Dear Momentum Options Subscriber,

The bulls got their second-straight win following Wednesday’s trip into continued blue-sky territory. Small-caps led the way higher, but the rally was broad-based. Today’s session could be flat ahead of Friday’s Nonfarm Payrolls report.

The Dow added 33 points, or 0.2%, to settle at 17,912. The blue-chips were choppy for much of the morning session after trading down to 17,855 on the open. Support at 17,800 easily held before the Dow tested a high of 17,924 into the close. The bulls held 17,900 and are targeting a run to 18,000-18,250.

The S&P 500 advanced 8 points, or 0.4%, to end at 2,074. The index traded to an all-time intraday high of 2,076 and just missed holding 2,075. The index showed the most strength, as it held in the green from start to finish. My year-end target of 2,100 from February is now just over 1% away from triggering. Support has been solid at 2,050.

The Nasdaq gained 19 points, or 0.4%, to close at 4,774. Tech tested a low of 4,745 and held near-term support at 4,725-4,700 before making a run to 4,781. I was pulling for a close above 4,775 to confirm another pop past 4,800, and the bulls missed holding this level by half of a point. My year-end target from February for the Nasdaq has been 4,800-5,000, and I will be updating my chart work on the index this weekend. I’m excited to see how 2015 is shapes up, but I will still show respect to the bears to figure out the best and worst case scenarios.

The Russell 2000 added 10 points, or 0.9%, to finish at 1,179. The small-caps dipped half of a point on the open to 1,068 but held near-term support at 1,160. The index reached a peak just south of 1,182 and held 1,175 into the closing bell. I was cheerleading for 1,180 to stick to get 1,200 back into the mix, but the bulls missed closing at that level by a point.

The S&P Volatility Index ($VIX, 12.47, down 0.38) closed back below 12.50 after falling to a low of 12.21. I have said the VIX could test single-digits this year, and the index came close to doing that in July. As long as 13.50 holds this month, there is still a good possibility of this happening.

From desk to press, futures are shaping up like this: Dow (+15); S&P 500 (+1.5); Nasdaq 100 (+7).

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 8:30 a.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.


American Express (AXP, $91.25, down $1.75)

AXP January 95 calls (AXP150117C00095000, $0.77, down $0.48)

Entry Price: $0.75 (12/3/2014)

Exit Target: $1.50

Return: 3%

Stop Target: None

Action: The January calls have 43 days before they expire, so there is plenty of time for this trade to work.  Support is at $90


JDS Uniphase (JDSU, $13.12, up $0.36)

JDSU January 13 calls (JDSU150117C00013000, $0.65, up $0.10)

Entry Price: $0.65 (12/3/2014)

Exit Target: $1.30

Return: 0%

Stop Target: None


JDSU March 14 calls (JDSU150320C00014000, $0.70, up $0.05)

Entry Price: $0.70 (12/3/2014)

Exit Target: $1.40

Return: 0%

Stop Target: None

Action: The January 13 calls were active and traded nearly 4,000 contracts on Wednesday. Support is at $12.75 and the 50-day moving average. There is additional risk to $12.50 and the 100/200-day moving averages. Resistance is at $13.50-$13.75.

You can read my full update on JDSU in the Dec. 3 Alert.


Diamond Foods (DMND, $29.65, down $0.06)

DMND December 32 calls (DMND141220C00032000, $0.60, flat)

Entry Price: $0.87 (11/18/2014)

Exit Target: $1.75

Return: -31%

Stop Target: None

Action: Near-term resistance is at $30.50. 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.


IMAX (IMAX, $30.83, down $0.12)

IMAX December 32 calls (IMAX1220C00032000, $0.35, down $0.05)

Entry Price: $0.35 (11/12/2014)

Exit Target: $0.70 (Limit Order on Half)

Return: 0%

Stop Target: None

Action: Support is at $30. Resistance is at $31.50-$32.


International Business Machines (IBM, $164.62, up $1.85)

IBM January 170 calls (IBM150117C00170000, $1.10, up $0.25)

Entry Price: $1.75 (11/10/2014)

Exit Target: $3.50

Return: -37%

Stop Target: $0.50

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, $11.24, up $0.14)

FLEX January 11 calls (FLEX150117C00011000, $0.55, up $0.05)

Entry Price: $0.68 (9/5/2014)

Exit Target: $1.25

Return: -18%

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 (2): 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.

Rubicon December 8 calls (From August 2014) — Continue to hold.

Fortinet December 29 calls (from September 2014) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options