Dear Momentum Options Subscriber,
The bulls showed signs of life as they pushed resistance on Wednesday. The financial stocks were strong and held the majority of their gains, while the VIX stayed relaxed. The higher highs and higher lows were promising signs ahead of what could be an explosive end-of-week showdown between the bulls and the bears.
The Dow gained 64 points, or 0.4%, to close at 18,076. The blue-chips tested resistance at 18,100-18,200 shortly after the open to reach a high of 18,168. Although these levels failed to hold into the close, the higher high and higher low for the week was a bullish sign. Support at 18,000-17,900 has been strong since early April.
The S&P 500 added 4 points, or 0.2%, to finish at 2,114. The index traded to a high of 2,121 about an hour after the open but stalled on upper resistance at 2,125. Continued closes above 2,125 could get all-time highs and 2,150 in play again. Support is at 2,100 and the 50-day moving average.
The Nasdaq advanced 22 points, or 0.4%, to end at 5,099. Tech zoomed past resistance at 5,100 to reach a peak of 5,114 during the first half of trading. The bulls just missed getting a close above 5,100, which is a level that has only held one time this year. The 15-year intraday high is at 5,119, and the all-time intraday peak for the Nasdaq is at 5,132. Near-term support is at 5,075-5,050.
The Russell 2000 jumped 12 points, or 1%, to settle at 1,264. The small-caps opened at 1,254 and traded up to 1,264 while holding the 1,260 level into the closing bell. Resistance is at 1,275-1,280 and the all-time high of 1,278. Support is at 1,250 on a drop below 1,260, with 1,240 serving as backup.
The S&P 500 Volatility Index ($VIX, 13.66, down 0.58) traded in negative territory throughout the session, with the bulls pushing a low of 13.40. The VIX failed at holding the 13.50 level, as the bears rebounded to push 14.20 during the second half of trading. The bulls have held the 15 level since early May, and we don’t need to get bearish until 17.50 is tripped.
From desk to press, futures look like this: Dow (-80); S&P 500 (-11); Nasdaq 100 (-33).
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.
Opko Health (OPK, $19.12, up $0.50)
OPK July 20 calls (OPK150717C00020000, $0.90, up $0.25)
Entry Price: $0.60 (6/2/2015)
Exit Target: $1.20
Stop Target: $0.65 (Stop Limit)
Action: Set a Stop Limit at $0.65 to protect profits.
Shares traded to a 52-week high of $19.20 on Wednesday. Resistance is at $20. Near-term support is at $18.
Sony (SNE, $30.43, down $0.11)
SNE July 33 calls (SNE150717C00033000, $0.40, down $0.05)
Entry Price: $0.45 (6/1/2015)
Exit Target: $0.90
Stop Target: None
Action: Yesterday’s low reached $30.27. 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, $15.30, up $0.01)
RMBS July 15 calls (RMBS150717C00015000, $0.85, down $0.05)
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, $0.70, down $0.05)
Entry Price: $0.43 (5/27/2015)
Exit Target: $0.90
Stop Target: $0.55 (Stop Limit)
Action: Wednesday’s high reached $15.37 before touching a low of $15.14. A close above $15.75-$16 could lead to a run at $17-$18. Near-term support is at $15, followed by $14.50.
Dot Hill Systems (HILL, $7.19, up $0.13)
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: Shares tested their recent 52-week high of $7.20 yesterday. Resistance is at $7.20-$7.25. Support is at $7, with $6.75 serving as backup.
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, $125.76, up $1.24)
IWM June 128 calls (IWM150619C00128000, $0.55, up $0.28)
Entry Price: $0.70 (5/19/2015)
Exit Target: $0.90 (Limit Order)
Stop Target: None
Action: The Exit Targets were previously $1.05 (Limit Order) on the first half and $1.40 (Limit Order) on the second half. Now lower the Exit Target on the entire position to $0.90 (Limit Order).
These are June options, and I mentioned I wanted to be out of this trade by next Friday. I have lowered the previous Limit Orders so that we can still get out of the trade for a profit. We can always raise the Limit Order if there is a breakout rally.
Resistance is at $126-$127. Short-term support is at $124, followed by $123 and the 50-day moving average.
Limelight Networks (LLNW, $4.23, down $0.06)
LLNW September 4 calls (LLNW150918C00004000, $0.60, 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 is at $4.25-$4.20.
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