Dear Momentum Options Subscriber,
Shares of Bank of America (BAC, $15.64, down $0.18) are down fractionally following the release of its first-quarter earnings results this morning.
The company reported a profit of $0.27 a share on revenue of $21.2 billion. Wall Street was expecting $0.29 a share on revenue of $21.5 billion. BAC would have reported $0.36 a share, but the company wrote-off $0.09 in charges, or $1.5 billion, for annual retirement costs and net interest income adjustments.
Morgan Stanley (MS) came out on Monday and said that Bank of America shares are “cheap” and kept its “Overweight” rating on the stock. They believe shares are worth $21.
While this might be debatable, the earnings miss isn’t, and it represented the fourth time in the past five quarters that the company has come up short.
Heading into the second half of trading, the Dow is up 77 points to 18,113, while the S&P 500 is higher by 11 points to 2,107. The Nasdaq is gaining 25 points to 5,002, and the Russell 2000 is jumping 9 points to 1,273.
I have a New Trade for the portfolio listed below, so let’s get to it.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 39-11-1 (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.
New Trade
PowerShares QQQ Trust (QQQ, $107.65, up $0.48)
Buy to open the QQQ May 110 calls (QQQ150515C00110000, $0.60, up $0.10) at current levels.
I like these call options to play another run at $108-$110. These are the regular monthly options that expire on May 15.
Current Trades
Jabil Circuit (JBL, $23.99, up $0.09)
JBL May 24 calls (JBL150515C00024000, $0.70, up $0.03)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 17%
Stop Target: None
Action: Today’s high has reached $24.11. Continued closes above $24 would be bullish for a run to $26-$28. Near-term support is at $23.50, followed by $23.
Sony (SNE, $31.50, up $0.37)
SNE May 31 calls (SNE150515C00031000, $1.50, up $0.20)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 114%
Stop Target: $0.95 (Stop Limit)
Action: Shares have traded to a high of $31.70 today. My near-term target is $32, with a shot at $35. Yesterday’s peak reached $31.35. Support is at $30, followed by $29. Earnings are due out on April 30. You can read my full update on what to expect in the April 7 Mid-Market Update.
Rigel Pharmaceuticals (RIGL, $4.02, down $0.04)
RIGL June 5 calls (RIGL150619C00005000, $0.40, flat)
Entry Price: $0.25 (3/31/2015)
Exit Target: $0.75-$1.00
Return: 60%
Stop Target: None
Action: Resistance is at $4.20 and the 52-week high. A close above this level would be bullish for a possible run to $4.50-$5. Support is at $3.80-$3.60.
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) — This 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 that BBRY will receive 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 tomorrow — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options