SolarCity (SCTY, $59.29, down $3.48) has been a fascinating stock to watch in 2013. We added shares to our Weekly Wrap at $16.25 on January 7, looking for a double-digit return.
We said at the time shares could run past $20 but a week later they were struggling to hold $13. Another week later shares were back above $16 and by late February they tripped $20.
We closed the trade at $18.50 after three days of resistance and a 14% gain. The next day shares cleared our Price Target. We didn’t like the volatility so we decided to take profits as our original objective was achieved. By mid-March shares were back at $16.
In late April, Solarcity pushing $25 and we suggested call options for our Daily as the May 30 calls were going for 25 cents. The next day shares surged past $27 and we had a 140% gain in less than 24 hours so we rang the register at 60 cents. We wished we would have only closed half the trade as shares zoomed to $45 the day the May options expired.
By late June shares had fallen to $32 and we started aggressively watching it for either a rebound or breakdown.
On October 7, 2013 here were our thoughts along with our chart work showing the possibility of a huge breakout:
SolarCity (SCTY, $37.65, up $1.91)
November 40 calls (WEEKLY) (SCTY131101C00040000, $1.40, up $0.50)
November 40 calls (SCTY131116C00040000, $1.40, up $0.60)
Thoughts: Shares could be setting up for a run past $40. The symmetrical triangle that has formed usually foreshadows a major breakout (or breakdown) that could get $50 in play if $40 clears. A drop below $35 would be bearish.
October 4, 2013 chart for SCTY:
Symmetrical Triangles are powerful trading strategies and with shares near $60, these options exploded for jaw-dropping gains. Today’s chart and updates are proof why options trading is the most powerful and the most lucrative investment in the world!
The November 40 calls (WEEKLY) (SCTY131101C00040000) expired last Friday and shares closed at $54.75. These call options were $14.75 “in-the-money” and the return from $1.40 to $14.75 represents a gain of 954% in a little over a month.
The November 40 calls (SCTY131116C00040000, $19.70, down $2.90) have dropped below $20 with today’s dip below $60 in the stock. As you can see from the quote below these options are roughly $20 in-the-money.
The return from $1.40 to $20 represents a gain of over 1,300%!
We will be doing some chart work on SCTY over the weekend to see if a possible peak is in or if shares are heading to $100 in 2014.
As far as the market, futures were pointing towards a strong open this morning and the opening pop has held up well with the blue-chips hitting a fresh all-time high. Tech is pulling back along with the small-caps so these developments need to be watched.
The Dow is up 88 points to 15,706 while the S&P 500 is higher by 4 points to 1,767. The Nasdaq is off 9 points to 3,930. The Russell 2000 is lower by 4 points to 1,099 and is just below the 1,100 level.
We have another Profit Alert today so let’s go see where things are at along with our current trades. Subscribers, check the Members Area for the updates.
9:00am (EST) continued…
The Dow fell 21 points, or 0.1%, to close at 15,618. The blue-chips dropped below support at 15,600 to a low of 15,522 but rebounded to push positive territory by midday. The high reached 15,651 but was 7 points shy of Monday’s peak but the close above 15,600 keeps 15,800-16,000 in play. A close below 15,600-15,500 would be bearish and likely lead to a test down to 15,400-15,350.
The S&P 500 slipped 5 points or 0.3%, to settle at 1,762. The index bottomed at 1,755 by 10am and came within a point of reaching green several times in the second half of trading. Support at 1,750 is solid and a close above 1,775 keeps 1,800 on the radar.
The Nasdaq added 3 points, or 0.1%, to finish at 3,939. Tech flopped to 3,909 after the opening bell but held support at 3,900 while bouncing back above 3,925 an hour into the session. The bulls tried pushing resistance at 3,950 and came close to breaking through as they pushed a peak of 3,947. A close above this level could lead to a quick run to 4,000.
The Russell 2000 slipped 4 points, or 0.4%, to settle at 1,103. The small-caps traded to a low of 1,097 before recovering the 1,100 level shortly after the open and holding it the rest of the day and into the close. There is still risk down to 1,075 but as long as support holds then a run to 1,125 and new all-time highs are still on tap.
The S&P 500 Volatility Index ($VIX, 13.27, up 0.34) cleared 13.50 after touching 13.64 in the morning but was back and closed below this level after an hour into the session. This was a good clue the bears weren’t going to be making much of a move and we are watching 14.50-15 to Paul Revere us.
As we head to press, futures look like this: Dow (xx); S&P 500 (xx); Nasdaq 100 (xx).
MEMBERS AREA
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 tradesor “Exit Orders” in your brokerage account unless we list one. We will send out a “Profit Alert” or “New Trade” if we want you to close a position OR if a new trade comes out. Otherwise, follow instructions at all times in the 9am and 1pm updates. Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames. Closed Trades for 2013: 125-63 – the Weekly Wrap is 40-4 for 2013 (84-6 since 2011) and is designed for traders that want to use options with less risk.
Kodiak Oil & Gas (KOG, $12.53, down $0.51)
December 13 calls (KOG131221C00013000, $0.65, down $0.20)
Entry Price: $0.65 (11/4/13)
Exit Target: $1.30
Return: 0%
Stop Target: None
Action: Shares held $12.50 but there is risk down to $12. Resistance is at $13.
