Dear Momentum Options Subscriber,
The bulls were betting on a “Goldilocks” nonfarm payrolls number, and they got it after the report showed that 223,000 jobs were added in April. The unemployment rate dipped to 5.4% from 5.5%, which is the lowest level since May of 2008.
The nastiness of March’s nonfarm payrolls number was quickly forgotten, but overlooked was the fact that they were revised lower to show that only 85,000 jobs were created during that month.
Although the start of the second quarter looks good, the first three months of the year were terrible on average. In any event, today’s report still showed green sprouts in the jobs market, and Wall Street took it as good news.
The Dow is advancing 265 points to 18,189, while the S&P 500 is higher by 27 points to 2,115. The Nasdaq is surging 65 points to 5,011, and the Russell 2000 is jumping 11 points to 1,237.
The current trading range has been frustrating for Wall Street, and I have done my best to get us through it with good results. A clearer trend should be on the horizon once the trading ranges crack, which is when trading will become much easier.
I am closing one of the current trades that has been on “hold” today, and I also have a new trade that I want us to get into.
While there is a chance that I could open another new trade later this afternoon, the portfolio is in good shape. May option expiration is next week, but we do not have to worry about it, as the rest of our trades have June and September expiration dates.
If you do not hear from me ahead of the close, have a great weekend, and I will chat with everyone again on Monday.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 47-14-1 (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 11:30 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.
New Trade
Sony (SNE, $30.65, up $0.35)
Buy to open the SNE June 32 calls (SNE150619C00032000, $0.70, up $0.15) at current levels.
Action: I like these call options to play another run past $32. The last two times we traded SNE options, we captured gains of 106% and 64%. These are the regular monthly options that expire on June 19.
Current Trades
Wells Fargo (WFC, $55.43, up $0.62)
WFC June 57.50 calls (WFC150619C00057500, $0.33, up $0.06)
Entry Price: $0.31 (5/4/2015)
Exit Target: $0.65
Return: 6%
Stop Target: None
Action: Resistance is at $55.50. The 52-week high is at $56.26. Support is at $54.50-$54.
Limelight Networks (LLNW, $4.10, down $0.03)
LLNW September 4 calls (LLNW150918C00004000, $0.60, flat)
Entry Price: $0.35 (4/29/2015)
Exit Target: $0.80 (Limit Order on half)
Return: 71%
Stop Target: $0.40 (Stop Limit)
Action: Resistance is at $4.20-$4.25. Support is at $4, followed by 3.80-$3.75.
You can read my full update on LLNW in the May 1 Pre-Market Update.
Opko Health (OPK, $14.27, up $0.13)
OPK June 16 calls (OPK150619C00016000, $0.30, flat)
Entry Price: $0.50 (4/27/2015)
Exit Target: $1.00
Return: -40%
Stop Target: None
Action: Resistance is at $14-$14.25. Support is at $13.75-$13.50 on another drop below $14.
Earnings are scheduled to be released next week or later in the month. Analysts are looking for a loss of $0.08 a share on revenue of $23 million. I believe OPK will top these numbers.
Dot Hill Systems (HILL, $6.96, up $0.12)
HILL September 7.50 calls (HILL150918C00007500, $0.65, flat)
Entry Price: $0.45 (4/20/2015)
Exit Target: $1.35-$1.80
Return: 44%
Stop Target: None
Action: Shares have traded to a high of $7 today. Resistance is at $7.25. Support is at $6.75-$6.50.
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.
iShares Russell 2000 (IWM) May 127 calls (from April 2015) — Sell to close the IWM May 127 calls at current levels to save the premium for our next trade. The bid/ask spread is currently $0.02/$0.03. If the small-caps remain strong or clear 1,250, we can use the June options to play a continued rebound.
SunPower (SPWR) June 38 calls (from April 2015) — I will likely close this trade if support at $30 fails. Resistance is at $32.50 — 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.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options