MomentumOptionsTrading.com Weekly Wrap Trade Update (VRA) for 9/12/2013
9:00am (EST)
We have action to take at the open on some put options that could explode. The stock we are following was down nearly 10% in after-hours last night after going for a wild ride into the close.
Our put options should do very well and we are looking to make 150% at the open if they trade up to $2.
Subscribers, please read our trade instructions very carefully inside our Members Area. We will likely send out a Trade Alert shortly after the opening bell as a follow-up.
Weekly Wrap Premium Section
9:00am (EST)
Current Trades
Vera Bradley (VRA, $19.45, up $0.48) Strangle Option Trade
October 17.50 puts (VRA131019P00017500, $1.35 up $0.40)
Original Entry Price: $0.80 (9/10/13)
Exit Target: $1.60
Return: 69%
Stop Target: None
October 20 calls (VRA131019C00020000, $0.50, down $0.30)
Original Entry Price: $0.80 (9/10/13)
Exit Target: $1.60
Return: -38%
Stop Target: None
Action: Set limit orders to close the October 17.50 puts at $2.00 or better. If they open lower than $2 but are above $1.70, close the puts to make this a risk free trade with the calls still open.
Wow. Shares were flat to lower for much of yesterday’s session but they spiked to $21.24 just before the close. The call options reached $2.20 (see option quote below or on website) and it would have been a perfect exit to make the trade profitable with us still holding the puts after the close. The options zoomed 200% but we saw no indications of this coming. In hindsight we wished we would have set limit orders to exit the call or put options at $1.70 or better as a day order yesterday but we didn’t. The 10% move into the close came out of left field but we should have prepared better for the volatility as we told you a huge move was coming.
The good news is that we still expect the trade to be profitable as shares were down 10% to $17.78 in after-hours trading last night. Our plan is to close the puts into the open this morning and hopefully we can get $2 or more when we exit the put options. Shares could rebound off their lows once the dust settles and we will likely exit the call options later in the day or down the road. Our goal for strangle option trades is to make 20%-25% but we may have been whipsawed out of a possible triple-digit return. If we can make our goal we will feel a little better but days like yesterday are frustrating.
We will send out a Trade Alert on any action we take if $2 doesn’t trigger on the puts so look for an update after the open.
