Dear Momentum Options Subscriber,
The market was under pressure this morning following reports of terrorist attacks overseas that claimed the lives of approximately 30 people and injured many more. According to authorities, two bombs were detonated in an airport in Brussels, and another explosion was reported in the city’s subway system.
Headlines from Belgium continue to dominate the news, but the market has shown some resiliency given the events. Airline stocks have been hit the hardest today, but they are still in a strong uptrend off of their February lows.
The pullback in the sector could present a bullish or bearish trade in the coming days, but it’s too soon to make that call. I usually avoid the sector because of the bearish history of airline stocks, but there is no denying the recent price action.
Turning to the broader market, the Dow is gaining 17 points to 17,640, while the S&P 500 is up 3 points to 2,055. The Nasdaq is higher by 23 points to 4,832, and the Russell 2000 is adding 2 points to 1,100.
I could have a New Trade ahead of the closing bell today, as my watch list is exploding with both bullish and bearish setups. I still like the April option chains, but I’m also looking into May and June trades. The regular April monthly options will expire three weeks from this Friday, and that makes them a little more risky as time decay comes into play.
Stay close to your email inboxes in case I take action. If you don’t hear from me by 3:30 p.m. EST, however, it means we are standing pat with our current trades.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 33-5 (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 2:05 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.
Rambus (RMBS, $13.74, up $0.13)
RMBS May 14 calls (RMBS160520C00014000, $0.63, up $0.10)
Entry Price: $0.47 (3/21/2016)
Exit Target: $1.00
Stop Target: None
Action: Near-term resistance is at $13.75-$14. Support is at $13.25-$13.
You can read my thoughts on RMBS in this morning’s Pre-Market Update.
Krispy Kreme (KKD, $15.52, flat)
KKD April 16 calls (KKD160415C00016000, $0.72, down $0.03)
Entry Price: $0.60 (3/21/2016)
Exit Target: $1.20
Stop Target: None
Action: Support is at $15.50-$15.25. Resistance is at $15.75-$16. There is a gap to fill past $16.50, which could be cleared on better-than-expected numbers. A test to $14 could come on a miss or a lowered outlook. Earnings are due to be released after the close this afternoon.
You can read my thoughts on KKD’s numbers from earlier this month in the March 11 Mid-Market Update.
Nucor (NUE, $46.58, up $0.17)
NUE April 48 calls (NUE160415C00048000, $0.38, down $0.03)
Entry Price: $0.55 (3/17/2016)
Exit Target: $1.10
Stop Target: None
Action: Support is at $46.25-$46. Resistance is at $47.50-$48.
Editor and Chief Options Strategist