Mid-Market Update for 1/26/2017

Starbucks (SBUX) Facing Crucial Quarter

2:05pm (EST)

The market got off to a good start this morning as the major indexes continue to work their way towards records highs and a three-session win streak. Geopolitical news has taken center stage for the second half of action as President Trump continues to roll out his ambitious plans for America. Perhaps a cancelled meeting by Mexico’s President for next week about “The Wall” has sparked some nervousness and will remain an ongoing story.

Aside from the choppy action, earnings are still in focus and have been the real catalyst for the indexes breaking out to fresh highs this week. One stock that will sink or swim in after-hours trading will be Starbucks (SBUX, $58.47, down $0.23). Wall Street will be looking for a profit of $0.52 a share on revenue of $5.85 billion. The company has matched twice and topped estimates by a penny, twice, over the past four quarters.

While I have no doubt the company will perform the same feat this go around, I do believe their revenue numbers come in a tad light. The recent retirement announcement of CEO, Howard Schultz, certainly has to make current shareholders feel uneasy about the future success of Starbucks. Although these fears were quickly debunked as the new CEO was introduced, he certainly isn’t Howard.

I wouldn’t compare this story to Steve Jobs, Tim Cook, and Apple, but you get my drift. Given this backdrop, it is very tempting to take an earnings trade.

The SBUX February 57.50 puts (SBUX170217P00057500, $1.00, up $0.10) can be targeted by bearish traders looking for a pullback to double-nickels in the stock. These options would double from current levels if shares fall below $55.50 on the news, or trade below this level by mid-February.

The SBUX February 60 calls (SBUX170217C00060000, $0.70, down $0.05) can be targeted by bullish traders looking for a surge past $60 on a blowout quarter and raised guidance. The options would double, technically, if shares clear $61.40 by mid-February.

I will be on the sidelines for this one as I like our current trades and don’t want to take on added risk.

The Dow is up 22 points to 20,090 while the S&P 500 is off 2 points to 2,296. The Nasdaq is declining 3 points to 5,652 and the Russell 2000 is lower by 7 points to 1,375.

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


Momentum Options Play List

Closed Momentum Options Trades for 2017: 4-0 (100%). 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 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send an Trade Alerts outside of these time frames.


Viavi Solutions (VIAV, $9.07, up $0.05)

VIAV March 9 calls (VIAV170317C00009000, $0.50, flat)

Entry Price: $0.50 (1/25/2017)
Exit Target: $1.00
Return: 0%
Stop Target: None

Action: Short-term support is at $9-$8.75. Resistance is at $9.25-$9.50.


TherapeuticsMD (TXMD, $5.84, up $0.07)

TXMD June 7.50 calls (TXMD170616C00007500, $0.70, flat)

Entry Price: $0.75 (1/18/2017)
Exit Target: $1.50
Return: -7%
Stop Target: None

Action: Near-term resistance is at $5.75-$6. Support is at $5.25-$5.


Transocean (RIG, $15.25, down $0.05)

RIG March 17 calls (RIG170317C00017000, $0.40, flat)

Entry Price: $0.66 (1/13/2017)
Exit Target: $1.35
Return: -39%
Stop Target: None

Action: Resistance is at $15.50-$15.75. Support is at $15-$14.75.


Tower Semiconductor (TSEM, $21.35, down $0.09)

TSEM February 21 calls (TSEM170217C00021000, $1.05, down $0.05)

Entry Price: $0.65 (1/11/2017)
Exit Target: $1.50 (Limit Order on half)
Return: 62%
Stop Target: 90 cents (Stop Limit)

Action: Support is at $21-20.50. Resistance is at $21.50-$22.


Green Dot (GDOT, $26.31, down $0.29)

GDOT March 25 calls (GDOT170317C00025000, $2.20, down $0.10)

Entry Price: $1.30 (1/6/2017)
Exit Target: $3 (Limit Order on half)
Return: 69%
Stop Target: $1.90 (Limit Order)

Action: Resistance is at $26.75-$27. Support is at $26.25-$26.


Sony (SNE, $31.10, up $0.31)

February 27 puts (SNE170217P00027000, $0.10, flat)

Entry Price: $0.65 (12/23/2016)
Exit Target: $1.30 (closed half at 10 cents on 1/23/17)
Return: -85%
Stop Target: None

Action: Resistance is at $30.75-$31. Support is at $30.25-$30.