12:00pm (EST)
The bulls are pushing the next layers of support after reclaiming the first waves on Wednesday. The bears have been in slight hibernation despite an appearance on Tuesday but seem to be waiting for all hell to break loose before their next visit.
Corporate earnings after the bell include: Agilent Technologies (A), Applied Materials (AMAT), Autodesk (ADSK), Castle Brands (ROX), Dillard’s (DDS), Extreme Networks (EXTR), JC Penney (JCP), Nordstrom (JWN), Sina (SINA) and Wachovia (WB).
None of the aforementioned stocks look promising as an option trade although Wall Street seems bullish on JCP. To me, the jury is still out on Penney’s and I have been more bearish than bullish on the stock.
Although I haven’t traded JCP this year, I did recommend 2 monster put option trades last June that made subscribers 364% and 319%, respectively. I even recommended a rebound play last November that made readers 26% in 2 weeks.
While tempting, I will be sitting on the sidelines this time around with a closed playbook on Penney’s. I do, however, have a New Trade on a stock that is showing momentum.
Heading into halftime, the Dow is up 36 points to 16,689 while the S&P 500 is higher by 5 to 1,951. The Nasdaq is gaining 7 points to 4,441 and the Russell 2000 is popping a point to 1,142.
I could also have additional actions to take later in the session so stay locked-and-loaded through the second half of trading.
Closed Trades for 2014: 81-39 – the Weekly Wrap is 22-4 (85%) for 2014 (107-11, or 91% win rate, since 2011) and is designed for traders that want to use options with less risk. 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 9am and 12pm-1pm 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.
New Trade!
Sony (SNE, $17.96, up $0.02)
Buy to open September 18 calls (SNE140920C00018000, $0.50, flat)
Action: Shares could make a run at $20 as long as the 200-day MA holds. I like these options at current levels.
Current Trades
Fossil (FOSL, $97.00, up $0.45)
September 90 puts (FOSL140920P00090000, $0.80, down $0.10)
Entry Price: $1.05 (8/12/2014)
Exit Target: $1.75-$2.10 (Limit Orders)
Return: -24%
Stop Target: None
Action: I would like to see a close below $95 ahead of the weekend. Resistance is at $97-$98.
Yahoo (YHOO, $36.29, up $0.10)
September 38 calls (YHOO140920C00038000, $1.35, flat)
Entry Price: $1.25 (8/11/2014)
Exit Target: $1.90-$2.50
Return: 8%
Stop Target: None
October 43 calls (YHOO1018C00043000, $0.80, flat)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.90-$2.50
Return: 0%
Stop Target: None
Action: Shares have been hovering in a tight range for 3 weeks between $35.50-$36.50. I’m expecting a breakout to $40+ once $37 clears. The 200-day MA is at $36.29.
World Wrestling Federation (WWE, $13.88, up $0.05)
September 15 calls (WWE140920C00015000, $0.40, flat)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: -20%
Stop Target: None
Action: Resistance is at $13.75-$14 and a close above the latter would be bullish. Support is at $13.50 and a drop below this level will likely lead to $13.
The 2 prior WWE trades made 203% (in early March) and 133% (last week). This is a piggy-back trade that I’d like to see perform just as well.
Pool (POOL, $55.55, down $0.05)
October 50 puts (POOL141018P00050000, $0.70, flat)
Entry Price: $1.10 (7/16/2014)
Exit Target: $2.20-$3.30
Return: -36%
Stop Target: None
Action: A break below the July low of $54.16 would be bearish and could lead to $50 and fresh 52-week lows. Longer-term resistance is at $57 along with the 200-day MA.
The break-even point for the trade is at $48.90, technically, by mid-October. These options have over 2 months before they expire.
Other 2014 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 2014 Portfolio link in the Members Area to view ALL open/ closed trades.
Fortinet September 28 calls (from June 2013) – continue to hold
CVS Caremark September 82.50 calls (from July 2014) – continue to hold
S&P 500 Spiders September 180 puts (from August 2014) – continue to hold