Dear Momentum Options Subscriber,
With the Nasdaq coming into the week within spitting distance of its all-time intraday high of 5,132, it’s fitting that Apple (AAPL, $132.85, up $2.57) would be announcing its numbers today, which could help or hinder the bulls’ record run.
The company with the biggest market cap on the planet will announce earnings after today’s closing bell, and Wall Street will be looking for $2.16 a share on revenue north of $56 billion. Apple has beaten estimates by $0.46, $0.11, $0.05 and $0.20, respectively, over the past four quarters.
For the naysayers of the Apple Watch, Apple Pay (and its growing ecosystem), a possible car, TV and who knows what else, short-sellers have been crushed betting on a pullback in Apple’s stock price.
With shares near their 52-week high of $133.60, a run to $140 or a pullback to $125 on an earnings miss seems likely in after-hours trading and into Tuesday’s open.
This is also a big week for a third of S&P companies and other Dow components, and I will be covering some of the movers and shakers throughout the week. Thursday will be a big day for the portfolio, as we will likely have two earnings trades in play. I’ll be sure to keep you posted if there is any action to take.
Heading into the second half of trading, the Dow is down 5 points to 18,074, while the S&P 500 is lower by 3 points to 2,114. The Nasdaq is declining 15 points to 5,075, and the Russell 2000 is declining 7 points to 1,260.
I have updated our current trades below, so let’s go check the action. We have profits to take at the moment, and I could also have a New Trade ahead of the close, so stay locked and loaded.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 42-13-1 (75%). 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 12:50 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.
Sony (SNE, $31.25, down $0.09)
SNE May 32 calls (SNE150515C00032000, $0.90, down $0.05)
Entry Price: $0.50 (4/20/2015)
Exit Target: $1.50-$2 (closed 1/3 at $1.40 on 4/22/15)
Return: 113%
Stop Target: $0.80 (Stop Limit)
Action: Take profits and sell to close another third of the SNE May 32 calls at current levels. Also, set a Stop Limit at $0.80 on the last third of the trade.
Resistance is at $31.50-$32. Support is at $30. Sony upped its profit guidance forecast for the second time in a week and now expects $2.5 billion in profits. Earnings are due out this Thursday, April 30.
Rigel Pharmaceuticals (RIGL, $4.64, down $0.24)
RIGL June 5 calls (RIGL150619C00005000, $0.50, down $0.12)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00 (closed 1/4 at $0.60 on 4/22/15)
Return: 110%
Stop Target: $0.30 (Stop Limit)
Action: Take profits and sell to close another quarter of the RIGL June 5 calls at current levels. Also, set a Stop Limit at $0.30 on the remaining half of the position.
I usually close half-positions when they are up over 100%, but, in some circumstances, I may close a third or a quarter of a position. I understand that this can be aggravating for traders that might trade five contracts or less. However, in this case, I didn’t want to close too much of the position, as I wanted to maximize the gains on continued strength.
I also ensure that I protect our profits when we have them, which is why I want to close another quarter of the position. This should also help explain why I closed a third of the Sony trade instead of half. I hope this helps, but, for the most part, I like to close positions once triple-digit profits are reached.
Shares have traded to a high of $5.20 today, but they are losing ground. The next layers of resistance are at $5.50-$6. Support will try to hold at $4.50 on a pullback, followed by $4.25.
Opko Health (OPK, $14.70, down $0.12)
OPK June 16 calls (OPK150619C00016000, $0.50, up $0.05)
Entry Price: $0.50 (4/27/2015)
Exit Target: $1.00
Return: 0%
Stop Target: None
Action: Shares have been in a tight range since early February, which is when we last traded options on this stock. The nearly three-month range between $14-$15 could produce a substantial breakout or breakdown once key resistance or support levels are cleared.
The 52-week high is at $15.23, and a close above this level should lead to a run a $16-$17 over the near term. Support is at $14.75-$14.50 and the 50-day moving average.
Freeport-McMoRan (FCX, $21.94, up $1.12)
FCX June 23 calls (FCX150619C00023000, $0.80, up $0.35)
Entry Price: $0.55 (4/27/2015)
Exit Target: $1.10
Return: 45%
Stop Target: None
Action: Near-term resistance is at $22. If cleared, a run to $24 could be in the mix. Support is at $20-$19.75 and the 50-day moving average on a pullback.
TiVo (TIVO, $11.36, up $0.05)
TIVO June 12 calls (TIVO150619C00012000, $0.40, up $0.05)
Entry Price: $0.30 (4/24/2015)
Exit Target: $0.90
Return: 33%
Stop Target: None
Action: Shares made a strong move past the 100-day moving average last week following a three-week trading range. The next layers of resistance are at $11.50-$12, followed by the 200-day moving average. Support is at $11-$11.25 and the 50-day moving average.
SunPower (SPWR, $33.92, down $0.05)
SPWR June 38 calls (SPWR150619C00038000, $0.85, flat)
Entry Price: $0.95 (4/22/2015)
Exit Target: $1.90
Return: -11%
Stop Target: None
Action: Near-term resistance is at $36. Support is at $34.
Earnings are due out this Thursday, April 30, and you can read more about what to expect in this morning’s Pre-Market Update.
Dot Hill Systems (HILL, $6.49, down $0.07)
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, and a close above the latter would be bullish for a run at $7. Near-term support is at $6.25 on dips below $6.50. Earnings are due out on May 7, and I will cover the company’s numbers next week.
Jabil Circuit (JBL, $23.71, up $0.02)
JBL May 24 calls (JBL150515C00024000, $0.40, flat)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -33%
Stop Target: None
Action: Near-term support is at $23.50, followed by $23 and the 50-day moving average. Resistance is at $24, and the 52-week high at $24.11. A close above these levels should lead to a run at $25-$26.
Trades on Hold — other 2015 Portfolio Open positions (1): 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.
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.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options