Dear Momentum Options Subscriber,
The bulls are trying to nail down their second-straight weekly win as they continue their assault on the top of the trading ranges. With earnings season starting next week, Wall Street has been betting on a pullback, as they believe corporate numbers will come in below expectations.
While this might be true, the market is always looking ahead, and the current action is hinting at a possible “short-covering” rally. Of course, the continued two-month-plus trading ranges could stay intact if new highs aren’t reached, so we still need to be a little careful.
Heading into the second half of trading, the Dow is up 75 points to 18,034, while the S&P 500 is higher by 9 points to 2,100. The Nasdaq is climbing 15 points to 4,989, and the Russell 2000 is advancing 5 points to 1,264.
It has been a busy week, but I’m loving the action. I will be starting my weekend homework as soon as the market closes, as I’m excited to see what next week might hold. Although I will likely have a long night, researching and finding good trades is part of the “fun” of playing the market, and it keeps me a step ahead of the suit-and-ties. I will have the rest of the weekend to enjoy and to review the game plan I put in place earlier this month. The clues that were given this week played out like a fiddle, and we’ll hope that the bullish music continues late into the month.
The choppy action looked bearish throughout the week and has kept traders on the sidelines, but Monday’s clues were our signals to go long. I have updated all of our current trades, so let’s go check the tape. I could have additional updates into the close, but, if you don’t hear from me, have a great weekend and I will chat with you on Monday.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 34-10-1 (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 12:10 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.
Comcast (CMCSA, $60.00, up $0.41)
CMCSA May 60 calls (CMCSA150515C00060000, $1.55, up $0.15)
Entry Price: $1.05 (4/6/2015)
Exit Target: $2.10
Return: 48%
Stop Target: $1.20, raise to $1.30 (Stop Limit)
Action: Take profits and sell to close the first half of the CMCSA May 60 calls at current levels.
Also, raise the Stop Limit on the second half from $1.20 to $1.30. The low on the options has been $1.39 today, with the high reaching $1.65.
Shares have traded to a high of $60.17 today, and I would like to see a close above $60 ahead of the weekend. The 52-week high is at $60.70, which will likely be challenged on continued strength. Support is at $58-$57.75 and the 50-day moving average.
Yahoo! (YHOO, $45.11, down $0.52)
YHOO April 47 calls (YHOO150417C00047000, $0.14, down $0.11)
Entry Price: $0.80 (2/26/2015)
Exit Target: $0.85
Return: -83%
Stop Target: None
Action: Sell to close the YHOO April 47 calls at current levels.
Shares traded up to $45.79 on the open, and I was looking for a pop past $46. This is one of the last remaining trades from February, and it is running out of time, as these options expire next week.
While I would love to roll the dice for a continued rebound into next week, I just don’t think shares can make a run past $47 to $48. If they do, I can use May or June call options to play the move, but let’s close the trade at current levels to save the $0.14 in premium.
Jabil Circuit (JBL, $23.94, up $0.05)
JBL May 24 calls (JBL150515C00024000, $0.60, up $0.05)
Entry Price: $0.60 (4/10/2015)
Exit Target: $1.20
Return: 0%
Stop Target: None
Action: Shares touched a 52-week high of $24 yesterday. A run to $26-$28 could come on a continued closes above this level.
Rambus (RMBS, $13.63, up $0.27)
RMBS May 14 calls (RMBS150515C00014000, $0.50, up $0.15)
Entry Price: $0.38 (4/10/2015)
Exit Target: $1.00
Return: 32%
Stop Target: None
RMBS August 15 calls (RMBS150821C00015000, $0.65, up $0.10)
Entry Price: $0.53 (4/10/2015)
Exit Target: $1.25
Return: 23%
Stop Target: None
Action: Shares have a reached a weekly high of $13.80 today. A close above $13.75 would be a good sign for a possible run past $14. Support is at $13-$12.75 if $13.50 fails to hold into the close.
PowerShares QQQ Trust (QQQ, $107.51, up $0.20)
QQQ May 110 calls (QQQ150515C00110000, $0.62, up $0.02)
Entry Price: $0.57 (4/10/2015)
Exit Target: $0.85-$1.15 (Limit Order on first half at $0.85)
Return: 9%
Stop Target: None
Action: Set a Limit Order to close the first half of the QQQ May 110 calls at $0.85.
I have listed two exit targets, as I would like to close half the trade at $0.85, possibly next week. If a continued rally is in store afterwards, perhaps we can get $1.15 on the second half.
I’m expecting a run to $108-$110 this month as long as $106 holds over the near term.
iShares Russell 2000 (IWM, $125.67, up $0.66)
IWM May 128 calls (IWM150515C00128000, $1.00, up $0.15)
Entry Price: $0.90 (4/10/2015)
Exit Target: $1.35-$1.80 (Limit Order on first half at $1.35)
Return: 11%
Stop Target: None
Action: Set a Limit Order to close the first half of the IWM May 128 calls at $1.35.
I have listed two exit targets, as I would like to close the first half of the trade at $1.35. If a continued rally is in store afterwards, perhaps we can get $1.80 on the second half.
I’m expecting a possible push towards $127-$128 over the near term as long as $125-$124.50 holds.
Sony (SNE, $30.51, up $0.61)
SNE May 31 calls (SNE150515C00031000, $1.05, up $0.25)
Entry Price: $0.70 (4/6/2015)
Exit Target: $1.40
Return: 50%
Stop Target: $0.80 (Stop Limit)
Action: Set a Stop Limit at $0.80. The low has been $0.95 on today’s open.
My near-term target is $32, with a shot at $35 on continued momentum. Support is at $28.50-$28. Earnings are due out on April 30.
Rigel Pharmaceuticals (RIGL, $3.95, up $0.14)
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, followed by the 52-week high at $4.20. Support is at $3.60, followed by $3.40 on a drop back below $3.80-$3.75.
Cypress Semiconductor (CY, $14.20, up $0.11)
CY June 16 calls (CY150619C00016000, $0.40, flat)
Entry Price: $0.75 (3/18/2015)
Exit Target: $1.50
Return: -47%
Stop Target: None
Action: Resistance is at $14.25. Support is at $13.75 and the 100-day moving average on a close back below $14.
Trades on Hold — other 2015 Portfolio Open positions (2): 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) — Continue to hold.
BlackBerry (BBRY) June 13 calls (from March 2015) — Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options