12:35 p.m. (EST)
The game plan for this week is much the same as last and it was good to see futures higher following my late night research. Even better, Tech is showing continued strength and is at fresh 52-week peeks and the small-caps are outperforming.
Of course, there is still another half of trading to go as well as the rest of the week but so far, so good.
The Dow is gaining 161 points to 16,824 while the S&P 500 is up 15 points to 1,970. The Nasdaq is zooming 38 points to 4,503 and the Russell 2000 is higher by 14 points to 1,155.
It has been a busy morning and I expect a hustling afternoon as I could have additional New Trades and/ or Profit Alerts for both the Daily and Weekly Wrap.
Subscribers, hit the Members Area for the updates and stay locked-and-loaded throughout the second half of trading.
MEMBERS AREA
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.
GT Advanced Technologies (GTAT, $18.34, up $0.98)
September 20 calls (GTAT140920C00020000, $0.90, up $0.35)
Entry Price: $0.70 (8/18/2014)
Exit Target: $1.40 (Limit Order to close half)
Return: 29%
Stop Target: None
Action: Set Limit Orders at $1.40 to close half of the trade.
I know I just recommended the position a few hours ago but if I can double my money in a day? Yeah, I’m taking half off the table and playing with the house’s money.
Shares have been on fire since the beginning of the month after bottoming just above their 200-day MA at $13.75. Today’s momentum has shares on track for a run past $20 this week and where I would like to exit half or all of the trade. Today’s high has reached $18.41.
The company makes a “sapphire” display that Apple is rumored to be using in its upcoming iPhone 6 launch. Verizon is set to launch Kyocera’s new Brigadier smartphone that will feature the sapphire technology. They have basically said the phone is nearly indestructible.
I don’t know much about Kyocera’s business as I don’t actively follow the company but I do know Apple and I have been following the developments with GT Advanced Technologies.
GT Advanced is based in Mesa, Arizona and the first sapphire based display screens are expected to be ready later this month. The major problem for Apple will be getting enough of the material as demand will outweigh supply.
This could force Apple to use Sapphire only in their more expensive models but consumers might pay up for a scratch-free, non-breakable display. A great marketing tactic for Apple would be to announce its rumored iWatch along with the iPhone 6 launch with the sapphire display but that is another story.
Rubicon Technology (RBCN, $6.25, up $0.07) is also a sapphire supplier but the options are thinly traded and why I went with GT Advanced.
I have covered RBCN in the Weekly Wrap and need to take another look with shares near 52-week lows. They are down from a 52-week peak of north of $14 but for now I’m focused on GTAT and these call options.
Sony (SNE, $18.41, flat)
October 19 calls (SNE141018C00019000, $0.45, flat)
Entry Price: $0.45 (8/18/2014)
Exit Target: $0.90
Return: 0%
Stop Target: None
September 18 calls (SNE140920C00018000, $0.75, flat)
Entry Price: $0.50 (8/14/2014)
Exit Target: $1.00
Return: 50%
Stop Target: None
Action: Near-term resistance is at $18.50 with support at $17.75. Shares could make a run at $20 as long as the 200-day MA holds at $17.38.
Fossil (FOSL, $97.96, up $0.94)
September 90 puts (FOSL140920P00090000, $0.45, down $0.20)
Entry Price: $1.05 (8/12/2014)
Exit Target: $1.75-$2.10 (Limit Orders)
Return: -57%
Stop Target: None
Action: Resistance is at $97-$98. I will stick with the trade as long as $100 holds. A break below $95 would be extremely bearish in an already broken stock. The trade will be on hold as others come off but it will be open as long as $100 holds. I still want to keep some put protection going forward.
Yahoo (YHOO, $37.39, up $0.92)
September 38 calls (YHOO140920C00038000, $1.55, up $0.25)
Entry Price: $1.25 (8/11/2014)
Exit Target: $1.90-$2.50
Return: 24%
Stop Target: None
October 43 calls (YHOO1018C00043000, $0.75, flat)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.90-$2.50
Return: 13%
Stop Target: None
Action: Yahoo cleared its 200-da MA on Friday and a close above $37 would be bullish. 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 $36.43.
World Wrestling Federation (WWE, $14.11, up $0.25)
September 15 calls (WWE140920C00015000, $0.35, flat)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: -30%
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% (in early August). This is a piggy-back trade that I’d like to see perform just as well.
Pool (POOL, $56.24, up $0.64)
October 50 puts (POOL141018P00050000, $0.55, down $0.10)
Entry Price: $1.10 (7/16/2014)
Exit Target: $2.20-$3.30
Return: -50%
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