2:45pm (EST)
Sorry for the late update but we wanted to see how the market held up…
The bulls are running and the rally that we have been planning for since last week waited until Thursday and Friday to happen but it is happening. We have been covering key targets for the major indexes all week and we have been throwing bull’s-eyes which is helping keep our emotions in check. Although we like today’s action, the market is off its highs and we want to make sure those levels hold (or don’t hold) before committing to new trades.
The Dow was showing a triple-digit gain but has given up a bit and is currently up 78 points to 11,853. The S&P is higher by 5 points to 1,278 while the Nasdaq is up 10 points to 2,646. We would like to see 11,900-11,800 hold for the Dow; 1,275 for the S&P; and 2,675-2,650 for Tech.
One stock we want to cover is Nike (NKE, $77.28, down $8.13) which is folding like a cheap lawn chair after missing Wall Street’s estimates. If you look at our track records, you will notice we have played options on this stock numerous times in the past with pretty good success.
In any event, we had Nike put options on our Watch List all week and it was the ONE trade we would have felt comfortable with in making it an official recommendation. Here were our thoughts on Tuesday morning:
“The stock could drop 7%-10% on a disappointing outlook or earnings miss. It is hard to bet against the company but they have been known to disappoint Wall Street in the past. The idea would be to get into these on Wednesday or Thursday with the hope of shares dropping to $80 on Friday. At $82.50 the trade breaks even.” (END)
We profiled the March 85 puts (NKE110319P00085000, $7.75, up $6.25) which were at $1.30 at the time. At today’s prices, the trade would have netted you a 500% return. Was the trade risky? Yes. But you also could have played a strangle or straddle option trade because we had a good feeling shares were going to move 10%. Why? Because we have followed the company for years and in December they warned of higher costs.
If 2010 taught us anything it is patience. Folks, we don’t have to trade this market. We like to trade trends and right now the trend is choppy and volatile.
We reckon it might take a few weeks (not a day) for the world to figure out the Japan crisis and the market will continue to react to global events. What we do know is that the long-term bull market trend has not been broken. We think the sun will shine again and once we get a better picture on world government, Japan, and oil – we think this market is poised to go higher. However, we also know that a lot of technical damage has been done by the bears so we are also being cautious.
Remember, we aren’t bullish or bearish by nature, we just play the trend. You can make a lot of money in downtrends as well as uptrends but choppy markets are best suited for strangle and straddle option trades, or sitting tight. Folks, if you don’t know how these strategies work we can show you.
We profiled an S&P 500 trade last Tuesday (3/8/11) on our Watch List that used both a call and put option because we expected this volatility. These trades are designed to make 20%-50% and some of our subscribers did just that in a little over a week. If you want to learn these strategies and how to play earnings like we showed you on Nike then you should get our trading manual, How to Trade Options on Momentum Stocks.
The trading manual is packed with information that we use in all of our trades. We also include monthly videos to help show you how to find trades and we think the course is one of the BEST deals available on learning how to trade options. We have offered you a special deal for a few months now and pricing will be going up April 1.
If you haven’t ordered a copy, you can get one at no cost (NO CHARGE!) along with our Momentum Stocks Watch List which breaks down dozens of sectors on over 600 stocks if you order a one-year membership to any of our newsletters. The Watch List will help you with what moves sectors and what stocks lead these moves higher or lower. To get the options trading course, our Watch List, and access to our monthly videos – at no charge – all you have to do is order a one-year membership to our Daily publication or our Weekly Wrap. We do not advertise this promotion.
The Weekly Wrap is designed for investors that trade stocks but want to learn options or add options into their portfolio for further income. The publication aims for double digit returns, initially, but our goal is to show you how to make HIGH double-digit gains, possibly triple-digit gains.
The Daily publication is where the action is everyday and we try to release one or two recommendations a week, depending on market conditions. We use mainly call or put options but at times, we may use strangle or straddle option trades.
If you are serious about options and want to open up your playbook then we encourage you to take a look at our mentoring program (the course and videos).
As we head for the weekend, we will probably stand pat as we still have open trades that should do well on a continued recovery. It will also give us time to do some chart work AND work on the upcoming video for March. First quarter earnings season starts in April, folks, and we are setting up for some incredible trades not only now, but over the next few weeks.
We will be back Sunday night with the Weekly Wrap and even though the weekend is here, we already can’t wait for Monday. Have a good one and let’s hope the bulls can hold into the close…
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