Dear Momentum Options Subscriber,
Futures were up slightly after midnight and got progressively stronger ahead of Wall Street’s open this morning. This was a good sign to see for the bulls, and there were also a number of merger and acquisition deals announced today that added to the bullishness.
Here is a quick summary of the marriages:
UnitedHealth Group (UNH) forked out $12 billion to buy Catamaran (CTRX).
Teva (TEVA) went into its cash coffers to pull out $3.5 billion to buy Auspex Pharmaceuticals (ASPX).
And, finally, Horizon Pharma (HZNP) is buying Hyperion Therapeutics (HPTX) for about $1.1 billion.
Heading into the second half of trading, the Dow is up 283 points to 17,996, while the S&P 500 is higher 24 points to 2,085. The Nasdaq is surging 50 points to 4,941, and the Russell 2000 is climbing 15 points to 1,255.
I covered a lot in this morning’s Pre-Market Update, so let’s get right to the trades.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 26-7-1 (76%). 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 1:10 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.
Flextronics (FLEX, $12.70, up $0.32)
FLEX May 13 calls (FLEX150515C00013000, $0.40, up $0.18)
Entry Price: $0.32 (3/30/2015)
Exit Target: $0.65
Return: 25%
Stop Target: None
FLEX April 12 calls (FLEX150417C00012000, $0.77, up $0.27)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35, lower to $1.00 (Limit Order)
Return: 15%
Stop Target: None
Action: Lower the Exit Target from $1.35 to $1.00 and make it a Limit Order on the FLEX April 12 calls.
Shares are at 52-week highs, with resistance at $13. A close above this level could lead to a run at $14. Support is at $12.25.
PowerShares QQQ Trust (QQQ, $106.61, up $1.09)
QQQ April 108 calls (QQQ150417C00108000, $0.68, up $0.23)
Entry Price: $0.65 (3/30/2015)
Exit Target: $1.30 (Limit Order on half)
Return: 5%
Stop Target: None
QQQ May 110 calls (QQQ150515C00110000, $0.75, up $0.18)
Entry Price: $0.65 (3/30/2015)
Exit Target: $1.30 (Limit Order on half)
Return: 15%
Stop Target: None
Action: The QQQ April 108 calls and the QQQ May 110 calls both opened at $0.65, and we have set limit orders to close the first half of each trade at $1.30.
The QQQs need to hold $106 into the close to keep $108-$110 in sight.
US Steel (X, $25.42, up $0.64)
X May 21 puts (X150515P00021000, $0.50, down $0.13)
Entry Price: $0.60 (3/26/2015)
Exit Target: $1.20
Return: -17%
Stop Target: None
Action: Resistance is at $25-$26. A close above $27 and the 100-day moving average would be bullish. Support is at $24, followed by $23.50 and the 50-day moving average. I’m looking for a test to $20 by mid-May.
You can read my full thoughts on the trade in the March 27 Pre-Market Update.
Cypress Semiconductor (CY, $14.23, down $0.13)
CY April 16 calls (CY150417C00016000, $0.20, flat)
Entry Price: $0.40 (3/18/2015)
Exit Target: $0.80
Return: -50%
Stop Target: None
CY June 16 calls (CY150619C00016000, $0.45, down $0.05)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -40%
Stop Target: None
Action: Resistance is at $14.50-$15. Support is at $14-$13.50 and the 100-day moving average on closes back below $14.25.
Veeva Systems (VEEV, $25.49, up $0.03)
VEEV April 29 calls (VEEV150417C00029000, $0.15, flat)
Entry Price: $0.60 (3/18/2015)
Exit Target: $1.20
Return: -75%
Stop Target: None
Action: Support is at $25. Resistance is at $26-$27 and the 200-day moving average. If shares close below $24, I will exit the trade.
Yahoo! (YHOO, $44.86, down $0.24)
YHOO April 47 calls (YHOO150417C00047000, $0.40, down $0.05)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -50%
Stop Target: None
Action: Near-term support is at $44.50, followed by $44-$43 and the 200-day moving average. Shares look poised to test $47 and the 100-day moving average, with momentum possibly pushing $50.
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.
Marvell Technology (MRVL) May 18 calls (from February 2015) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — The company beat earning by $0.04, but revenue was light — Continue to hold.
Gogo (GOGO) April 23 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options