Dear Momentum Options Subscriber,

The bulls are looking to end a sweet week with another Friday win. If they’re successful, it will be their third-straight Friday victory and a good clue that higher highs are still in the mix.

While this week was the “unofficial” start of third-quarter earnings season, the action will pick up next week when the financial stocks come into focus. I have mentioned all year that the sector needs to show strength as the next market leader if the bulls want to make another run to the market’s record highs.

I will be covering a couple of the high-profile names that are reporting on Monday after doing some research over the weekend. The detailed charts I included in this past Monday’s Pre-Market Update served as a great preview of the rebound this week.

All signs are pointing towards higher highs next week, but any weekend drama or geopolitical concerns could factor into the equation negatively. However, we are positioned nicely, as we do have some put protection in addition to our bullish call option plays.

I mentioned yesterday that we have room for more new trades, but I still want to keep our portfolio somewhat light. We just got confirmation yesterday that this rally might be for real, and the portfolio can usually handle up to 12-15 open trades in a trending market. However, volatility is still somewhat elevated, and October has been a spooky month in the past. These are a few of the reasons I haven’t been too aggressive on this week’s rebound.

In the final hours of trading ahead of the weekend, the Dow is down 9 points to 17,041, while the S&P 500 is off 3 points to 2,009. The Nasdaq is climbing 7 points to 4,817, and the Russell 2000 is advancing a point to 1,164.

I will be back on Monday morning with updated charts and an in-depth overview on what this week’s action will mean going forward. If you don’t hear from me again ahead of the closing bell, have a great weekend!

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 1:35 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.

 

Qualcomm (QCOM, $57.83, up $0.17)

QCOM November 60 calls (QCOM151120C00060000, $1.20, up $0.09)

Entry Price: $1.20 (10/9/2015)

Exit Target: $2.40

Return: 0%

Stop Target: None

Action: Shares have cleared their 50-day moving average and look poised to make a run past $60. Support is at $56.

 

Earnings are due out in early November, and I will cover the company’s numbers on Monday. If shares clear $62.50 by mid-November, these options will easily double from current levels.

 

Kohl’s (KSS, $47.10, up $0.45)

KSS November 42.50 puts (KSS151120P00042500, $0.73, down $0.07)

Entry Price: $0.95 (10/7/2015)

Exit Target: $1.90

Return: -23%

Stop Target: None

Action: Resistance is at $47-$47.50. Support is at $46-$45.

You can read my detailed write-up in the Oct. 7 Mid-Market Update. Earnings are due out Nov. 12.

 

Starbucks (SBUX, $59.80, up $0.34)

SBUX November 50 puts (SBUX151120P00050000, $0.31, down $0.02)

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

Exit Target: $1.80

Return: -66%

Stop Target: None

Action: Resistance is at $60. A move past $60-$60.50 could lead to a run towards $65 and force us out of the position. Support is at $58, followed by $56.50 and the 50-day moving average.

 

Financial Select Sector SPDR (XLF, $23.18, down $0.21)

XLF November 22 puts (XLF151120P00022000, $0.24, up $0.03)

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

Exit Target: $1.35

Return: -64%

Stop Target: None

Action: Resistance is at $23.50-$23.75 and the 50-day moving average. Support is at $23-$22.50.

 

Cisco Systems (CSCO, $27.88, down $0.04)

CSCO November 27 calls (CSCO151120C00027000, $1.52, flat)

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

Exit Target: $1.75 (closed first half at $0.87 on 10/5/2015)

Return: 93%

Stop Target: $1.30 (Stop Limit)

Action: Shares traded past $28.05 to $28.15 but failed to hold resistance at $28. This has shied me away from piggy-backing this trade for now. Support is at $27-$26.50.

 

Corning (GLW, $17.66, down $0.31)

GLW November 19 calls (GLW151120C00019000, $0.30, down $0.08)

Entry Price: $0.60 (9/16/2015)

Exit Target: $0.75

Return: -50%

Stop Target: None

Action: Support is at $17.50-$17. Resistance is at $18-$18.50, followed by $19 and the 100-day moving average.

You can read my take on GLW in the Sept. 17 Pre-Market Update.

 

PayPal Holdings (PYPL, $32.08, up $0.41)

PYPL January (2016) 40 calls (PYPL160115C00040000, $0.54, up $0.09)

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

Exit Target: $2.10

Return: -49%

Stop Target: None

Action: Resistance is at $33 and the 20-day moving average, followed by $34. Support is at $31-$30 on a close back below $32.

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.

Sony (SNE) October 24 puts (from 9/22/15) — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options