Dear Momentum Options Subscriber,
The market is mixed this afternoon after pushing higher highs earlier this morning. Some of the nervousness can be blamed on tomorrow’s jobs report that is due out before the opening bell, although there have been a couple of reports that showed employment growth may have rebounded in June.
The ADP survey came in with an increase of 172,000 private-sector jobs in June versus expectations for 160,000 jobs added. Elsewhere, initial jobless claims fell by 16,000 to 254,000. These nuggets of news are suggesting a rebound in tomorrow’s nonfarm payrolls report.
In merger and acquisition news, WhiteWave Foods (WWAV, $56.24, up $8.81) is surging 18% after agreeing to a merger deal with Danone (DANOY, $14.30, up $0.25) for $56.25 per share. Although a deal has been announced, there is speculation that other potential bidders, such as Coca-Cola (KO) or PepsiCo (PEP), may offer competing bids for the organic and natural food and beverage company.
Turning to the market, the Dow is down 60 points to 17,858, while the S&P 500 is off 5 points to 2,094. The Nasdaq is higher by 3 points to 4,863, and the Russell 2000 is slipping a quarter of a point to 1,147.
I have updated the parameters of our latest trade in Green Dot (GDOT) 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 2:00 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Green Dot (GDOT, $23.22, down $0.14)
GDOT August 25 calls (GDOT160819C00025000, $0.80, up $0.05)
Entry Price: $0.80 (7/7/2016)
Exit Target: $1.60
Stop Target: None
Action: The Exit Target for the trade is at $1.60, but this is not a Limit Order at this time.
The chart shows that there is resistance at $23.50-$24, which are levels that have held all year. A blue-sky breakout could occur if shares clear the “triple top” that has formed. If resistance continues to hold and shares falter from current levels, a backtest to $23-$22.50 and the 50-day moving average could be in the cards.
Altria Group (MO, $69.51, down $0.21)
MO August 70 calls (MO160819C00070000, $1.34, down $0.14)
Entry Price: $1.15 (7/5/2016)
Exit Target: $2.30
Stop Target: $1.25 (Stop Limit)
Action: Resistance is at $70. Support is at $68.
Energous (WATT, $11.91, down $0.24)
WATT August 12.50 calls (WATT160819C00012500, $1.20, down $0.20)
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, $25.55, up $0.40)
MS August 28 calls (MS160819C00028000, $0.27, up $0.06)
Entry Price: $0.79 (6/23/2016)
Exit Target: $1.50
Stop Target: None
Action: Resistance is at $25.75-$26. Support is at $25-$24.75.
Viavi Solutions (VIAV, $6.59, up $0.11)
VIAV September 7 calls (VIAV160916C00007000, $0.26, up $0.04)
Entry Price: $0.55 (6/23/2016)
Exit Target: $1.10
Stop Target: None
Action: Near-term resistance is at $6.75-$7. Support is at $6.50-$6.40.
Editor and Chief Options Strategist