12:05 p.m. (EST)
Futures were mixed ahead of the overseas markets opening and when I wrapped up my late-night research but improved ahead of this morning’s open. It was a good sign the bulls were going to continue their romp to all-time record highs.
I mentioned today’s session could see some added volatility as Europe mulls over its interest rate options but all signs are pointing towards a possible “QE” program. Of course, the bulls loved this news.
I have been talking about the possibility of the Wall Street suit-and-ties coming back next week behind the 8-ball and being shocked by the August gains. While the talking heads have lulled investors to sleep during the “summer doldrums” worrying about a pullback, I have been preparing my subscribers for a summer rally. Hedge & Mutual fund managers will be grasping at straws and looking like Pinocchio when their clients ask why they are under-performing the market.
Heading into the second half of trading, the Dow is up 68 points to 17,145 while the S&P 500 is gaining a 6-pack to 2,004. Both have triggered fresh all-time highs today. The Nasdaq is higher by 14 points to 4,571 and the Russell 2000 is advancing 8 points to 1,173.
I have another triple-digit Profit Alert on a trade that is up 118%. While the 1-week gains have been short of stunning, I’m still leaving a few contracts open on the hot potato trade as I have said a major announcement is expected next week concerning one of the company’s drugs.
By closing a quarter of the trade yesterday, and a quarter today, the position is now ensured a profit. Of course, bad news could hurt the stock if the FDA says something negative but all the research I’ve done is showing shares could pop past $20 on the news. This would give the option trade an even bigger payday.
In any event, I want to ring-the-register now to lock-in these gains. Subscribers, check the Members Area for the updates and once again, watch your email inboxes intently for the remainder of the session as I will likely have additional Profit Alerts and/ or New Trades.
Momentum Options Play List
Closed Trades for 2014: 83-40 – the Weekly Wrap is 22-4 (85%) for 2014 (107-11, 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 the 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 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 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.
Flextronics (FLEX, $11.00, up $0.17)
October 11 calls (FLEX141018C00011000, $0.38, up $0.07)
Entry Price: $0.33 (8/25/2014)
Exit Target: $1.00
Return: 15%
Stop Target: None
Action: Support is at $10.80 and a break below this level could lead to $10.40. A close above $11 could spark a run to $11.40. If shares trigger $12 by mid-October these options will be worth $1 for a 200% return.
Rubicon (RBCN, $6.61, up $0.11)
December 8 calls (RBCN141220C00008000, $0.45, up $0.05)
Entry Price: $0.35 (8/25/2014)
Exit Target: $0.70
Return: 29%
Stop Target: None
Action: There is a gap to fill to $7 and where the first level of resistance lies. Support is at $6.
Sony (SNE, $18.91, down $0.06)
September 19 calls (SNE140920C00019000, $0.45, down $0.05)
Entry Price: $0.45 (8/20/2014)
Exit Target: $0.90
Return: 0%
Stop Target: None
October 20 calls (SNE141018C00020000, $0.30, down $0.05)
Entry Price: $0.25 (8/20/2014)
Exit Target: $0.50-$0.75
Return: 20%
Stop Target: None
October 19 calls (SNE141018C00019000, $0.65, down $0.05)
Entry Price: $0.45 (8/18/2014)
Exit Target: $0.90
Return: 44%
Stop Target: 45 cents (Stop Limit)
Action: A run to $20 should come once $19 is cleared on the close. Support is at $18.75.
Keryx Biopharmaceuticals (KERX, $18.00, up $0.77)
September 18 calls (KERX140920C00018000, $1.75, up $0.45)
Entry Price: $0.75 (8/20/2014)
Exit Target: $1.75-$2.00 (closed a quarter at $1.30 on 8/25/14)
Return: 118%
Stop Target: 90 cents (Stop Limit on remaining 3/4’s)
Action: Close another QUARTER of the trade at current levels.
Yahoo (YHOO, $37.82, up $0.11)
September 38 calls (YHOO140920C00038000, $1.60, flat)
Entry Price: $1.25 (8/11/2014)
Exit Target: $1.90-$2.50 (closed half at $1.90 on 8/22/14, Limit Order to close other half at $2.50)
Return: 40%
Stop Target: $1.50 (Stop Limit on other half)
October 43 calls (YHOO1018C00043000, $0.95, flat)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.20-$1.60
Return: 19%
Stop Target: 85 cents (Stop Limit)
Action: A close back above $38 today would be slightly bullish.
World Wrestling Federation (WWE, $14.86, down $0.03)
September 15 calls (WWE140920C00015000, $0.50, down $0.05)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: 0%
Stop Target: None
Action: There is a gap to fill up to $17 and the 200-day MA is at $17.44. A run to these levels will make this trade a big winner if $15 clears this week.
The 2 prior WWE trades made 203% (in early March) and 133% (in early August). This is a piggy-back trade that I’d like to see perform just as well and only cost 50 cents.
Trades on Hold – other 2014 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 I would not open any new positions. I’m still keeping track of the trades and will record the results accordingly when the trade closes or if the options expire. Click on the 2014 Portfolio link in the Members Area to view all open/closed trades.
Fortinet September 28 calls (from June 2013) – The 52-week high is at $26.23. Shares are acting like they want to clear $26 and make a run at fresh highs – continue to hold.
CVS Caremark September 82.50 calls (from July 2014) – Shares are still trying to crack $80. I will bring back coverage once cleared – continue to hold.
S&P 500 Spiders September 180 puts (from August 2014) – Like blackjack, I’m considering this trade as “insurance” as the puts still have a month before they expire. Perhaps they pay off, maybe not but the tremendous gains in the other trades makes me feel comfortable holding the trade open. Remember, the bulls like taking the stairs higher. The bears love taking the elevator – continue to hold.
Pool October 50 puts (From July 2014) – The break-even point for the trade is at $48.90, technically, by mid-October. These options have nearly 2 months before they expire.