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 2014: 15-1- the Weekly Wrap is 7-1 for 2014 (92-8 since 2011) and is designed for traders that want to use options with less risk.
2:20pm (EST)
New Trade!!!
Ariad Pharmaceuticals (ARIA, $8.03, up $0.12)
Buy to OPEN March 10 calls (ARIA140322C00010000, $0.95, up $0.10)
Buy to OPEN May 11 calls (ARIA140517C00011000, $1.05, up $0.10)
Action: We have done well with our first 2 trades on Ariad (+56%, +183%) and we really feel as though shares will trade to the mid-to high double-digits, soon, or there will be a takeover of the company for possibly $20+ a share. We will use stops to protect our overall profits in case shares do a back test to $7 but we think $10 trips and shares never look back.
Current Trades
Krispy Kreme Doughnuts (KKD, $18.33, up $0.85)
March 16 puts (KKD140322P00016000, $0.60, down $0.15)
Entry Price: $0.70 (1/27/2014)
Exit Target: $1.40
Return: -14%
Stop Target: None
Action: We are expecting a near-term test to $15 for KKD and the chart shows the potential for shares to drop to $14 based on the “gap” that needs to be filled. Resistance is at $18 that was serving as prior support.
This isn’t an earnings trade as the company won’t announce until early-March but we are looking for them to possible warn Wall Street their numbers will come up short. We would almost bet a doughnut the company uses the weather as an excuse if they are going to come up short. The KKD in Our Town never seems to be busy and with the New Year here consumers are cutting back on the fats.
BlackBerry (BBRY, $10.09, up $0.34)
February 11 calls (BBRY140222C00011000, $0.45, up $0.15)
Entry Price: $0.65 (1/22/2014)
Exit Target: $1.30
Return: -31%
Stop Target: None
Action: There could be a back test to $9-$8.50 if volatility picks up but we still like the position. A close back above $10.50 would be bullish.
Exact Sciences (EXAS, $13.42, flat)
April 19 calls (EXAS140419C00019000, $0.55, flat)
Entry Price: $0.88 (1/22/2014)
Exit Target: $1.75
Return: -38%
Stop Target: None
Action: The company should get some FDA news in March on its Cologuard drug. These are April options with 3 months until expiration and we plan to hold through the volatility because we want to be in when the March news is released and why we do not have a Stop Limit listed. There could be further weakness and we may have to put the trade on hold but this will be a major event.
PowerShares QQQ (QQQ, $85.62, down $0.28)
February 90 calls (QQQ140222C00090000, $0.10, down $0.10)
Entry Price: $0.75 (1/22/2014)
Exit Target: $1.50
Return: -93%
Stop Target: None
Action: We will likely close the trade if the QQQ’s break below $85. If support holds we may stay but we will need a close back above $88 by Friday to feel good about it. In the meantime, we will place the trade on hold.
Other 2014 Portfolio OPEN positions (4): 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.
SLM February 27 calls (from January 2014)
General Electric March 28 calls (from January 2014)
PulteGroup February 22 calls (from January 2014)
Sony February 19 calls (from January 2014)
April 20 calls
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.
We will update this section in the morning.