MomentumOptions.com Mid-Market Update for 5/24/2017

Network Appliance (NTAP) Earnings in Focus

12:20pm (EST)

Shares of NetApp (NTAP) are at crucial support ahead of today’s earning’s announcement after the closing bell. Wall Street is expecting a profit of $0.82 a share on revenue of $1.44 billion. The high and low estimates are pegged 3 cents above and below the aforementioned average profit target. The high revenue estimate is at $1.51 bullion with the low at $1.4 billion.

As you can see, $39.50 and the 100-day moving average is shaky support with risk to $39-$38.50 on continued weakness. However, depending on the impact of an earnings miss or beat, shares could swing 10%, with a backtest to the $36-$35 area and the 200-day moving average on disappointing numbers. Of course, a double-digit run the other way, on a beat-and-raise quarter, could have shares north of $43. This would easily clear a downward sloping 50-day moving average and a still rising 100-day moving average.

The company has topped estimates the past three quarters by 8 cents, 6 cents, and a penny, respectively. However, in the year-ago period, they missed by three cents. This sets up for an interesting after-hours with carryover into tomorrow’s action. As option traders, stocks that you might think will move double-digits make for a ripe earnings trade – if you are on the right side of the action.

The NTAP June 37 puts (NTAP170616P00037000, $0.70, up $0.10) can be targeted by bearish traders for a possible trade ahead of today’s closing bell. These put options would double from current levels if shares fall below $35.60, technically, by mid-June.

Bullish traders can target the NTAP June 41 calls (NTAP170616C00041000, $0.80, down $0.10) for a possible run past $40. These call options would double from current levels if shares clear $42.60, technically, by June 16th, 2017.

The aforementioned options, together, would create a strangle option trade for a price of $1.50. The price points for the trade to double, or return 100% would be if shares are above $44, or below $34 – by June 16th.

While I’m more bearish than bullish on NTAP, I will likely sit on the sidelines as there are more compelling trades I like without the risk of an earnings announcement.

The market has traded in a tight range today with the bias to the upside and ahead of today’s minutes from the last FOMC meeting. Wall Street will be looking for clues on the pace of expected rate hikes throughout the year with most talking heads penciling-in two more.

The Dow is up 19 points to 20,957 while the S&P 500 is adding a point to 2,399. The Nasdaq is gaining 8 points to 6,147 and the Russell 2000 is slipping a half-point to 1,380.

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

 

Momentum Options Play List

Closed Momentum Options Trades for 2017: 32-10 (76%). All trades are dated and time stamped for verification. New subscribers can look at the past history to see how the trades have played out or to research our Track Records.

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 a Trade Alert outside of these time frames.

 

Amicus Therapeutics (FOLD, $8.13, down $0.13)

FOLD July 8 calls (FOLD170721C00008000, $0.85, down $0.10)

Entry Price: $0.85 (5/22/2017)
Exit Target: $1.70-$2.55
Return: 0%
Stop Target: None

Action: Support is at $8-$7.75. Resistance is at $8.25-$8.50.

 

Spider Gold Shares (GLD, $119.06, down $0.08)

GLD June 122 calls (GLD170616C00122000, $0.45, flat)

Entry Price: $0.75 (5/22/2017)
Exit Target: $1.50
Return: -40%
Stop Target: None

Action: Resistance at $119.50-$120. Support is at $119-$118.75.

 

Flex (FLEX, $16.95, up $0.23)

FLEX July 17 calls (FLEX170721C00017000, $0.60, up $0.10)

Entry Price: $0.45 (5/16/2017)
Exit Target: $0.90
Return: 33%
Stop Target: None

Action: Resistance is at $17-$17.25. Support is at $16.50-$16.25.

 

STMicroelectronics (STM, $16.30, up $0.19)

STM October 20 calls (STM171020C00020000, $0.50, up $0.05)

Entry Price: $0.70 (5/15/2017)
Exit Target: $1.40
Return: -29%
Stop Target: None

 

STM July 17.50 calls (STM170721C00017500, $0.45, up $0.05)

Entry Price: $0.65 (5/15/2017)
Exit Target: $1.30
Return: -31%
Stop Target: None

Action: Resistance is at $16.50-$16.75. Support is at $16.25-$16.

 

Viavi Solutions (VIAV, $11.20, down $0.06)

June 12 calls (VIAV170616C00022500, $0.17, flat)

Entry Price: $0.35 (5/5/2017)
Exit Target: $0.70-$1.05
Return: -51%
Stop Target: None

Action: Support is at $11.25-$11. Resistance is at $11.50.

 

Cypress Semiconductor (CY, $13.64, up $0.60)

CY June 14 calls (CY170616C00014000, $0.30, up $0.15)

Entry Price: $0.85 (4/20/2017)
Exit Target: $1.70
Return: -59%
Stop Target: None

Action: Fresh resistance is at $13.50-$13.75. Support is at $13-$12.75.