Dear Momentum Options Subscriber,

Shares of Green Dot (GDOT, $19.09, down $0.31) have been in a strong uptrend after holding their 200-day moving average earlier this month. The 50-day moving average is also on track to clear the 200-day moving average, which would form a “golden cross” in the $17.50 area on continued strength. The 100-day moving average is also rising. The 52-week high is at $21.62, and near-term support is at $19.

GDOT

Earnings are due out after the closing bell and shares will likely make a 5%-10% move in after-hours and into Thursday’s open. I’m looking for top- and bottom-line earnings beats, but a miss could send shares south by 5%-10%.

Wall Street is expecting Green Dot to earn $0.03 a share on revenue just south of $150 million. The range is wide, as estimates run as high as $0.10 a share and as low as a loss of $0.05 a share. This could translate into a beat of $0.07 or a miss of $0.08.

The company has topped expectations during past three quarters by $0.07, $0.04 and $0.24, respectively. In the year-ago period, the company missed forecasts by a penny but still reported a profitable quarter.

I have a New Trade listed for GDOT below, and I’m using the June options to offset some risk from the earnings announcement. My original research was led by technical analysis, but, like I often mention, it is good to know the fundamentals of a company as well.

The earnings announcement makes this a high-risk/high-reward trade, but I like the odds for shares to make new highs by mid-June, if not sooner.

As far as the market goes, backup support is holding, and the market is off of its lows. The Dow is down 87 points to 16,344, while the S&P 500 is lower by 10 points to 1,910. The Nasdaq is slipping 9 points to 4,494, and the Russell 2000 is up a fraction of a point to 1,012.

As I mentioned, I have a New Trade for us listed below based on the above write-up, and I have updated our current trades as well, so let’s go check the action.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 20-3 (87%). 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 2:00 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.

 

Green Dot (GDOT, $19.09, down $0.31)

Buy to open the GDOT June 22.50 calls (GDOT160617C00022500, $0.65, down $0.05) at current levels.

Action: I like these options at current levels, and you can use a Limit Order up to $0.80 to get the best fills. These are the regular monthly options that expire on June 17, and I will provide the parameters of the trade in tomorrow’s Pre-Market Update.

 

Oracle (ORCL, $36.27, down $0.28)

ORCL April 40 calls (ORCL160415C00040000, $0.22, down $0.03)

Entry Price: $0.40 (2/22/2016)

Exit Target: $0.80

Return: -45%

Stop Target: None

Action: Support is at $36.50-$36. Resistance is at $37-$37.50.

You can read my detailed write-up in the Feb. 23 Pre-Market Update.

 

Bank of America (BAC, $11.90 down $0.26)

BAC March 13 calls (BAC160318C00013000, $0.11, down $0.04)

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

Exit Target: $0.80

Return: -73%

Stop Target: None

 

BAC April 14 calls (BAC160415C00014000, $0.10, down $0.02)

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

Exit Target: $0.60

Return: -67%

Stop Target: None

Action: Support is at $11.75. Resistance is at $12-$12.25.

 

Rambus (RMBS, $12.82, up $0.21)

RMBS March 13 calls (RMBS160318C00013000, $0.29, up $0.04)

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

Exit Target: $0.70

Return: -17%

Stop Target: None

Action: Resistance is at $12.50-$12.75 and the 200-day moving average. Support is at $12.25-$12.

 

Trades on Hold — other 2016 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.

Opko Health (OPK) March 7 puts (OPK160318P00007000) — Earnings are due to be released next week. Continue to hold the second half of the position.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options