ACTIONS:

Buy to open the JDSU January 13 calls (JDSU150117C00013000, $0.65, up $0.10).

Buy to open the JDSU March 14 calls (JDSU150320C00014000, $0.70, up $0.05).

Buy to open the AXP January 95 calls (AXP150117C00095000, $0.75, down $0.50).

 

Dear Momentum Options Subscriber,

I have two New Trade recommendations that could easily return triple-digits when momentum picks back up in these names.

One stock is an old favorite of mine, while the other is a financial play.

 

JDS Uniphase (JDSU, $13.16, up $0.30)

Buy to open the JDSU January 13 calls (JDSU150117C00013000, $0.65, up $0.10).

Buy to open the JDSU March 14 calls (JDSU150320C00014000, $0.70, up $0.05).

Shares made a backtest to their 50-day moving average, which has been holding following the October breakout above this level.

The company recently reported better-than-expected earnings of $0.14 a share on revenue of $433 million. Wall Street had been expecting $0.10 a share on revenue of $416 million. They have beaten estimates in three of the past four quarters.

For the current quarter, analysts are looking for a profit of $0.16 a share on sales of $445 million. There are 15 analysts that cover the stock, and their range is for a profit of $0.14-$0.17 a share. This would mean a $0.01 beat or $0.02 miss based on those estimates, which should create enough volatility to move shares 5% or more. However, an earnings beat of $0.02 or better or a miss of $0.03 or better might move shares 10% or more.

The company’s next earnings announcement isn’t due until late January, and that headline risk will remain in play if the March calls are still open by then. However, earnings won’t factor in with the January calls, which is why I added them into the mix.

There is additional risk to $12.50 and the 100-day and 200-day moving averages on a close below $12.75. Resistance is at $13.75, which has been tested every month since September. A close above this level easily gets the upper teens in play.

If shares can clear $14 by mid-January, the January 13 calls will be worth at least $1.00 for an easy double. If shares can top $15 by mid-March, the March 14 calls will also clear $1.00.

 

American Express (AXP, $91.27, down $1.73)

Buy to open the AXP January 95 calls (AXP150117C00095000, $0.75, down $0.50).

There is risk to $90 on the stock, but I like these calls at current levels for a push past $95 by mid-January.

 

All prices given in this update are current as of 2:35 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.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options