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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 tradesor “Exit Orders” in your brokerage account unless we list one. We will send out a “Profit Alert” or “New Trade” if we want you to close a position OR if a new trade comes out. Otherwise, follow instructions at all times in the 9am and 1pm updates. Also, we will usually give you a heads-up if we think we are going to send an email outside of these time frames. Closed Trades for 2014: 15-1- the Weekly Wrap is 7-1 for 2014 (92-8 since 2011) and is designed for traders that want to use options with less risk.
1:15pm (EST)
New Trade (PM)!!!
Philip Morris (PM, $78.35, down $0.74)
Buy to OPEN March 75 puts (PM140322P00075000, $0.85, up $0.10)
Action: The drop below $80 was bearish and we have a near-term target of $75 on the stock. We like these put options at current prices.
Current Trades
Caterpillar (CAT, $94.21, up $1.01)
March 85 puts (CAT140322P00085000, $0.50, down $0.05)
Entry Price: $0.75 (1/28/2014)
Exit Target: $1.50
Return: -33%
Stop Target: None
Action: The March option have 49 days before they expire and we wanted some put protection heading into February. We believe shares will dip below $90 again and possibly push $85 over the next 6 weeks. Resistance is at $95 and where we would possibly exit the trade if cleared.
Ariad Pharmaceuticals (ARIA, $7.50, down $0.34)
March 10 calls (ARIA140322C00010000, $0.65, down $0.15)
Entry Price: $0.95 (1/28/2014)
Exit Target: $1.90
Return: -32%
Stop Target: None
May 11 calls (ARIA140517C00011000, $0.85, down $0.10)
Entry Price: $1.05 (1/28/2014)
Exit Target: $2.10
Return: -19%
Stop Target: Nobe
Action: We feel as though shares will trade to the mid-to high double-digits, soon, or there will be a takeover of the company for possibly $20+ a share.
Krispy Kreme Doughnuts (KKD, $17.31, down $0.16)
March 16 puts (KKD140322P00016000, $0.85, up $0.10)
Entry Price: $0.70 (1/27/2014)
Exit Target: $1.40
Return: 21%
Stop Target: None
Action: Shares have traded to a low of $16.78 as the puts have reached a peak of 95 cents. We are expecting a near-term test to $15 for KKD and the chart shows the potential for shares to drop to $14 based on the “gap” that needs to be filled. Resistance will try to hold at $18 and we have wiggle room to $20 before the drop to $15 comes.
BlackBerry (BBRY, $9.60, down $0.18)
February 11 calls (BBRY140222C00011000, $0.15, down $0.05)
Entry Price: $0.65 (1/22/2014)
Exit Target: $1.30
Return: -77%
Stop Target: None
Action: There could be a back test to $9-$8.50 if volatility picks up but we still like the position. A close back above $10.50 would be bullish.
Exact Sciences (EXAS, $13.10, down $0.27)
April 19 calls (EXAS140419C00019000, $0.50, down $0.05)
Entry Price: $0.88 (1/22/2014)
Exit Target: $1.75
Return: -43%
Stop Target: None
Action: The company should get some FDA news in March on its Cologuard drug. These are April options with 3 months until expiration and we plan to hold through the volatility because we want to be in when the March news is released and why we do not have a Stop Limit listed. There could be further weakness and we may have to put the trade on hold but this will be a major event and we will hold the trade open win, lose, or draw.
Other 2014 Portfolio OPEN positions (5): 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 we would not open any new positions. We are still keeping track of the trades and we will record the results, accordingly, when we close them or if the options expire. Click on the 2013Portfolio link in the Members Area to view ALL open/ closed trades.
SLM February 27 calls (from January 2014)
General Electric March 28 calls (from January 2014)
PulteGroup February 22 calls (from January 2014)
Sony February 19 calls (from January 2014)
April 20 calls
PowerShares QQQ February 90 calls (from January 2014)
WATCH LIST SECTION
These trades are NOT recommendations. They are trades that we like but have not added to the portfolio as an official recommendation because of market conditions or because we are waiting for better entry prices. We try not to have more than 12-15 open trades at any one time which is why we created a Watch List. We will not list entry prices because these stocks are on the verge of breaking out or they could sell off but these are the trades we are watching as new candidates.
We will update this section on Monday with some fresh ideas.