Dear Momentum Options Subscriber,
The market started off weak this morning following a number of disappointing earnings reports, but it has rebounded off of its lows heading into the final hours of trading.
The blue-chips are up despite Dow component Apple’s weakness, and volatility is spiking. The good news is that the bulls are holding key levels of support along with resistance on the VIX. The bad news is that the rest of the week and month could be a struggle.
The Dow is up 8 points to 18,177, while the S&P 500 is down 6 points to 2,137. The Nasdaq is lower by 36 points to 5,247, and the Russell 2000 is falling 6 points to 1,209. The S&P 500 Volatility Index ($VIX, 14.35, up 0.89) is up 7%, but it is holding 14.50-15.
I’m a little short on commentary this afternoon, as it has been a busy day for our current trades. While I’m disappointed in some of the results, the good news is that the portfolio will be light, and we will be in a perfect position to play a pending pullback or another test to all-time highs. I have a number of updates, so let’s get to them.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 76-29 (72%). 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 2:05 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
PowerShares QQQ ETF (QQQ, $119.19, down $0.38)
QQQ November 120 calls (QQQ161118C00120000, $0.93, down $0.31)
Entry Price: $0.99 (10/13/2016)
Exit Target: $2.00 Limit Order (closed first half @$1.29 on 10/25/2016)
Stop Target: $1.10 (Stop Limit)
Action: The Stop Limit at $1.10 was triggered on today’s pullback in the ETF, and we are now out of the position at an average closing price of approximately $1.20.
Apple (AAPL, $114.75, down $3.50)
AAPL November 125 calls (AAPL161118C00125000, $0.13, down $0.67)
Entry Price: $1.10 (10/11/2016)
Exit Target: $2.20
Stop Target: $0.20 (Stop limit)
Action: The Stop Limit at $0.20 was triggered on today’s drop in the stock, and we are now out of the position.
Six Flags Entertainment (SIX, $53.01, up $1.76)
SIX November 50 puts (SIX161118P00050000, $0.40, down $1.12)
Entry Price: $1.46 (10/25/2016)
Exit Target: $3.00 (Limit Order on first half)
Stop Target: None
Action: The company missed earnings by a whopping $0.56, with revenue falling short by about $30 million. Shares were down 5% in pre-market action, but they recovered ahead of the open.
I don’t want you to panic because the position is down, as there are still three weeks for the position to play out. I’m disappointed about the results because my homework was spot on, and this is one of the reasons I often say that earnings trades are tricky. However, I’m still hopeful that the trade comes back, as the breakeven point is at $48.50. I’m going to stick with the position at least through Friday, and I will update new support and resistance levels after today’s action settles.
Lattice Semiconductor (LSCC, $6.35, down $0.14)
LSCC December 7.50 calls (LSCC161216C00007500, $0.22, down $0.03)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60-$0.90
Stop Target: None
Action: Support is at $6.30-$6.25 and the 50-day moving average. Near-term resistance is at $6.60-$6.75.
Finisar (FNSR, $29.38, down $0.07)
FNSR November 31 calls (FNSR161118C00031000, $0.40, flat)
Entry Price: $1.28 (10/10/2016)
Exit Target: $2.60
Stop Target: $0.30 (Stop Limit)
Action: Support is at $29-$28.75. Resistance is at $30-$30.25.
Viavi Solutions (VIAV, $7.25, up $0.03)
VIAV December 8 calls (VIAV161216C00008000, $0.14, down $0.02)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.05 (Stop Limit)
Action: Support is at $7.10-$7 and the 100-day moving average. Resistance is at $7.25-$7.35 and the 50-day moving average.
Editor and Chief Options Strategist