Dear Momentum Options Subscriber,

E*Trade Financial (ETFC) is scheduled to announce earnings this Thursday, after the closing bell. The company is expected to post a profit of $0.40 a share on revenue just south of $471 million.

Over the past two quarters, the company has posted two $0.10 beats. In the previous two quarters, the company matched expectations and beat estimates by $0.04 in the year-ago period.

Analyst coverage over the past couple of months has been mixed, with Bank of America Merrill Lynch recently downgrading the stock to “Neutral” from “Buy.” However, the price target was raised to $33 from $31.

In September, Morgan Stanley initiated coverage of the stock with an “Equal Weight” rating and a $29 price target. Additionally, Credit Suisse reinstated coverage of the stock with an “Outperform” rating and a $33 price target.

The technical setup is bullish, as a “symmetrical triangle” pattern is forming. This usually leads to a big move and, with earnings due to be released, shares could move 5%-10%. The 50-day moving average is in a nice uptrend, and a 5% move would equate to roughly a $1.50 swing in the stock. A 10% move could push shares $3 higher or lower in after-hours trading on Thursday.etfc

Turning our attention to the market, the Dow is gaining 80 points to 18,252, while the S&P 500 is up 8 points to 2,147. The Nasdaq is advancing 7 points to 5,251, and the Russell 2000 is adding 8 points to 1,225.

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

Momentum Options Play List

Closed Momentum Options Trades for 2016: 74-28 (73%). 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 2:10 p.m. EST.

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

 

E*Trade Financial (ETFC, $28.63, up $0.21)

ETFC November 29 calls (ETFC161118C00029000, $0.80, flat)

Entry Price: $0.90 (10/17/2016)

Exit Target: $1.80

Return: -11%

Stop Target: None

Action: Resistance is at $28.50-$28.75. Support is at $28-$27.75.

 

PowerShares QQQ ETF (QQQ, $117.94, up $0.08)

QQQ November 120 calls (QQQ161118C00120000, $0.98, up $0.01)

Entry Price: $0.99 (10/13/2016)

Exit Target: $2.00

Return: -1%

Stop Target: None

Action: Resistance is at $118 and the 50-day moving average, followed by $119-$120. Support has moved up to $117.50-$117.

 

Lattice Semiconductor (LSCC, $6.53, up $0.12)

LSCC December 7.50 calls (LSCC161216C00007500, $0.30, flat)

Entry Price: $0.30 (10/12/2016)

Exit Target: $0.60-$0.90

Return: 0%

Stop Target: None

Action: Resistance is at $6.50-$6.75. Support has moved up to $6.25.

 

Apple (AAPL, $117.39, down $0.08)

AAPL November 125 calls (AAPL161118C00125000, $0.81, down $0.04)

Entry Price: $1.10 (10/11/2016)

Exit Target: $2.20

Return: -26%

Stop Target: None

Action: Support is at $117-$116.50. Resistance is at $118-$118.25.

 

Finisar (FNSR, $29.65, up $0.65)

FNSR November 31 calls (FNSR161118C00031000, $0.70, up $0.20)

Entry Price: $1.28 (10/10/2016)

Exit Target: $2.60

Return: -45%

Stop Target: $0.30 (Stop Limit)

Action: Fresh resistance is at $29.50-$30. Support is at $29-$28.75.

 

Viavi Solutions (VIAV, $7.34, up $0.07)

VIAV December 8 calls (VIAV161216C00008000, $0.16, flat)

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

Exit Target: $1.05

Return: -69%

Stop Target: $0.05 (Stop Limit)

Action: Resistance is at $7.45-$7.50 and the 50-day moving average. Support is at $7.25-$7.150 and the 100-day moving average.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options