Dear Momentum Options Subscriber,
The bears slept all through the month and will be glad when February is over. Thursday’s action was mixed once again, although tech and the small-caps continued their climb to fresh record highs.
The Dow dipped 10 points, or 0.1%, to end at 18,214. The blue-chips struggled at the start of trading but reached an intraday peak of 18,239. The late day fade to 18,157 held support at 18,100-18,000, and continued closes above 18,200 would be bullish. The bulls are still eyeing a run towards 18,300-18,500 into March.
The S&P 500 gave back 3 points, or 0.2%, to settle at 2,110. The index traded in negative territory throughout the session following a barely-green open at 2,113. The bears pushed a low of 2,103 but failed at cracking support at 2,100. There is additional help at 2,075 on a close below this level. A finish above 2,115 today keeps 2,125-2,150 in play.
The Nasdaq advanced 20 points, or 0.4%, to close at 4,988. Tech was slightly weak on the open but held support at 4,950 following a test to 4,955. The rebound to 4,989 put the bulls within spitting distance of clearing resistance at 5,000-5,100.
The Russell 2000 added 4 points, or 0.3%, to finish at 1,239. The small-caps traded down to 1,231 shortly after the open before reaching and finishing at another all-time high closing high. Support at 1,230-1,225 held for the eighth-straight session. A move above 1,240 will likely lead to a push towards 1,250-1,260.
The S&P 500 Volatility Index ($VIX, 13.91, up 0.07) made another run at closing below 13.50 but fell just shy after reaching 13.55. The late-day pop to 14.57 easily held 15, which is a level that needs to hold into the weekend.
I have another Profit Alert on a trade that was stopped out going into yesterday’s close. The good news is that we locked in a 41% winner despite the volatility in the stock.
We could have another busy day, so stay locked and loaded throughout the morning for additional Profit Alerts or possibly New Trades.
From desk to press, futures look like this: Dow (-13); S&P 500 (-3); Nasdaq 100 (-5).
Momentum Options Play List
Closed Momentum Options Trades for 2015: 16-1 (94%). 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.
All prices given in this update are current as of 8:30 a.m. EST.
Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.
Yahoo! (YHOO, $44.45, up $0.02)
YHOO April 47 calls (YHOO150417C00047000, $0.80, up $0.05)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: 0%
Stop Target: None
Action: Shares are forming a solid base at $43-$44. A move above $45 should lead to a run to $46-$50. The 50-day moving average is at $47, and I’m expecting a test to this level by mid- to late-March.
CH Robinson Worldwide (CHRW, $74.21, up $0.66)
CHRW April 75 calls (CHRW150417C00075000, $1.40, up $0.15)
Entry Price: $1.30 (2/26/2015)
Exit Target: $2.60
Return: 8%
Stop Target: None
Action: Shares traded down to $73.15 before rebounding to reach a peak of $74.26. Near-term resistance is at $75. Fresh support will try to hold at $73.50, and there is additional help at $72-$71. The 52-week high is at $77.49.
Western Union (WU, $19.59, down $0.01)
WU April 20 calls (WU150417C00020000, $0.40, up $0.05)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: 11%
Stop Target: None
WU March 19 calls (WU150320C00019000, $0.80, up $0.05)
Entry Price: $0.40 (2/13/2015)
Exit Target: $0.80 (closed first half at $0.60 on 2/19/2015)
Return: 75%
Stop Target: $0.48, raise to $0.58 (Stop Limit)
Action: Raise the Stop Limit from $0.48 to $0.58 on the WU March 19 calls.
Shares are on the verge of tripping $20 once $19.75 clears. Yesterday’s high reached $19.74. There is additional fluff from the six-year chart up to $22 on closes above $20. Support is at $19.50-$19.25.
American Express (AXP, $83.25, up $1.08)
AXP April 87.50 calls (AXP150417C00087500, $0.75, up $0.15)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: 34%
Stop Target: None
Action: Shares traded to a high of $83.47 on Thursday. The next layers of resistance for AXP are at $83.50-$84. Support is at $82 and prior resistance on a pullback, followed by $80.
Flextronics (FLEX, $12.21, down $0.01)
FLEX April 12 calls (FLEX150417C00012000, $0.60, down $0.05)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -10%
Stop Target: None
Action: Shares reached a peak of $12.48 before finishing slightly lower. Flextronics is on track to test $13 and could possibly make a run at $15. Short-term support is at $12.25-$12 on a pullback.
GrubHub (GRUB, $41.75, down $0.71)
GRUB March 45 calls (GRUB150320C00045000, $0.70, down $0.25)
Entry Price: $0.55 (2/20/2015)
Exit Target: $2.00 (closed first half at $0.95 on 2/25/2015)
Return: 41%
Stop Target: $0.60 (Stop Limit)
Action: The Stop Limit of $0.60 triggered on the second half of the trade going into Thursday’s close.
The market makers weren’t kind to us following GRUB’s dip to $41.21. We were “Charlie Browned” with our options, as they traded down to $0.60 on the spot.
I still like the prospects of shares testing $50, and I may use the options again next week to play a rebound to $45. I also like the GRUB April 45 calls, but shares need to clear $43 before we possibly go long again. The company is in the early stages of the tremendous growth that lies ahead.
Gogo (GOGO, $18.20, up $0.71)
GOGO March 18 calls (GOGO150320C00018000, $0.90, up $0.05)
Entry Price: $0.45 (2/20/2015)
Exit Target: $3.25 (Limit Order) (closed first half at $1.00 on 2/25/2015)
Return: 111%
Stop Target: $0.60 (Stop Limit)
Action: The options traded to a high of $1.49 after shares touched $18.92 on Thursday’s open. Shares are still on track to trip $20 over the near term as long as $18-$17.50 holds on a pullback.
Given the wild recent price swings, I’m leaving the $0.60 Stop Limit in place on the second half of the trade instead of raising it.
Marvell Technology (MRVL, $16.10, down $0.24)
MRVL May 18 calls (MRVL150515C00018000, $0.30, down $0.05)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -40%
Stop Target: None
Action: Resistance is at $16.50-$16.75. Near-term support is at $16.
Brocade Communications Systems (BRCD, $12.85, up $0.39)
BRCD March 13 calls (BRCD150320C00013000, $0.27, up $0.12)
Entry Price: $0.24 (2/13/2015)
Exit Target: $0.50-$0.75
Return: 13%
Stop Target: None
Action: Shares cleared resistance at $12.50-$12.75 following yesterday’s run to $12.96. A close above $13 would be very bullish for a push towards $13.50-$14. Support is at $12.50-$12.25 on a backtest.
JDS Uniphase (JDSU, $13.38, down $0.01)
JDSU March 14 calls (JDSU150320C00014000, $0.23, down $0.07)
Entry Price: $0.78 (1/8/2015)
Exit Target: $0.50-$0.75
Return: -71%
Stop Target: None
Action: Resistance is at $13.75-$14. The breakeven point for the trade is at $14.25.
Trades on Hold — other 2015 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 Open Trades and Closed Trades pages to see all open and closed positions.
Philip Morris (PM) March 75 puts (From January 2015) — Continue to hold.
AT&T (T) March 36 calls (From February 2015) — Continue to hold.
CBOE Holdings (CBOE) March 67.50 calls (From February 2015) — Closed first half at $1.10 on 2/5/15 — Continue to hold the second half.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options