Dear Momentum Options Subscriber,
Futures were showing a strong open this morning, and a backtest to resistance was a given. How the market acts into the close of trading will be another story, however, as volatility is still elevated despite today’s rebound.
I mentioned previously that investing in financials was becoming a crowded trade, but they are showing strength again following a couple of rough weeks of trading. Now that the suits-and-ties have bailed on the sector, some of the names are getting interesting again.
Goldman Sachs (GS, $205.37, up $1.31) is trying to recover its 50-day moving average, but there is still risk to $200 and the 100-day moving average on a pullback. I’m watching the August call and put options and may decide play the next $10-$15 move that will likely come in the next few weeks. A move above $209 or below $203 in shares of GS would likely be my trigger points for a possible new trade.
As far as the market this afternoon, the Dow is currently up 107 points to 17,623, while the S&P 500 is higher by 12 points to 2,058. The Nasdaq is gaining 40 points to 4,950, and the Russell 2000 is climbing 8 points to 1,237.
I have updated our current trades with another Profit Alert below. I’m also working on a possible new trade that I really like, but I’m still doing the chart work and math to determine the right options to play. I will send out an alert if I decide to take a swing, so stay close to your email inboxes or wait for my text alert.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 68-23-1 (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 12:45 p.m. EST.
I hereby disclose that I will be participating in the following trade(s). Every 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 portfolio.
Krispy Kreme Doughnuts (KKD, $19.28, up $0.26)
KKD August 19 puts (KKD150821P00019000, $0.60, down $0.17)
Entry Price: $0.55 (6/29/2015)
Exit Target: $1.10-$1.60
Stop Target: $0.60 (Stop Limit)
Action: Our Stop Limit of $0.60 triggered during today’s session, and we are now out of the position. I could come back to KKD on a move below $19, but, for now, I’m moving on.
Alcoa (AA, $10.76, up $0.26)
AA August 11 puts (AA150821P00011000, $0.62, down $0.25)
Entry Price: $0.45 (7/2/2015)
Exit Target: $1.20 (Limit Order on first half)
Stop Target: $0.50 (Stop Limit)
Action: Set a Stop Limit at $0.50 to protect profits.
Shares have made a backtest to resistance at $11, which served as prior support. The puts have traded to a low of $0.51.
I’m expecting today’s slight uptick to fade, but, if shares clear $11, we will likely be out of the trade. AA has traded to a high of $10.97 today.
You can read my full report in the July 2 Mid-Market Update.
Caterpillar (CAT, $82.13, down $0.14)
CAT August 77.50 puts (CAT150821P00077500, $1.30, down $0.02)
Entry Price: $1.30 (7/8/2015)
Exit Target: $1.95-$2.60
Stop Target: None
Action: A close below $82 should lead to a test to $80-$78. Resistance is at $84-$85.
World Wrestling Entertainment (WWE, $16.74, up $1.25)
WWE August 17 calls (WWE150821C00017000, $1.00, up $0.30)
Entry Price: $1.10 (7/1/2015)
Exit Target: $2.20
Stop Target: None
Action: Shares have cleared resistance at $16 and are making a run at $17. A close above this level would be super bullish and could lead to fresh 52-week peaks north of $18.
Rambus (RMBS, $13.38, down $0.03)
RMBS August 16 calls (RMBS150821C00016000, $0.15, flat)
Entry Price: $0.55 (6/19/2015)
Exit Target: $1.40
Stop Target: None
Action: Support is at $13.50-$13.25 and the 100-day moving average. Resistance is at $13.75-$14.
You can read my full update on RMBS and view the chart work in the June 22 Pre-Market Update.
Rigel Pharmaceuticals (RIGL, $3.00, up $0.12)
RIGL September 5 calls (RIGL150918C00005000, $0.15, flat)
Entry Price: $0.40 (6/4/2015)
Exit Target: $0.80
Stop Target: None
Action: Support is at $2.80-$2.75 and the 200-day moving average. Resistance is at $3-$3.25.
You can read my detailed write-up on RIGL in the June 5 Pre-Market Update.
Trades on Hold — other 2015 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.
United Parcel Service (UPS) October 110 calls (from 6/11/15) — Continue to hold.
Wells Fargo (WFC) July 60 calls (from 6/5/2015) — Earnings are due out next week — Continue to hold.
Editor and Chief Options Strategist