Dear Momentum Options Subscriber,

I often say that the bulls like to take the stairs higher, while the bears prefer to take the elevator lower. As the market enters correction territory, this week’s elevator drops show how fast and furious the bears can be.

It is too early to say how next week will shake out, but all indicators are pointing towards continued weakness. There should be a bottoming process that follows, and this week’s pullback has created some incredible buying opportunities, but there could be more damage to come.

This doesn’t mean that there aren’t attractive short opportunities, because there are. More importantly, however, the current action and volatility are showing signs that the rest of the year should be an exciting time to go both long and short.

The Dow is currently down 252 points to 16,737, while the S&P 500 is lower by 27 points to 2,008. The Nasdaq is imploding 69 points to 4,807, and the Russell 2000 is off 14 points to 1,158. The VIX is at 24, up 4.86.

I have two Trade Alerts listed below for positions that I want to save the remaining premium on. These are the first two losing trades I have recommended since mid-June, which will snap a 17-trade winning streak. By removing them, we can make room for two to three new trades next week.

I have started my weekend homework already and could have additional trade updates ahead of the close. If you don’t hear from me, however, have a great weekend, and I will be back on Monday morning with the next Pre-Market Update.

Momentum Options Play List

Closed Momentum Options Trades for 2015: 82-26-2 (75%). 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 12:15 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.


PowerShares QQQ Trust (QQQ, $104.84, down $2.24)

QQQ September 112 Weekly calls (QQQ150904C00112000, $0.07, down $0.05)

Entry Price: $0.95 (8/13/2015)

Exit Target: $1.90

Return: -93%

Stop Target: $0.35

Action: Sell to close the QQQ September 112 Weekly calls at current levels to save the remaining premium. These options expire in two weeks, and I don’t believe the QQQs are going to recover $113, which is the level at which we would need the shares to be.


Krispy Kreme Doughnuts (KKD, $17.25, down $0.31)

KKD November 17 puts (KKD151120P00017000, $1.20, up $0.05)

Entry Price: $0.95 (8/19/2015)

Exit Target: $1.90

Return: 26%

Stop Target: None

Action: Support is at $17.25-$17. Resistance is at $17.50-$17.75.

The company is scheduled to report earnings on Sept. 9, after the close.


iShares Russell 2000 (IWM, $115.80, down $0.59)

IWM September 123 calls (IWM150918C00123000, $0.23, down $0.05)

Entry Price: $0.78 (8/19/2015)

Exit Target: $1.60

Return: -70%

Stop Target: None

Action: Support is at $115, which is a level I would like to see hold ahead of the weekend.


Bank of America (BAC, $16.34, down $0.38)

BAC September 18 calls (BAC150918C00018000, $0.07, down $0.02)

Entry Price: $0.28 (8/17/2015)

Exit Target: $0.60-$0.90

Return: -75%

Stop Target: None

Action: Support is at $16.50-$16.25. Resistance is at $16.50-$16.75.

You can read my full write-up on BAC in Monday’s Pre-Market Update.


JPMorgan Chase (JPM, $64.68, down $1.26)

JPM September 70 calls (JPM150918C00070000, $0.19, down $0.11)

Entry Price: $0.80 (8/10/2015)

Exit Target: $1.60

Return: -76%

Stop Target: None

Action: Support is at $66-$65.75 and the 100-day moving average. Resistance is at $67-$68.


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.

Rigel Pharmaceuticals (RIGL) September 5 calls (from 6/4/15) — Continue to hold.

SPDR Gold Trust ETF (GLD) September 98 puts (from 7/28/15) — Sell to close the GLD September 98 puts at current levels. The close above $110 yesterday and the follow-through today have forced us out of the trade. The puts are currently going for $0.07.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options