Dear Momentum Options Subscriber,

There were a number of positive developments in the market this week that have provided clues that the bulls could continue their rebound. While today’s action has been choppy, a slight pause was due following three-straight days of 1% gains or more.

I will cover the transports and the financial sector in next Monday’s Pre-Market Update, but it has been beneficial for the market that both sectors seem to have recovered or, at least, held support.

Traders have been questioning how long this rally can last each day, but that is a fool’s game if you are on the outside looking in. That is like worrying about when a bottom might be made while the bears are pushing lower lows. The number of different reasons the talking heads give to stay long or short the market truly amazes me.

While the news can and certainly does influence market action, technical and fundamental analysis must also be performed each and every day. I love the pressure of trading a volatile market, but it is definitely easier to trade in a trending market.

Trends can last for days, weeks or years, but, again, that is why it is important to do the homework daily. Money is constantly rotating between sectors and individual stocks that are moving in or out of favor by investors, so it is extremely beneficial to know how to go long or short stocks by using call or put options to play these short-term moves.

Remember, single-digit moves in stocks can often translate into double- or triple-digit returns for options, but the job is a little harder because you have to be right within a certain time period.

As far as the major indices go today, the Dow is down 23 points to 16,430, while the S&P 500 is lower by 5 points to 1,921. The Nasdaq is falling 27 points to 4,506, and the Russell 2000 is off 3 points to 1,008.

I have raised the Stop Limits on a number of our current trades below, so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 17-3 (85%). 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 1:10 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.

 

Microsoft (MSFT, $52.47, up $0.05)

MSFT March 52.50 calls (MSFT160318C00052500, $1.61, flat)

Entry Price: $1.15 (2/16/2016)

Exit Target: $2.40

Return: 40%

Stop Target: $1.25, raise to $1.40 (Stop Limit)

Action: Raise the Stop Limit from $1.25 to $1.40 on the second half of the MSFT March 52.50 calls.

Resistance is at $52.50-$53 and the 200-day moving average. A move above $53 will likely get $55-$56 in play. Support is at $50.50-$50.

 

Emerson Electric (EMR, $48.43, up $0.67)

EMR March 49 calls (EMR160318C00049000, $1.10, up $0.24)

Entry Price: $0.60 (2/16/2016)

Exit Target: $1.20 (closed first half at $0.90 on 2/17/16)

Return: 67%

Stop Target: $0.70, raise to $0.90 (Stop Limit)

Action: Raise the Stop Limit from $0.70 to $0.90 on the second half of the EMR March 49 calls.

Resistance is at $48.50-$49 and the 200-day moving average. A move above the latter would be super bullish. Support is at $46 and the 100-day moving average.

 

Intel (INTC, $29.64, up $0.17)

INTC March 30 calls (INTC160318C00030000, $0.67, up $0.05)

Entry Price: $0.40 (2/16/2016)

Exit Target: $0.80 (closed first half at $0.60 on 2/17/16)

Return: 55%

Stop Target: $0.50, raise to $0.60 (Stop Limit)

Action: Raise the Stop Limit from $0.50 to $0.60 on the second half of the INTC March 30 calls.

Short-term resistance is at $29.50-$30. Support is at $28.50-$28.25.

 

Bank of America (BAC, $12.25, down $0.31)

BAC March 13 calls (BAC160318C00013000, $0.27, down $0.07)

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

Exit Target: $0.80

Return: -33%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.21, down $0.03)

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

Exit Target: $0.60

Return: -30%

Stop Target: None

Action: Short-term support is at $12.25-$12. Resistance is at $12.50-$12.75.

 

Rambus (RMBS, $12.59, up $0.17)

RMBS March 13 calls (RMBS160318C00013000, $0.26, up $0.04)

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

Exit Target: $0.70

Return: -26%

Stop Target: None

Action: Resistance is at $12.50-$12.75. Support is at $12.25-$12.

 

Opko Health (OPK, $8.93, up $0.15)

OPK March 7 puts (OPK160318P00007000, $0.16, down $0.04)

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

Exit Target: $0.70

Return: -54%

Stop Target: None

Action: Resistance is at $9. Support is at $8.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options