Dear Momentum Options Subscriber,
I mentioned that the first trading day of the month has historically been volatile, but Monday’s action was a bullish sign for June.
The Dow advanced 29 points, or 0.2%, to end at 18,040. The blue-chips tested resistance at 18,100-18,200 on the open before fading to a low of 17,982. Support at 17,900-17,800 held before a late-day run to 18,105. A close above 18,200 would be bullish this week, while a close below 17,900 would be bearish.
The S&P 500 added 4 points, or 0.2%, to settle at 2,111. The index opened a point higher at 2,108 and tested resistance at 2,115-2,125 before slipping to 2,102 an hour into trading. The rebound to 2,119 was encouraging, but I wanted to see 2,115 hold into the close.
The Nasdaq climbed 13 points, or 0.3%, to close just below 5,083. Tech made an opening run to resistance at 5,100 but peaked at 5,099 before a backtest to 5,045 within the first hour of trading. Support at 5,050 was stretched, but it held, and I liked the close above 5,075.
The Russell 2000 gained 3 points, or 0.3%, to finish at 1,249. The small-caps opened above the 1,250 level at 1,252 before falling to a low of 1,238. Near-term support at 1,240 was also stretched before a late-day rebound to 1,254. Resistance remains at 1,260.
The S&P 500 Volatility Index ($VIX, 13.97, up 0.13) spiked to a high of 14.86, with the bulls holding the 15 level for the 16th-straight session. The bears held 13.50 following a low of 13.69 afterwards. Closes below 13.50-12.50 keep all-times in play. I won’t flinch or think about going short until the VIX clears 17.50.
I could have a New Trade shortly after the open if the technical picture holds up. Until then, let’s go check on our current trades.
From desk to press, futures look like this: Dow (-16); S&P 500 (-4); Nasdaq 100 (-6).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 55-18-1 (74%). 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.
I hereby disclose that I will be participating in the following trade(s). 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.
Sony (SNE, $30.80, down $0.12)
SNE July 33 calls (SNE150717C00033000, $0.50, flat)
Entry Price: $0.45 (6/1/2015)
Exit Target: $0.90
Stop Target: None
Action: Monday’s low reached $30.62 before a run to $31.02. Shares are in the process of backtesting support at $30.50-$30 and the 50-day moving average. This level has held for much of 2015, but there is risk to $29-$28. A move above $31.50-$32 would be a bullish sign that the recent selling pressure is over.
Rambus (RMBS, $15.23, down $0.06)
RMBS July 15 calls (RMBS150717C00015000, $0.95, flat)
Entry Price: $0.50 (5/27/2015)
Exit Target: $1.30 (Limit Order on half)
Stop Target: $0.65 (Stop Limit)
RMBS August 16 calls (RMBS150821C00016000, $0.75, flat)
Entry Price: $0.43 (5/27/2015)
Exit Target: $0.90
Stop Target: $0.55 (Stop Limit)
Action: A close above $15.75-$16 could lead to a run at $17-$18. Yesterday’s peak of $15.48 matched last Thursday’s 52-week high. Near-term support is at $15, followed by $14.50.
Dot Hill Systems (HILL, $7.03, down 0.01)
HILL September 7.50 calls (HILL150918C00007500, $0.65, flat)
Entry Price: $0.55 (5/21/2015)
Exit Target: $1.10
Stop Target: $0.57 (Stop Limit)
HILL December 7.50 calls (HILL151218C00007500, $0.95, flat)
Entry Price: $0.80 (5/21/2015)
Exit Target: $1.60
Stop Target: $0.85 (Stop Limit)
Action: Support is at $7 with $6.75 serving as backup. A close below $6.75 will likely trigger the Stop Limits. Resistance is at $7.20-$7.25.
You can read my full update on HILL and check out its 15-year chart in the May 22 Pre-Market Update.
iShares Russell 2000 (IWM, $124.28, up $0.39)
IWM June 128 calls (IWM150619C00128000, $0.24, up $0.02)
Entry Price: $0.70 (5/19/2015)
Exit Target: $1.05 (Limit Order on first half), $1.40 (Limit Order on second half)
Stop Target: None
Action: Resistance is at $125-$125.50. Short-term support is at $123 and the 50-day moving average, followed by $122 and the 100-day moving average.
Limelight Networks (LLNW, $4.30, down $0.07)
LLNW September 4 calls (LLNW150918C00004000, $0.65, down $0.05)
Entry Price: $0.35 (4/29/2015)
Exit Target: $1.00 (Limit Order on half)
Stop Target: $0.45 (Stop Limit)
Action: A move above resistance at $4.50 could lead to a run to $4.75-$5. Support has moved up to $4.25, with $4 serving backup.
Trades on Hold — other 2015 Portfolio Open positions (1): 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.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade from early March on BBRY receiving a takeover offer of $14 or better by mid-June. These options will carry some premium through the first week of June. I would like to be out of this trade by next Friday’s close. This gives the trade until June 10 for Blackberry to get a takeover offer — Continue to hold.
Editor and Chief Options Strategist