Dear Momentum Options Subscriber,
It is too early to tell if the V-shaped recovery off of Monday’s lows will continue into next week or if the current rally is a bear trap, but today’s action is slightly bullish.
While the market is mixed at the moment, there are still several hours of trading to go.
The Dow is currently down 27 points to 16,627, while the S&P 500 is off a point to 1,986. The Nasdaq is up 5 points to 4,818, and the Russell 2000 is climbing 4 points to 1,158. The VIX is up 0.66 at 26.76, but I’m keeping my fingers crossed that it slides below 25 into the close.
I will likely refrain from adding new trades this afternoon, but there is a possibly that I could add another position depending on the action going into the close. However, if you don’t hear from me, have a super weekend, and I will be back on Monday morning with a full update.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 83-29-2 (73%). 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.
KB Home (KBH, $14.65, up $0.29)
KBH October 16 calls (KBH151016C00016000, $0.45, up $0.07)
Entry Price: $0.33 (8/27/2015)
Exit Target: $0.70
Stop Target: None
Action: Resistance is at $14.50-$14.75, followed by $15 and the 200-day moving average. Short-term support is at $14, with risk to $13.50 if breached.
Trades on Hold — other 2015 Portfolio Open positions (3): 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.
Bank of America (BAC) September 18 calls (from 8/17/15) — Continue to hold.
JPMorgan Chase (JPM) September 70 calls (from 8/10/2015) — Continue to hold.
iShares Russell 2000 (IWM) September 123 calls (from 8/19/2015) — Continue to hold.
Editor and Chief Options Strategist