Dear Momentum Options Subscriber,
March has been a tough month to trade so far, as the back-and-forth action has been a little frustrating. The Dow and S&P were already showing losses for the month coming into today’s session, and the test to their 50-day moving averages has exacerbated the pullback.
The Nasdaq and Russell 2000 were showing gains for the month heading into today’s action. Tech has given back its gains for the month, but the small-caps are trying to hold and still have a little breathing room.
While I was hoping that the bulls would hit their “sweet spot” this week, I warned that the back-end of the month is historically weak. The good news is that if the bulls can keep the losses from progressing while holding the 50-day moving averages, April could be a promising month.
We should be in tremendous shape to play the next trend as we wind down our current trades. My goal is to have less than five open trades going into next month, with a win rate of over 75%, while leaving a few chips on the table.
Heading into the second half of trading, the Dow is declining 199 points to 17,812, while the S&P 500 is lower by 18 points to 2,073. The Nasdaq is declining 86 points to 4,908, and the Russell 2000 is down 19 points to 1,244.
I’m cutting the cord on one of our trades today, so let’s go check the tape.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 25-6-1 (78%). 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 1:00 p.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.
American Express (AXP, $80.23, down $1.14)
AXP April 87.50 calls (AXP150417C00087500, $0.08, down $0.04)
Entry Price: $0.56 (2/25/2015)
Exit Target: $0.70 (Limit Order)
Return: -86%
Stop Target: None
Action: Sell to close the AXP April 87.50 calls at current levels.
I have traded bullish call options on American Express over the last few years, but this time was a dud, as my timing was off. I thought that shares would stabilize following the drop near $80 in late February. They did, but they also developed a trading range which has crushed the premium in these options. Shares need to trade to $88 by mid-April for the trade to break even. While Monday’s push past resistance at $83.50 was a tease, this level has failed to clear. Today’s pullback to $80 was the nail in the coffin.
Dot Hill Systems (HILL, $5.38, down $0.03)
HILL June 5 calls (HILL150619C00005000, $0.80, down $0.05)
Entry Price: $0.65 (3/24/2015)
Exit Target: $1.30
Return: 23%
Stop Target: None
Action: Shares have traded to another 52-week high of $5.46 today. My near-term price target for the stock is $6+ on continued momentum, which is where I would like to close the first half of the trade. Support is at $5.
Cypress Semiconductor (CY, $14.60, down $0.72)
CY April 16 calls (CY150417C00016000, $0.25, down $0.15)
Entry Price: $0.40 (3/18/2015)
Exit Target: $0.80
Return: -38%
Stop Target: None
CY June 16 calls (CY150619C00016000, $0.60, down $0.25)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -20%
Stop Target: None
Action: Support is at $14.50-$14.25 on continued weakness.
Veeva Systems (VEEV, $26.43, down $0.81)
VEEV April 29 calls (VEEV150417C00029000, $0.35, down $0.10)
Entry Price: $0.60 (3/18/2015)
Exit Target: $1.20
Return: -42%
Stop Target: None
Action: Support is at $26-$25. Resistance is at $27.
Gogo (GOGO, $18.98, down $0.53)
GOGO April 23 calls (GOGO150417C00023000, $0.10, down $0.05)
Entry Price: $0.55 (3/17/2015)
Exit Target: $1.10
Return: -82%
Stop Target: None
Action: Support is at $19-$18.75 on continued weakness.
Yahoo! (YHOO, $44.28, down $0.14)
YHOO April 47 calls (YHOO150417C00047000, $0.34, flat)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -58%
Stop Target: None
Action: Near-term support is at $44. Continued closes above $45 should lead to a run to $47-$48 and the 100-day moving average. I plan to keep this trade open into April, but $44 needs to hold to make me feel good.
Additionally, the company will be announcing earnings the week that these options expire, which is another reason I will likely hold the trade open. A 10% move on earnings could be in the cards, and that would put shares past $48 if current levels hold.
Flextronics (FLEX, $12.48, up $0.03)
FLEX April 12 calls (FLEX150417C00012000, $0.60, flat)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -10%
Stop Target: None
Action: Shares have kissed $12.61 today. Short-term resistance is at $12.75. A close above this level could lead to a run at $13. Support is at $12.25-$12.
Trades on Hold — other 2015 Portfolio Open positions (2): 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.
Marvell Technology (MRVL) May 18 calls (from February 2015) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options