Cliff’s Natural Resources (CLF, $28.19, down $0.51)
November 25 calls (CLF131116C00025000, $2.95, down $0.80)
Entry Price: $0.95 (10/21/13)
Exit Target: $5 (closed half @ $1.25 on 10/31/13, closed half @ $3 on 11/5/13)
Return: 124%
Stop Target: $3 (Stop Limit)
December 30 calls (CLF131221C00030000, $1.15, down $0.15)
Entry Price: $0.70 (11/1/13)
Exit Target: $1.40
Return: 64%
Stop Target: $0.90 (Stop Limit)
Action: We were stopped out of our November 25 calls late yesterday after the options closed a nickel under $3. The December 30’s traded down to $1.01. We still believe a run past $30 is coming once $29 clears but we want to protect profits in case it doesn’t.
H&R Block (HRB, $29.62, up $0.19)
December 30 calls (HRB131221C00030000, $0.90, up $0.05)
Entry Price: $0.60 (10/29/13)
Exit Target: $1.20
Return: 50%
Stop Target: 60 cents
Action: Resistance at $30 and if cleared the 52-week high of $32.09 should come into play. Support is at $28 but will now try to hold at $29.
Millennial Media (MM, $7.02, up $0.01)
December 7.50 calls (MM131221C00007500, $0.75, flat)
Entry Price: $0.65 (10/25/13)
Exit Target: $1.30
Return: 15%
Stop Target: None
Action: Shares are hovering around the 50-day MA with resistance at $7.25. A close above this level could lead to a run to $8 and we have a longer-term target of 10+. Support is at $6.75-$6.50.
DuPont (DD, $60.30, down $0.01)
December 62.50 calls (DD131221C00062500, $0.45, flat)
Entry Price: $0.60 (10/24/13)
Exit Target: $1.20
Return: -25%
Stop Target: None
Action: Support at $60 was tested again yesterday with the low coming in at $59.75. Resistance is at $62-$63.
Other 2013 Portfolio OPEN positions (3): These are trades that are still open in the portfolio but are down over 50%. They have longer expiration dates and are on “hold” but are not worth mentioning until they turn around. This means we would not open any new positions. We are still keeping track of the trades and we will record the results, accordingly, when we close them or if the options expire. Click on the 2013Portfolio link in the Members Area to view ALL open/ closed trades.
Boston Scientific November 12 calls (from October 2013) – HOLD
Aruba Networks November 20 calls (from October 2013) – HOLD
Catamaran November 52.50 calls (from October 2013) – HOLD
WATCH LIST SECTION
These trades are NOT recommendations. They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices. We try not to have more than 12-15 open trades at any one time which is why we created a Watch List. We will not list entry prices because these stocks are on the verge of breaking out or they could sell off but these are the trades we are watching as new candidates.
Coors Brewing (TAP, $54.01, down $0.20)
November 55 calls (TAP131116C00055000, $0.60, down $0.05)
Thoughts: A run past double-nickels could come on an earnings beat.
Cedar Fair (FUN, $45.45, down $0.15)
December 40 puts (FUN131221P00040000, $0.25, flat)
Thoughts: We love the risk/ reward these options offer and if we take action it will likely be Tuesday or Wednesday. We will send out a Trade Alert if we do.
ViroPharma (VPHM, $39.42, up $0.42)
December 45 calls (VPHM131221C0004500, $0.75, up $0.10)
Thoughts: We could add these calls on a pop past $40.
Annie’s (BNNY, $48.70, up $0.08)
November 50 calls (BNNY131116C00050000, $1.00, up $0.10)
Thoughts: The bid/ ask is a little wide and while puts might be the better option, these calls could do well if revenues come in above expectations.
AbbVie (ABBV, $48.17, down $0.59)
December 50 calls (ABBV131221C00050000, $0.70, down $0.20)
Thoughts: We could get into these call options on a move past $50.
Opko Health (OPK, $10.72, down $0.03)
December 11 calls (OPK131221C00012000, $0.90, flat)
January 12 calls (OPK140118C00012000, $0.85, flat)
Thoughts: There is risk down to $9.50 and we will likely wait for $11 to clear before getting back into this name. The December 11’s opened at 65 cents, the January 12’s at 80 cents on Monday.
Keryx Biopharmaceuticals (KERX, $13.18, up $2.08)
December 13 calls (KERX131221C00013000, $1.35, up $0.30)
Thoughts: Support at $10 has been holding strong and a run to the mid-teens could be coming over the next 3-6 months. These options opened at $1 on Monday.
iShares Russell 2000 (IWM, $109.59, down $0.38)
December 114 calls (IWM131221C00114000, $0.65, down $0.10)
December 102 puts (IWM131221P00102000, $0.60, up $0.05)
Thoughts: We could go long on a pop above $111 or short on a close below $108.
Salesforce.com (CRM, $55.69, up $0.11)
December 60 calls (CRM131221C00060000, $1.50, flat)
Thoughts: We believe shares will make a run past $60 as long as $50 holds and $55 is cleared. These options opened at $1.20 on Monday.