Dear Momentum Options Subscriber,

I was bullish on Hilton Worldwide Holdings (HLT, $23.29, up $0.35) earlier this year, but I have stayed away from the iconic brand since February. We made 88% trading call options on the stock’s move from $26 to over $28 back then, but shares have suffered since.

Hilton has fallen on hard times, as shares have recently been testing the 52-week low at $20.72. The Aug. 24 low touched $20.93.

The “death cross” that formed in August confirmed that lower lows were ahead, and the 50- and 100-day moving averages are still in a downtrend. The 200-day moving average seems to be leveling out.

 

The longer-term chart shows that shares are near their December 2013 IPO closing price of $21.50.

 

The company is scheduled to release earnings on Oct. 28, before the market opens, and Wall Street is looking for a reading of $0.23 a share on revenue of $2.87 billion. The company has matched or beaten estimates in three of the past four quarters.

While it is a little early to go long HLT, I do think shares are going through a bottoming process. There is support at $23-$22, while short-term resistance is at $25 and the 50-day moving average.

The HLT November 26 calls (HLT151120C00026000, $0.50, up $0.10) look tempting to take as a trade, as do the HLT January 2016 26 calls (HLT160115C00026000, $0.70, up $0.30).

The January calls would allow more time for a bullish trade to play out, and the breakeven point for these options is at $26.70. The trade would double if shares reach $27.40, technically, by mid-January.

I’m keeping these options on my Watch List for a possible trade in HLT later this month, but I need to see a little more follow-through before going long.

As far as the market goes today, the trading range remains in place, and the major indices are down close to 1% each. The Dow is down 189 points to 16,094, while the S&P 500 is declining 16 points to 1,904. The Nasdaq is lower by 50 points to 4,569, and the Russell 2000 is off 16 points to 1,084.

I have updated our current trades below, so let’s go check the action.

Momentum Options Play List

Closed Momentum Options Trades for 2015: 85-33-2 (71%). 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 12:35 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.

 

Starbucks (SBUX, $56.60, down $0.24)

SBUX November 50 puts (SBUX151120P00050000, $0.79, up $0.07)

Entry Price: $0.90 (9/28/2015)

Exit Target: $1.80

Return: -12%

Stop Target: None

Action: Support is at $55, followed by $54.50 and the 100-day moving average. Resistance is at $58-$59.

 

Financial Select Sector SPDR (XLF, $22.45, down $0.21)

XLF November 22 puts (XLF151120P00022000, $0.54, up $0.03)

Entry Price: $0.66 (9/24/2015)

Exit Target: $1.35

Return: -18%

Stop Target: None

Action: Support is at $22.50-$22. Resistance is at $22.75-$23.

 

Sony (SNE, $24.55, up $0.05)

SNE October 24 puts (SNE151016P00024000, $0.51, down $0.14)

Entry Price: $0.65 (9/22/2015)

Exit Target: $1.60 (Limit Order on first half)

Return: -22%

Stop Target: None

Action: Resistance is at $25. Support is at $24-$23.50.

 

Cisco Systems (CSCO, $25.60, down $0.65)

CSCO November 27 calls (CSCO151120C00027000, $0.49, down $0.16)

Entry Price: $0.62 (9/16/2015)

Exit Target: $1.30

Return: -21%

Stop Target: None

Action: Support is at $26-$25.50. A close above $26.75 and the 50-day moving average would be bullish.

 

PayPal Holdings (PYPL, $31.00, down $0.04)

PYPL January (2016) 40 calls (PYPL160115C00040000, $0.43, down $0.02)

Entry Price: $1.05 (9/14/2015)

Exit Target: $2.10

Return: -59%

Stop Target: None

Action: Resistance is at $31.50-$32. Support is at $30. You can read my detailed write-up on PYPL in the Sept. 15 Pre-Market Update.

 

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.

Corning (GLW) November 19 calls (from 9/16/2015) — You can read my take on GLW in the Sept. 17 Pre-Market Update — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options