Dear Momentum Options Subscriber,

Apple’s (AAPL, $114.90, up $3.13) surge past $113 to a nine-month high amid an otherwise bearish tape on Tuesday and Wednesday has helped the market hold at its support levels this week. Today’s push past $115 on continued momentum is also helping the bulls regain prior support levels.

For the talking heads that predicted year-over-year declines or slow sales for the iPhone7, we now know that such talk was a bit premature. This morning’s news that initial quantities of the iPhone 7 Plus have sold out globally and that the iPhone 7 is out of stock in the new “jet black” color have silenced the critics. I mentioned previously that iPhone 7 sales could easily top the estimates of unenthused analysts and that current estimates might need to be raised.

As you can see from the chart below, I was looking for the $108 area to hold going into the product announcement. This level was cleared but failed to hold on back-to-back sessions earlier this month. Shares did close at $108.36 ahead of the news, although they closed north of $105 afterwards. Last Friday’s low tapped $103 before this Monday’s trip to $102.53.

Wednesday’s move above $108 held the Dow above the 18,000 level, for the most part, this week. Today’s surge past $115 in AAPL stock is the rising tide that is lifting all boats, as the overall market is pushing higher highs.

I was watching the AAPL October 110 calls (AAPL161021C00110000, $6.25, up $2.15) on Wednesday during the move back above $108 after they opened the session at $2.19. They closed at $5.10 as shares reached a peak north of $113 to easily end the day with a triple-digit gain. Today’s run to a high of $6.85 has made for a gain of over 200%.

The aforementioned options traded a staggering 38,000 contracts on Wednesday and are active again today, with volume pushing nearly 40,000. The AAPL October 130 calls (AAPL161021C00130000, $0.53, up $0.22) opened at $0.06 and closed Wednesday’s session at $0.30 on volume of over 100,000 contracts. That would have been an astounding 400% one-day gain. These options are up again today and have kissed a high of $0.70 on volume of over 17,000 contracts.

Although I was very bullish on this week’s surge past $108, I usually refrain from trading stocks over $100 per share, as they carry higher option premiums. Trading the AAPL October 130 calls would have been a gambler’s game given the rise from $0.06 to $0.70 this week, as they will likely expire worthless in a month. The AAPL October 110 calls will likely finish in the money, but those would have been risky to chase as well.

Turning to the market, the Dow is up 115 points to 18,150, while the S&P 500 is higher by 13 points to 2,139. The Nasdaq is adding 55 points to 5,228, and the Russell 2000 is advancing a dime to 1,222.

I have updated our current trades below, so let’s go check the tape.

Momentum Options Play List

Closed Momentum Options Trades for 2016: 69-24 (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 1:25 p.m. EST.

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


T-Mobile (TMUS, $47.01, up $1.14)

TMUS October 48 calls (TMUS161021C00048000, $0.94, up $0.23)

Entry Price: $0.68 (9/14/2016)

Exit Target: $1.40

Return: 38%

Stop Target: None

Action: Fresh resistance is at $46-$46.25. Support has moved up to $46.


Chicago Bridge & Iron (CBI, $27.66, down $0.20)

CBI October 27.50 puts (CBI161021P00027500, $1.20, flat)

Entry Price: $1.11 (9/14/2016)

Exit Target: $2.25

Return: 8%

Stop Target: None

Action: Support is at $27.75-$27.50. A close below the latter should lead to $27-$26.50. Resistance is at $28-$28.25.


Xilinx (XLNX, $53.60, up $0.59)

XLNX October 57.50 calls (XLNX161021C00057500, $0.82, up $0.12)

Entry Price: $0.71 (9/12/2016)

Exit Target: $1.45

Return: 15%

Stop Target: None

Action: Resistance is at $53.25-$53.50. Support is at $53-$52.50.

You can read my detailed write-up in the Sept. 13 Mid-Market Update.


Kroger (KR, $30.90, up $0.19)

KR October 30 puts (KR161021P00030000, $0.59, down $0.05)

Entry Price: $0.78 (9/7/2016)

Exit Target: $1.60 (Limit Order on first half)

Return: -24%

Stop Target: None

Action: Resistance is at $31.25-$31.50. Support is at $30.75-$30.50.


Vuzix (VUZI, $8.78, up $0.18)

VUZI October 10 calls (VUZI161021C00010000, $0.50, up $0.10)

Entry Price: $0.68 (9/7/2016)

Exit Target: $1.40

Return: -26%

Stop Target: $0.25 (Stop Limit)

Action: Resistance is at $8.75-$9. Support is at $8.50-$8.25.


Viavi Solutions (VIAV, $7.51, flat)

VIAV December 8 calls (VIAV161216C00008000, $0.40, up $0.01)

Entry Price: $0.51 (8/19/2016)

Exit Target: $1.05

Return: -22%

Stop Target: None

Action: Resistance is at $7.75-$8. Support is at $7.50-$7.25 and the 50-day moving average.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options