Dear Momentum Options Subscriber,
I mentioned previously that the market could stay in a tight trading range today ahead of Friday’s unemployment report. With tomorrow being April Fools’ Day, anything could happen, but I’m expecting higher highs into next month.
Having said that, I don’t think any short-term pullback will hurt the bulls unless prior levels of support are breached. This is also why I track the technical setups each and every day that Wall Street is open. Today’s slight dip on the open has been recovered, with the bulls holding the lead heading into halftime.
The Dow is currently gaining 32 points to 17,748, while the S&P 500 is adding 3 points to 2,067. The Nasdaq is higher by 18 points to 4,887, and the Russell 2000 is gaining 4 points to 1,114.
I’m a little short on commentary today because I have another Profit Alert for our position in Nucor (NUE) this afternoon, which marks our 35th winning trade of the year. Making a double-nickel (55%) profit in two weeks wasn’t too shabby. Remember, no matter what happens in the market this year, I continue to believe that this is shaping up to be one of the best years ever to trade the market.
I’m still hopeful that I can get us into a New Trade ahead of the closing bell, but we don’t need to force the action. The portfolio is light and in terrific shape going into first-quarter earnings season.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 35-6 (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 12:10 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.
Nucor (NUE, $47.59, down $0.72)
NUE April 48 calls (NUE160415C00048000, $0.78, down $0.30)
Entry Price: $0.55 (3/17/2016)
Exit Target: $2.00 (closed first half at $0.80 on 3/30/16)
Stop Target: $0.90 (Stop Limit)
Action: The Stop Limit at $0.90 triggered on the NUE April 48 calls following the stock’s drop back below $48, and we are now out of the position.
The calls opened at $0.95 and traded to $0.96 before tripping our Stop Limit. I was worried about a possible backtest to $48-$47.50, but I wanted to be out of this trade by this Friday, regardless. These options expire two weeks from tomorrow, so these options are in a time period I label as the “Danger Zone.”
The good news is that the average closing price was $0.85, so the trade made roughly 55% overall. This was the last position from a great batch of trades in March. We are in the process of building out our next batch of trades into May and June, so I hope you stick around through this time period.
I will keep NUE on my watch list for a possible “rollover” trade in April using May options.
You can read my extended write-up on NUE in the March 28 Pre-Market Update.
Rambus (RMBS, $13.86, up $0.03)
RMBS May 14 calls (RMBS160520C00014000, $0.57, down $0.04)
Entry Price: $0.45 (3/28/2016)
Exit Target: $0.90
Stop Target: $0.50 (Stop Limit)
Action: Set a Stop Limit at $0.50 to protect profits. Today’s low has tapped $0.55.
Support is at $13.75-$13.50. Resistance is at $14.
You can read my full write-up on RMBS in the March 29 Pre-Market Update.
Oracle (ORCL, $41.10, up $0.13)
ORCL May 42 calls (ORCL160520C00042000, $0.59, up $0.01)
Entry Price: $0.55 (3/29/2016)
Exit Target: $1.10
Stop Target: None
Action: Resistance is at $41-$41.25. Support is at $40.
Editor and Chief Options Strategist