Dear Momentum Options Subscriber,
Although the bulls have been looking good, I was expecting a slight pullback today, and possibly into next week, as February expiration day has been extremely bearish in recent years. In fact, the Nasdaq has fallen in 12 of the past 15 February expiration sessions but is actually showing a little strength as we make the turn.
Futures were showing a lower start ahead of this morning’s open, and I used this week’s strength to exit a number of profitable positions. I have also used Limit Orders and Stop Limits to help navigate some of the divergence we’ve seen this week and they help take the emotion out of trading.
I still believe higher highs will be reached into March and, if next week is choppy, we can use the weakness to establish fresh positions.
I have already started my weekend research, and I like how the longer-term charts are setting up. The portfolio will be in great shape to start new positions and the current trades are holding up well.
Heading into the second half of trading, the Dow is higher by 11 points to 17,996, while the S&P 500 is down 2 points to 2,095. The Nasdaq is up 4 points to 4,929 and the Russell 2000 is off 2 points to 1,226.
I could have additional Profit Alerts, and possibly a New Trade ahead of the close, so stay locked-and-loaded. If you don’t hear from me, have a great weekend and I will chat with everyone on Monday morning.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 12-1 (92%). 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 12:15 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.
Marvell Technology (MRVL, $16.24, down $0.16)
MRVL May 18 calls (MRVL150515C00018000, $0.45, down $0.10)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -10%
Stop Target: None
Action: Shares have been choppy but have traded to a 52-week high of $16.78. This is a bullish sign as long as $16 holds into the close.
Western Union (WU, $19.29, up $0.02)
WU March 19 calls (WU150320C00019000, $0.60, flat)
Entry Price: $0.40 (2/13/2015)
Exit Target: $0.80 (closed half at $0.60 on 2/19/2015)
Return: 50%
Stop Target: 40 cents (Stop Limit)
Action: The options traded to a low of 45 cents on this morning’s dip to $19.11. Our Stop Limit is holding and shares are rebounding. Support is at $19.25-$19. Resistance is at $19.50.
Brocade Communications Systems (BRCD, $11.94, down $0.64)
BRCD March 13 calls (BRCD150320C00013000, $0.10, down $0.20)
Entry Price: $0.24 (2/13/2015)
Exit Target: $0.50-$0.75
Return: -58%
Stop Target: None
Action: I would like to see $12 hold into the close.
Boston Scientific (BSX, $16.34, down $0.11)
BSX March 15 calls (BSX150320C00015000, $1.50, down $0.05)
Entry Price: $0.45 (2/10/2015)
Exit Target: $2.50 (closed half at $1.34 on 2/18/15)
Return: 216%
Stop Target: $1.25 (Stop Limit)
Action: Support is at $16.25-$16. Resistance is at $17-$18 over the near-term.
CBOE Holdings (CBOE, $62.09, up $0.13)
CBOE March 67.50 calls (CBOE150320C00067500, $0.10, flat)
Entry Price: $0.80 (2/4/2015)
Exit Target: 60 cents on the other half (Limit Order), (closed half at $1.10 on 2/5/15)
Return: -25%
Stop Target: None
Action: A close above $64 and the 50-day moving average would be bullish. Support is at $61 and the 100-day moving average. A close below these levels could force me to exit the trade for a slight loss.
Trades on Hold — other 2015 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 Open Trades and Closed Trades pages to see all open and closed positions.
JDS Uniphase (JDSU) March 14 calls (From January 2015) — Continue to hold.
Philip Morris (PM) March 75 puts (From January 2015) — Continue to hold.
AT&T (T) March 36 calls (From February 2015) – Continue to hold.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options