Dear Momentum Options Subscriber,
Bank of America (BAC, $19.97, down $0.11) shares cleared $20 on Monday and are trying to hold longer-term resistance at this level. Momentum is a powerful tool, although it can sometimes be intimidating to even the best traders.
While I was correct in my assumption that there would be a post-election rally, no matter which candidate won, I certainly didn’t expect the financial stocks and shares of BAC to make this kind of run.
With the portfolio having a tremendous year, I was tempted to gamble on a number of bullish BAC call option trades. However, I also didn’t want to give back some of the profits we have worked hard all year long to get.
The BAC December 18 calls (BAC161216C00018000, $2.10, down $0.13) came into Monday’s session at $1.30, opened at $1.60 and reached a peak of $2.30. Volume topped 29,000 contracts.
The BAC December 19 calls (BAC161216C00019000, $1.25, down $0.15) closed last Friday at $0.67 and opened Monday at $0.80. The calls traded to a high of $1.48 on volume of over 17,000 contracts.
The BAC January 20 calls (BAC170120C00020000, $0.92, down $0.12) came into the week just at $0.49 and opened Monday’s session at $0.50. Volume was jaw-dropping at over 80,000 contracts, and the calls reached a peak of $1.09.
If you took any of the aforementioned trades, congratulations, and I would start ringing the register. Although these weren’t official recommendations, my email inbox exploded throughout Monday’s action with messages asking if it was too late to chase.
I mentioned on Monday that I was a little nervous about chasing BAC, but sometimes playing the lottery pays off. Right now, I’m focusing on stocks that have solid fundamentals and bullish charts and searching for call options that have gone unnoticed. I’m also looking for overextended stocks with lousy fundamentals for possible bearish trades into December and January.
As far as today’s action goes, there has been some choppiness during the first half of trading as well as continued divergence. The Dow is down 20 points to 18,848, while the S&P 500 is up 8 points to 2,172. The Nasdaq is advancing 44 points to 5,263, and the Russell 2000 is declining 2 points to 1,296.
I have updated the parameters of our Apple (AAPL) trade below, but I could have another New Trade ahead of the closing bell, so stay close to your email inboxes.
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 1:50 p.m. EST.
I hereby disclose that I will be participating in the following trade(s).
Apple (AAPL, $106.79, up $1.08)
AAPL January 115 calls (AAPL170120C00115000, $1.10, up $0.02)
Entry Price: $1.24 (11/15/2016)
Exit Target: $2.50
Stop Target: $0.60
Action: The Exit Target for the trade is at $2.50, but it is not a Limit Order at this time. Also, the Stop Target for the trade is at $0.60, but it is not a Stop Limit at this time.
Resistance is at $106-$107 and the 100-day moving average. Multi-month support is at $104-$103 and the 200-day moving average. A close below $102 would be a bearish development.
Array BioPharma (ARRY, $6.93, up $0.02)
ARRY January 7 calls (ARRY170120C00007000, $0.75, down $0.05)
Entry Price: $0.78 (11/14/2016)
Exit Target: $1.80
Stop Target: None
Action: Resistance is at $7-$7.25. Support is at $6.75-$6.50.
You can read my previous comments on ARRY in this morning’s Pre-Market Update.
Starbucks (SBUX, $54.11, up $0.14)
SBUX January 47.50 puts (SBUX170120P00047500, $0.31, down $0.05)
Entry Price: $0.95 (11/3/2016)
Exit Target: $1.90
Stop Target: None
Action: Resistance is at $54.25-$54.50. Support is at $54-$53.75.
Lattice Semiconductor (LSCC, $7.79, up $0.05)
LSCC December 7.50 calls (LSCC161216C00007500, $0.35, flat)
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, $7.86, flat)
VIAV December 8 calls (VIAV161216C00008000, $0.20, up $0.04)
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