ACTIONS:

Buy to open the BAC October 18 calls (BAC151016C00018000, $0.45, down $0.03) at current levels.

Buy to open Rave Restaurant Group (RAVE) common stock at current levels.

Dear Momentum Stocks Weekly Subscriber,

I mentioned in this morning’s Weekly Update that I might take action on Bank of America (BAC) with an option trade, and that time has now come.

I also said that I could elect to start a second position in my favorite stock, Rave Restaurant Group (RAVE), if shares got cheaper. They did just that last week, and the bargain is now too good to pass up.

 

Bank of America (BAC, $17.60, down $0.10)

Buy to open the BAC October 18 calls (BAC151016C00018000, $0.45, down $0.03) at current levels.

I like these call options at current levels. These are the regular monthly options that expire on Oct. 16, and I will provide the parameters for the trade in today’s Mid-Market Update.

These are longer-term options that will give the shares enough time to make a possible run to $19-$20. If shares can reach $19 by mid-October, these options will be at least $1 “in the money” and would more than double from current levels.

Short-term resistance is at $18. The July and 52-week high is at $18.48. Support is at $17.50 and the 50-day moving average, with backup at $17.25-$17.

I thought about buying the common stock and making this a covered call trade, but, for now, I want to get aggressive with these options. This is a less expensive way to play the name that could provide a much better return.

You can read my full write-up on BAC in this morning’s Weekly Update.

 

Rave Restaurant Group (RAVE, $11.70, up $0.13)

Buy to open Rave Restaurant Group (RAVE) common stock at current levels.

While there is still risk to $10, I like shares at current levels for a run past $12-$12.25 over the near term.

Whether you are entering your first position in RAVE or adding to an existing position, you should feel comfortable buying shares at current levels.

 

All prices given in this update are current as of 10:00 a.m. EST.

I hereby disclose that I will be participating in the aforementioned trade(s). Every new Momentum Stocks Weekly 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!

Signed

Rick Rouse
Editor
Momentum Stocks Weekly