Dear Momentum Options Subscriber,

Verint Systems (VRNT, $46.65, down $0.20) is scheduled to announce earnings following Wednesday’s close, and Wall Street is expecting a reading of $0.79 a share on revenue north of $298 million. The company has topped estimates during the last four quarters by $0.02, $0.12, $0.04 and $0.09, respectively.

Shares are down from their 52-week peak of $66.45 that was set in early June, and they recently tapped a one-year low of $40.90 in late September. A “death cross” formed in late August when the 50-day moving average crossed below the 200-day moving average while shares were just under $60.

Shares have been stuck in a tight trading range for the past six sessions, but the 50-day moving average appears to be curling slightly higher. A large move appears to be shaping up, and the stock has been volatile around earnings announcements in the past.

In early September, shares fell nearly $3 after the company reported a $0.02 earnings beat and higher revenues. Shares also fell nearly $3 in early June following the $0.12 beat, while revenue came in lower than expected.

In late March, shares jumped over $3 on better-than-expected earnings of $1.19 a shares versus expectations for a reading of $1.15 a share. However, revenue fell shy of estimates. And, finally, in early December of 2014, VRNT topped forecast by $0.09 a share, with revenue coming in above expectations. Shares fell $1.29 during the next trading session.

The VRNT December 50 calls (VRNT151218C00050000, $0.70, down $0.05) and the VRNT December 45 puts (VRNT151218P00045000, $1.10, up $0.05) would create a “strangle” option trade, but I don’t like the setup based on the stock’s past trading patterns around earnings.

Although I’m a little more bullish than bearish on VRNT following the haircut to recent lows, I don’t like the bid/ask spread on the calls, and it’s not a lock that shares will trade higher. It was fun to do the research on VRNT, but I don’t like the options for an earnings trade.

As a side note, Infoblox (BLOX, $18.30, up $3.26), which I wrote about in yesterday’s Mid-Market Update, is up 22% following better-than-expected numbers.

In the issue, I profiled a BLOX “straddle” option trade that would have had a cost basis of $2.00.

The BLOX December 15 calls (BLOX151218C00015000, $3.20, up $2.00) were going for $0.90, and they have zoomed over 250% today. The BLOX December 15 puts (BLOX151218P00015000, $0.10, down $1.00) were trading for $1.10, and they have been crushed today. However, the combined premium for both options is now $3.30 and, from an entry price of $2.00, the return would have been over 50%.

This is the beauty of straddle option trades, but they require a rather large move in a stock to pay off.

Heading into the final hours of trading, the Dow is gaining 98 points to 17,818, while the S&P 500 is advancing 12 points to 2,092. The Nasdaq is climbing 24 points to 5,133, and the Russell 2000 is adding a point to 1,199.

I have updated our current trades below, so let’s go check the tape. I’m also working on a New Trade that I hope to have ready by the close. If you don’t hear from me by 3:00 p.m. ET, however, we will wait until tomorrow.

Momentum Options Play List

Closed Momentum Options Trades for 2015: 93-38-2 (70%). 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 1:55 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.


Corning (GLW, $18.75, up $0.02)

GLW (2016) January 20 calls (GLW160115C00020000, $0.19, flat)

Entry Price: $0.44 (11/23/2015)

Exit Target: $1.00

Return: -57%

Stop Target: None

Action: Support is at $18.75-$18.50. Resistance is at $19.

You can read my detailed write-up from the Nov. 23 Mid-Market Update.


Harris (HRS, $83.89, up $0.76)

HRS December 85 calls (HRS151218C00085000, $1.05, up $0.15)

Entry Price: $1.25 (11/19/2015)

Exit Target: $2.50

Return: -16%

Stop Target: None

Action: Resistance is at $83.25-$83.50. A close above $84 should lead to a blue-sky breakout. Support is at $82.


Wells Fargo (WFC, $55.40, up $0.30)

WFC December 57.50 calls (WFC151218C00057500, $0.15, up $0.03)

Entry Price: $0.38 (11/18/2015)

Exit Target: $0.80

Return: -61%

Stop Target: None

Action: Near-term resistance is at $55.50-$56. Support is at $55-$54.50 and the 100- and 200-day moving averages.

You can read my write-up on WFC in the Nov. 19 Pre-Market Update.


Jabil Circuit (JBL, $25.61, up $0.02)

JBL December 25 calls (JBL151218C00025000, $1.65, up $0.06)

Entry Price: $0.65 (11/10/2015)

Exit Target: $2.00

Return: 154%

Stop Target: $1.30 (Stop Limit)

Action: Overhead resistance is at $25.75-$26. Support is at $25-$24.50. My near-term target remains at $27-$28.

You can read my detailed write-up on JBL in the Nov. 10 Mid-Market Update.


PowerShares QQQ Trust (QQQ, $114.56, up $0.54)

QQQ December 117 calls (QQQ151218C00117000, $0.47, up $0.15)

Entry Price: $0.63 (11/10/2015)

Exit Target: $1.30

Return: -25%

Stop Target: None

Action: Resistance is at $115-$115.50. The all-time high is at $115.47. Support is at $113-$112.50.


iShares Russell 2000 (IWM, $119.46, up $0.36)

IWM December 124 calls (IWM151218C00124000, $0.13, down $0.03)

Entry Price: $0.58 (11/5/2015)

Exit Target: $1.20

Return: -78%

Stop Target: None

Action: Short-term resistance is at $120 and the 200-day moving average. Support is at $118, followed by $117.50-$17 and the 100-day moving average.


Comcast (CMCSA, $61.51, up $0.65)

CMCSA December 65 calls (CMCSA151218C00065000, $0.10, flat)

Entry Price: $0.74 (11/3/2015)

Exit Target: $1.50

Return: -86%

Stop Target: None

Action: Support is at $61-$60.50 and the 50-day moving average. Resistance is at $62.

You can read my detailed write-up on CMCSA in the Nov. 4 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.

Hilton Worldwide Holdings (HLT) December 27 calls — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options