Dear Momentum Options Subscriber,

The bears got their second-straight win on Tuesday following another volatile trading session. However, the bulls put up a good fight, and they made an appearance in positive territory after holding support on the opening pullback.

Both sides seemed tentative to take larger positions ahead of Fed Chair Janet Yellen’s comments today, as she is due to speak before the House Financial Services Committee shortly after this morning’s open.

The Dow dipped 12 points, or 0.1%, to finish at 16,014. The blue-chips traded down to 15,881 on the open, but support at 15,800 held for the 14th-straight session. Resistance is at 16,200, followed by 16,350-16,400.

The S&P 500 slipped a point, or 0.1%, to close at 1,852. The index traveled to an intraday low of 1,834, but support at 1,825 held. The late-day rebound to 1,868 fell shy of resistance at 1,870-1,875.

The Nasdaq declined 15 points, or 0.4%, to end at 4,268. Tech opened at 4,224 and kissed 4,222 before making its way back into positive territory shortly afterwards. Backup support at 4,225-4,200 held before the surge to 4,329. Resistance at 4,325-4,350 was tested before the close back below 4,300.

The Russell 2000 fell 5 points, or 0.6%, to settle at 963. The small-caps were weak on the open and traded to a low of 957 within minutes. The turnaround to 975 pushed short-term resistance at 970-975, but these levels failed to hold into the closing bell.

The S&P 500 Volatility Index ($VIX, 26.54, up 0.54) made a run past resistance at 27.50 to reach a peak of 28.31 yesterday. There is risk to 30-35 on a close above 27.50. Support remains at 25, followed by 23.50-22.50.

From desk to press, futures look like this: Dow (+154); S&P 500 (+23); Nasdaq 100 (+62); Russell (+13).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 17-2 (89%). 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 8:00 a.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.


Bank of America (BAC, $12.20, down $0.07)

BAC March 13 calls (BAC160318C00013000, $0.38, down $0.05)

Entry Price: $0.40 (2/9/2016)

Exit Target: $0.80

Return: -5%

Stop Target: None


BAC April 14 calls (BAC160415C00014000, $0.29, down $0.04)

Entry Price: $0.30 (2/9/2016)

Exit Target: $0.60

Return: -3%

Stop Target: None

Action: Support is at $12. Short-term resistance is at $12.25-$12.50.


Wal-Mart Stores (WMT, $65.81, down $1.09)

WMT March 60 puts (WMT160318P00060000, $0.75, up $0.14)

Entry Price: $0.65 (2/4/2016)

Exit Target: $1.00-$1.30 (closed first half at $1.00 on 2/9/16)

Return: 31%

Stop Target: $0.70 (Stop Limit)

Action: The Stop Limit at $0.70 was triggered late in yesterday’s session following the rebound past $66 in the common stock, and we are now out of the position.

The calls traded to a high of $1.01, and we were fortunate enough to close the first half of the trade at $1.00. The low checked in at $0.69 following a prior low of $0.71 on the stock’s test to $64.68.

I will keep WMT on my watch list for a potential future trade, but, for now, we are out.


Rambus (RMBS, $11.76, down $0.18)

RMBS March 13 calls (RMBS160318C00013000, $0.19, down $0.06)

Entry Price: $0.35 (2/2/2016)

Exit Target: $0.70

Return: -46%

Stop Target: None

Action: Support is at $11.75, followed by $11.65-$11.50 and the 50- and 100-day moving averages. Resistance is at $12-$12.25.

You can read my extended write-up in the Feb. 2 Pre-Market Update.


Opko Health (OPK, $7.76, up $0.06)

OPK March 7 puts (OPK160318P00007000, $0.38, down $0.03)

Entry Price: $0.35 (1/25/2016)

Exit Target: $0.70

Return: 9%

Stop Target: None

Action: Support is at $7.50. Resistance is at $8.

You can read my earlier write-up in the Jan. 26 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.

Garmin (GRMN) February 30 puts — Continue to hold.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options