Dear Momentum Options Subscriber,
The bulls are trying to put a cherry on top of a good week while keeping their momentum going into the heart of first-quarter earnings next week. April option-expiration day has been bullish over the past two decades, as the Dow has finished higher 75% of the time. However, those odds went out the window at this morning’s open.
The portfolio does not have any April options expiring today, but it is important to remember that May options will expire in less than a month.
The portfolio has a few May trades in play, and I will be babysitting them closely over the next few weeks. Our new trades will likely have June or later expiration dates, but I may also take another May trade or two, as the gains will be bigger on nearer-term options. Of course, the losses could also be bolder, as time decay will start to accelerate more rapidly with the May options, so we still need to be careful.
The portfolio is light, so there is no need to rush the action, especially if the indexes revert back to the bottom of their three-month trading ranges that have developed since the start of February.
Heading into the second half of trading, the Dow is lower by 258 points to 17,846, while the S&P 500 is down 22 points to 2,082. The Nasdaq is declining 73 points to 4,934, and the Russell 2000 is off 18 points to 1,254.
I have updated our current trades ahead of the weekend. I could have a New Trade ahead of the close, but, if you don’t hear from me, I will be back Monday with the full update and chart work. Until then, have a great weekend everyone!
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 12:45 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.
PowerShares QQQ Trust (QQQ, $106.07, down $1.62)
QQQ May 110 calls (QQQ150515C00110000, $0.30, down $0.30)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: Support is at $106. Continued closes above $108 will likely lead to a push to $110. The 52-week high is at $109.42.
Jabil Circuit (JBL, $23.16, down $0.43)
JBL May 24 calls (JBL150515C00024000, $0.30, down $0.20)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: -50%
Stop Target: None
Action: Near-term support is at $23.50, followed by $23. Resistance is at $24.
Rigel Pharmaceuticals (RIGL, $4.13, 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 to be released on April 30 — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options