Dear Momentum Options Subscriber,

Shares of FireEye (FEYE, $14.70, down $2.05) are getting crushed today following another disappointing quarter. The company lost 33 cents on sales of $175 million. Wall Street was looking for a loss of 39 cents a share on revenue over $181 million.

Although the losses were “better-than-expected,” revenue once again failed to impress. FireEye also stated current quarter revenue will fall shy of expectations. A higher loss of 30-32 cents a share for Q3 was penciled-in while analysts had 24 cents in their forecast.

I warned of the skeletons in FEYE’s closet on Wednesday and didn’t like the fact they are a money-losing company. No matter how bullish a chart might look heading into earnings, doing fundamental homework is an important task that investors should use when considering trading an earnings announcement.

I profiled the FEYE August 15 puts (FEYE160819P00015000, $0.86, up $0.40) at 35 cents on Wednesday as a way to play a tumble back below $15. These options have zoomed 91% after reaching a peak of $1.51 on the open and clearly making bearish traders ecstatic.

The FEYE August 19 calls (FEYE160819C00019000, $0.0.5, down $0.37) were going for 67 cents on Wednesday and have been crushed. These options will likely expire worthless in two weeks.

Both aforementioned options would have cost roughly $1 on Wednesday and would have created a strangle option trade. It sounds like a hard strategy but one that is easy to execute.

With the FEYE August 15 puts surging today, this easily offsets the loss in the August 19 call options. Together, there was an opportunity to make 50% on the open had we traded both options. I don’t recommend these type of strangle, or straddle, trades for the newsletter, but I can, if the demand is there. Email us.

I mentioned I would keep FEYE on my Watch List for a possible post-earnings direction trade so let’s see how the dust settles into next week.

This morning’s jobs report came in better-than-expected and has given the bulls a bump. The Dow is up 165 points to 18,517 while the S&P 500 is surging 16 points to 2,180. The Nasdaq is gaining 56 points to 5,222 and the Russell 2000 is higher by 18 points to 1,232.

We have action to take on GDOT and I could have a New Trade ahead of the closing bell. If you don’t hear from me by 3:30 p.m. (EST), however, have a great and safe weekend.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 61-21 (74%). 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 2:35 p.m. EST.

I hereby disclose that I will be participating in the following trade(s).


Green Dot (GDOT, $24.16, up $0.50)

GDOT August 25 calls (GDOT160819C00025000, $0.20, down $0.30)

Entry Price: $0.80 (7/7/2016)

Exit Target: $1.60

Return: -75%

Stop Target: None

Action: Sell to close the GDOT August 25 calls at current levels.

Shares will need to clear $25.80 in two weeks and I don’t like those odds. I would rather save the remaining premium for a new trade than watch the rest of premium go up in smoke.


Rambus (RMBS, $13.69, up $0.23)

RMBS September 14 calls (RMBS160916C00014000, $0.36, up $0.09)

Entry Price: $0.40 (8/1/2016)

Exit Target: $0.80

Return: -10%

Stop Target: None

Action: Resistance is at $13.50-$13.75. Support is at $13.25-$13.


Vuzix (VUZI, $7.41, down $0.36)

September 10 calls (VUZI160916C00010000, $0.55, up $0.02)

Entry Price: $0.97 (7/27/2016)

Exit Target: $2.00

Return: -60%

Stop Target: None

Action: Support is at $7.25-$7 on today’s move below $7.50. Resistance is at $7.75-$8.


Viavi Solutions (VIAV, $7.25, up $0.10)

VIAV September 7 calls (VIAV160916C00007000, $0.47, up $0.05)

Entry Price: $0.55 (6/23/2016)

Exit Target: $1.10

Return: -15%

Stop Target: None

Action: Resistance is at $7.25. Support is at $7 with $6.90-$6.85 and the 50-day moving average serving as backup. Earnings are due out August 11th.


Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options