Dear Momentum Options Subscriber,
Futures were forecasting weakness late last night, and they stayed under pressure into Wall Street’s opening bell this morning. The action turned positive mid-day, however, and the bulls are holding nice gains as we head into the close of trading.
With the fireworks of second-quarter earnings starting next week, this week’s earnings schedule is light, although Pepsico (PEP, $106.23, down $0.19) will be worth watching on Thursday.
The PEP July 107 calls (PEP160715C00107000, $0.96, down $0.07) look like a lottery play given the recent market volatility, but they would produce a 100% return if shares trade past $109, technically, by next Friday.
The PEP July 105 puts (PEP160715P00105000, $0.85, up $0.05) would also be a high risk/high reward trade, but the options would double if shares fall below $103.30, technically, by July 15.
The suits-and-ties are looking for a profit of $1.30 a share on revenue north of $15.3 billion. While I’m tempted to go long with PEP call options, I often say that earnings trades are tricky to predict.
As far as the market goes, the Dow is up 64 points to 17,905, while the S&P 500 is adding 9 points to 2,097. The Nasdaq is higher by 33 points to 4,856, and the Russell 2000 is gaining 6 points to 1,145.
I have updated our current trades below, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 54-18 (75%). All trades are dated 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 3:05 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Altria Group (MO, $69.88, up $0.27)
MO August 70 calls (MO160819C00070000, $1.48, up $0.07)
Entry Price: $1.15 (7/5/2016)
Exit Target: $2.30
Stop Target: $1.20 (Stop Limit)
Action: Shares look poised to clear $70-$72 on a blue-sky breakout. Support is at $68.
Energous (WATT, $12.07, down $0.26)
WATT August 12.50 calls (WATT160819C00012500, $1.23, down $0.17)
Entry Price: $1.57 (6/28/2016)
Exit Target: $3.15
Stop Target: $0.75
Action: Support is at $11 and the 50-day moving average if $12 fails to hold. Resistance is at $12.75-$13.
Morgan Stanley (MS, $25.17, up $0.17)
MS August 28 calls (MS160819C00028000, $0.21, down $0.02)
Entry Price: $0.79 (6/23/2016)
Exit Target: $1.50
Stop Target: None
Action: Support is at $25-$24.75. Resistance is at $25.75-$26.
Viavi Solutions (VIAV, $6.49, up $0.05
VIAV September 7 calls (VIAV160916C00007000, $0.22, flat)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Support is at $6.50-$6.40. Near-term resistance is at $6.75-$7.
Editor and Chief Options Strategist