1:20 p.m. (EST)
There are a number of zombies scheduled to talk about the Fed’s current policy on interest rates over the next 24 hours and ahead of Janet Yellen’s comments on Friday. There has been chatter that some of them are so bored that they have been talking about “technical analysis” and how it is doesn’t work. Really? If true, I will put them in the same boat with the knuckleheads that claim the VIX is broken.
There will be “dovish” and “hawkish” rhetoric from the Fed Heads that Wall Street will be playing close attention to but I will be ignoring the noise as I have said to plan on a rally through month’s end. It doesn’t mean it will happen but new highs continue to be set despite today’s slight choppiness.
While the broader market has been strong, Tech and the small-caps are underperforming but are holding positive territory as I come to press.
The Dow is up 69 points to 17,048 while the S&P 500 is gaining 5 points to 1,991. The Nasdaq is flat at 4,526 along with the Russell 2000 which is currently at 1,157.
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Closed Trades for 2014: 83-39 – 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.
Sony (SNE, $18.85, down $0.10)
September 19 calls (SNE140920C00019000, $0.50, flat)
Entry Price: $0.45 (8/20/2014)
Exit Target: $0.90
Return: 11%
Stop Target: None
October 20 calls (SNE141018C00020000, $0.30, flat)
Entry Price: $0.25 (8/20/2014)
Exit Target: $0.50-$0.75
Return: 20%
Stop Target: None
October 19 calls (SNE141018C00019000, $0.65, flat)
Entry Price: $0.45 (8/18/2014)
Exit Target: $0.90
Return: 44%
Stop Target: 45 cents (Stop Limit)
Action: A close above $19 should get $20 in play. Support is moving up and I would like to see $18.75 hold on any pullback.
Keryx Biopharmaceuticals (KERX, $15.90, down $0.28)
September 18 calls (KERX140920C00018000, $0.70, down $0.05)
Entry Price: $0.75 (8/20/2014)
Exit Target: $1.50
Return: -7%
Stop Target: None
Action: Keryx has a Phase 3 drug, Zerenex, that could gain FDA approval at some point this year or next. News could be coming in the next few weeks.
Yahoo (YHOO, $37.54, up $0.04)
September 38 calls (YHOO140920C00038000, $1.55, flat)
Entry Price: $1.25 (8/11/2014)
Exit Target: $1.90-$2.50 (Limit Order to close half at $1.90)
Return: 24%
Stop Target: $1.50, lower to $1.40 (Stop Limit)
October 43 calls (YHOO1018C00043000, $0.90, flat)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.20-$1.60
Return: 13%
Stop Target: 80 cents (Stop Limit)
Action: I would like to see $37-$36.75 hold on any pullback but this would likely trigger the Stop Limits. A close back above $37.75-$38 keeps $40 in play.
World Wrestling Federation (WWE, $14.53, up $0.02)
September 15 calls (WWE140920C00015000, $0.45, flat)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: -10%
Stop Target: None
Action: The close above $14.50 was slightly bullish but $14.25 needs to hold on any pullback. If shares fall below $14, I might pull the plug. A close above $14.75 would be bullish.
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, $56.13, up $0.02)
October 50 puts (POOL141018P00050000, $0.45, flat)
Entry Price: $1.10 (7/16/2014)
Exit Target: $2.20-$3.30
Return: -59%
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 (4): 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) – The 52-week high is at $26.23 and shares are acting like they want to clear $26 and make a run at fresh highs – continue to hold.
CVS Caremark September 82.50 calls (from July 2014) – Shares are still trying to crack $80 and the trade is down 56%. I will bring back coverage once cleared – continue to hold.
S&P 500 Spiders September 180 puts (from August 2014) – Like blackjack, I’m considering this trade as “insurance” as the puts still have a month before they expire. Perhaps they pay off, maybe not but the tremendous gains in the other trades makes me feel comfortable holding the trade open. Remember, the bulls like taking the stairs higher. The bears love taking the elevator – continue to hold.
Fossil September 90 puts (from August 2014) – Shares are back above $100 and I said I would cut the cord if cleared. The puts are fetching a quarter (25 cents) so close the trade at current levels. I am very disappointed shares have rebounded after the dip to $95 on lousy earnings mid-month but it is time to move on.