12:45pm (EST)
The bulls are trying to put the finishing touches on another successful May but the bears are nibbling.
This month has been one of the tightest ranges in years to trade and the flip-flopping between the suit-and-ties has left them scratching their heads as most of the pros have underperformed the market. The tight action also weeded out the weaker hands in the market but the charts were showing higher highs for the market, especially the VIX.
This weekend’s chart work will be crucial in trying to determine next week’s and June’s possible trend. I mentioned earlier in the week there could be a continued rally into mid-June but I’m leery of the curveball that might come afterwards.
The Dow is down 28 points to 16,670 while the S&P 500 is lower by 2 points to 1,918. The Nasdaq is declining 6 points to 4,241 and the Russell 2000 is slipping 4 points to 1,136. The VIX is at 11.47, down 0.10.
I have a New Trade for today as well as a Profit Alert.
Closed Trades for 2014: 48-28 – the Weekly Wrap is 14-3 for 2014 (99-10, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk. All trades are dated and time stamped so new subscribers can look at our 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 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 12pm-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.
New Trade!!!
Fortinet (FTNT, $22.29, down $0.38)
Buy to OPEN July 24 calls (FTNT140719C00024000, $0.45, down $0.10)
Action: Shares are setting up for a run past $25. The 52-week high is just below $24 and if momentum catches, shares could run to $30.
Current Trades
CVS Caremark (CVS, $78.24, up $0.58)
July 80 calls (CVS140719C00080000, $0.80, up $0.20)
Entry Price: $0.52 (5/28/2014)
Exit Target: $1.10
Return: 54%
Stop Target: None
Action: CLOSE a THIRD of the trade at current levels.
I’m expecting a run past $80 over the next 2 months. If shares reach $81 these options will be worth at least $1-$1.05, for a 100% return. Short-term support is at $76.50.
Apollo Group (APOL, $26.60, down $0.07)
June 25 puts (APOL140621P00025000, $0.45, flat)
Entry Price: $0.55 (4/28/2014)
Exit Target: $1.10 (limit order to close half)
Return: -18%
Stop Target: None
August 23 puts (APOL140816P00023000, $0.70, flat)
Entry Price: $0.70 (4/28/2014)
Exit Target: $1.40 (limit order to close half)
Return: 0%
Stop Target: None
Action: The close below $27 and the 200-day MA opened the door for another test to $26. Yesterday’s low was $26.28. A break below $26 should lead to the low $20’s. Resistance is at $28.
Kirkland’s (KIRK, $17.63, up $0.23)
June 15 puts (KIRK140621P00015000, $0.15, flat)
Entry Price: $0.45 (5/20/2014)
Exit Target: $0.90
Return: -67%
Stop Target: None
Action: A close below $17.50 should lead to a test to $15. The longer-term chart shows a test to the low teens.
Bed, Bath & Beyond (BBBY, $60.54, down $0.45)
June 60 puts (BBBY140621P00060000, $0.75, up $0.10)
Entry Price: $0.60 (5/14/2014)
Exit Target: $1.20
Return: 25%
Stop Target: None
August 55 puts (BBBY140816P00055000, $0.60, flat)
Entry Price: $0.63 (5/14/2014)
Exit Target: $1.25
Return: 3%
Stop Target: None
Action: I would like to see a close below $60.50 today. Support is at $60 and a break below this level will likely lead to $57.50-$55. Resistance is at $61.50-$62.50.
Twitter (TWTR, $32.31, down $1.69)
January 50 calls 2015 (TWTR150117C00050000, $1.30, down $0.20) LEAP option
Entry Price: $1.75 (5/8/2014)
Exit Target: $3.50-$5
Return: -26%
Stop Target: None
Action: Shares traded to a high of $35.14 yesterday. Resistance is at $35. Support has moved up to $32.
McDonald’s (MCD, $100.95, down $0.39)
July 95 puts (MCD140719P00095000, $0.30, flat)
Entry Price: $0.70 (5/6/2014)
Exit Target: $1.40
Return: -57%
Stop Target: None
Action: The break below $101.50 was bearish and I’d like to see a close below $100 by the weekend. There is risk to $105. These options have 2 months before they expire so there is plenty of time for the trade to play out.
Other 2014 Portfolio OPEN positions (1): 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 2014 Portfolio link in the Members Area to view ALL open/ closed trades.
iShares Russell 2000 June 103 puts (from May 2014)
I will be back Sunday night with the Weekly Wrap and on Monday morning with the Daily. Until then, have a great weekend everyone!