Dear Momentum Options Subscriber,
Although the Nasdaq is holding near-term support, several high-profile tech stocks are getting whacked today. Shares of Apple (AAPL), Facebook (FB), Netflix (NFLX) and Alphabet (GOOG) are down around 3% on average.
The “FANG” stocks are down by double-digit percentage points despite the “Trump rally” from last week that has propelled the market higher. I don’t like attaching headlines to rallies or selloffs, but Wall Street has to blame somebody for the reason short-sellers got crushed last week ahead of the election.
Earnings season is still in play, and this week’s sector play will be retail. There are a number of retail stocks that have rebounded or sold off based on their numbers and outlook, and one stock that has gone bananas is Kohl’s (KSS, $55.83, up $2.61), as shares are surging another 5% today. This follows last week’s 24% surge from $42.82 to $50.97.
The company recently reported a profit of $0.80 a share, which was $0.10 ahead of expectations. This was an “ex-item” beat, and revenues only matched estimates at $4.33 billion. Kohl’s also adjusted its 2016 guidance to $3.80-$4.00 a share, with forecasts currently at $3.87 a share.
Obviously, there is room for error, as the company will be closing stores and taking impairment and other costs for the current quarter. While it is too early to go “short” KSS with put options, there will be an opportunity down the road once a backtest comes into play.
As far as the market goes, the Dow is off 18 points to 18,829, while the S&P 500 is down 5 points to 2,158. The Nasdaq is down 29 points to 5,207, and the Russell 2000 is higher by 15 points to 1,297.
I have updated our current trades below, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2016: 78-31 (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 12:40 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Array BioPharma (ARRY, $6.68, down $0.06)
ARRY January 7 calls (ARRY170120C00007000, $0.70, flat)
Entry Price: $0.78 (11/14/2016)
Exit Target: $1.80
Stop Target: None
Action: The Exit Target for the trade is at $1.80, but it is not a Limit Order at this time. There is no Stop Target at this time.
Resistance is at $7. Support is at $6.50.
Starbucks (SBUX, $54.30, up $0.37)
SBUX January 47.50 puts (SBUX170120P00047500, $0.37, flat)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $54-$54.50. Support is at $53.75 and the 50-day moving average, followed by $53.50-$53.
Lattice Semiconductor (LSCC, $7.79, up $0.07)
LSCC December 7.50 calls (LSCC161216C00007500, $0.30, down $0.03)
Entry Price: $0.30 (10/12/2016)
Exit Target: $0.60 (Limit Order)
Stop Target: None
Action: Resistance is at $7.75-$8. The 52-week peak is at $7.99. Support is at $7.50.
Viavi Solutions (VIAV, $7.81, up $0.01)
VIAV December 8 calls (VIAV161216C00008000, $0.16, down $0.06)
Entry Price: $0.51 (8/19/2016)
Exit Target: $1.05
Stop Target: $0.14 (Stop Limit)
Action: Resistance is at $8. Support is at $7.60-$7.50.
Editor and Chief Options Strategist