00026000, $0.45, down $0.30)
Entry Price: $0.50 (11/14/2014)
Exit Target: $1.00
Stop Target: $0.50 (Stop Limit)
Action: The Stop Limit of $0.85 on the HLT January 26 calls and the Stop Limit of $0.50 on the HLT December 26 calls triggered on the test to $25.50.
IMAX (IMAX, $31.16, down $0.22)
IMAX December 32 calls (IMAX1220C00032000, $0.50, down $0.10)
Entry Price: $0.35 (11/12/2014)
Exit Target: $0.70 (Limit Order on Half)
Stop Target: None
Action: Support is at $30. Resistance is at $31.50-$32.
International Business Machines (IBM, $161.75, down $0.42)
IBM January 170 calls (IBM150117C00170000, $0.80, down $0.10)
Entry Price: $1.75 (11/10/2014)
Exit Target: $3.50
Stop Target: $0.90
Action: Resistance is at $163.50. Support is at $160.
You can read more about why I like this trade and its risk/reward setup in the Nov. 11 Pre-Market Update.
Flextronics (FLEX, $11.11, up $0.02)
FLEX January 11 calls (FLEX150117C00011000, $0.45, flat)
Entry Price: $0.68 (9/5/2014)
Exit Target: $1.25
Stop Target: None
Action: Resistance is at $11.25-$11.50, and a close above the latter should get the 52-week high of $11.83 in play. Support is at $10.75, with backup at $10.50 and the 100-day moving average.
Trades on 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 I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the Open Trades and Closed Trades pages to see all open and closed positions.
AKS Steel Holding January 13 calls (from August 2014) — The calls are trading for $0.06, and I have decided to close this trade at current levels. Shares are at $5.55, and a move past $13 is unlikely by mid-January. This was a leftover trade from August that didn’t work out following the run past $10.
Twitter January 67.50 calls (from October 2014) — Close the trade at current levels. The calls are going for a nickel, and shares are below $40. I don’t believe shares will zoom more than 50% by mid-January, and I would rather move on to save a little premium than leave the position open.
Rubicon December 8 calls (From August 2014) — Continue to hold.
Fortinet December 29 calls (from September 2014) — Shares traded to a 52-week high of $27.70 on Friday — Continue to hold.
Editor and Chief Options Strategist