Dear Momentum Options Subscriber,
Following some early-morning weakness, the market shrugged off the slow start and is pushing fresh 52-week and all-time highs. There are a number of marquee names reporting earnings after the close that will help or hinder Friday’s action, but all signs are pointing towards higher highs.
Google (GOOG, $546.95, up $7.59) will have the biggest audience on their conference call, as the company is expected to earn $6.61 a share on revenue north of $14 billion.
Trading options on stocks over $100 can be expensive, as the premiums are much higher, which is why I shy away from trading them. While I’m expecting shares to move $50, up or down, playing the move isn’t worth the risk or reward.
The GOOG May 600 calls (GOOG150515C00600000, $1.55, up $0.25) look tempting, but they would likely expire worthless if shares sank to $500 on an earnings miss.
The GOOG May 500 puts (GOOG150515P00500000, $2.00, down $0.85) could do well on an earnings miss but would suffer if Google trounces earnings and shares shoot past $600.
I like to trade options that cost $1.00 or less. At times, I will pay up to $1.50-$2.00 for an option, but I’m usually not counting on a stock to make a $50 move.
As far as the market, the Dow is adding 73 points to 18,111, while the S&P 500 is higher by 9 points to 2,117. The Nasdaq is jumping 25 points to 5,060, and the Russell 2000 is advancing 5 points to 1,271.
I have a number of updates on our trades, so let’s get to it.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 40-11-1 (77%). 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 2:05 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.
SunPower (SPWR, $35.00, up $0.26)
SPWR June 38 calls (SPWR150619C00038000, $1.10, up $0.10)
Entry Price: $0.95 (4/22/2015)
Exit Target: $1.90
Return: 17%
Stop Target: None
Action: Near-term resistance is at $36. Support is at $34.
Dot Hill Systems (HILL, $6.48, down $0.04)
HILL September 7.50 calls (HILL150918C00007500, $0.55, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 22%
Stop Target: None
Action: Resistance is at $6.50-$6.75. Support is at $6.25-$6.
You can read my earnings outlook and review the stock’s chart in the April 21 Pre-Market Update.
Sony (SNE, $30.75, down $1.60)
SNE May 32 calls (SNE150515C00032000, $0.65, down $0.65)
Entry Price: $0.50 (4/20/2015)
Exit Target: $1.50-$2.00 (closed 1/3 at $1.40 on 4/22/15)
Return: 80%
Stop Target: Remove the Stop Limit from the SNE May 32 calls.
Action: Remove the Stop Limit from the SNE May 32 calls. The Stop Limit of $0.90 has NOT triggered, as the options gapped lower and opened at $0.50 this morning. They have traded up to $0.63.
Let’s remove the Stop Limit and see how tomorrow plays out. If the options rebound to $0.90, we can then decide what to do for next week.
The trade is still up 80%, and I want to keep a partial position open going into earnings. However, if shares fall below $30 ahead of the weekend, I will likely close the trade.
Rambus (RMBS, $14.34, down $0.06)
RMBS August 14 calls (RMBS150821C00014000, $1.30, flat)
Entry Price: $0.65 (4/20/2015)
Exit Target: $1.70 (closed first half at $1.30 on 4/21/15)
Return: 100%
Stop Target: $1.00 (Stop Limit)
Action: Resistance is at $14.50. Support is at $14-$13.75.
PowerShares QQQ Trust (QQQ, $109.17, up $0.52)
QQQ May 110 calls (QQQ150515C00110000, $0.90, up $0.20)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20 (closed first half at $0.70 on 4/22/15)
Return: 33%
Stop Target: $0.55, raise to $0.60 (Stop Limit)
Action: Raise the Stop Limit of $0.55 to $0.60 on the second half of the position.
Resistance is at $109-$110. Support is at $108.
Jabil Circuit (JBL, $23.95, up $0.19)
JBL May 24 calls (JBL150515C00024000, $0.50, up $0.05)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -17%
Stop Target: None
Action: Resistance is at $23.50-$24. Support is at $23.
Rigel Pharmaceuticals (RIGL, $4.31, up $0.07)
RIGL June 5 calls (RIGL150619C00005000, $0.45, up $0.05)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00
Return: 80%
Stop Target: None
Action: Resistance is at $4.20-$4.25. Continued closes above these levels would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60 on a close below $4.
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) — The sector could see heated M&A activity in the coming months, and MRVL tends to move on takeover chatter — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — This is a speculation trade from early March on BBRY receiving a takeover offer of $14 or better by mid-June — Continue to hold.
Cypress Semiconductor (CY) June 16 calls (from March 2015) — Earnings are due out next Thursday, April 30 — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options