12:40 p.m. (EST)
Futures were showing a strong open throughout the night and held up into this morning’s open. Monday’s have been good to the bulls over the past month and they are looking to extend that streak to 5-straight if current levels hold.
The Financial stocks are showing some strength as the Financial Select Spiders (XLF, $23.24, up $0.22) are rushing to fresh 52-week peaks. Perhaps a continued bullish clue if the breakout holds.
M&A action is back in focus as well as America’s 40% corporate tax rate. Is seems Burger King Worldwide (BKW, $32.22, up $5.11) has had enough of our government’s spending ways and ballooning debt that they no longer want to support their habits.
Instead, they might be teaming up with Tim Hortons (THI, $75.65, up $12.81) and Canada’s corporate tax rate of 26.5%. Burger King would be buying the company to save money while in the process, building the world’s third largest burger brand name. The strategy makes sense as Tim’s is the largest distributor of coffee and doughnuts in Canada and BK’s breakfast menu has been struggle at best.
I have been mentioning and monitoring these tax inversions deals of late and future ones that could come but clearly corporate America isn’t waiting on Congress to lower the corporate tax rate.
If Apple (AAPL, $101.91, up $0.59) announced a deal to buy an overseas company, it might encourage the zombies to do something quicker with our corporate tax rate. However, this burger/ coffee deal will likely go unnoticed with the government on vacation through the beginning of September.
Of course, much of Wall Street has been away this month as well and volume will slack again this week as traders try to get one last vacation in. I said by the time they got back they could be chasing the bulls.
Heading into the second half of trading, the Dow is up 98 points to 17,100 while the S&P 500 is higher by a 9 points to 1,997 and has tripped 2K. The Nasdaq is popping a 12-pack to 4,550 and the Russell 2000 is up 7 points to 1,167.
The current trades are getting some nice pin action and I have a New Trade I am adding to the Daily portfolio. Subscribers, check the Members Area for the updates and stay locked-and-loaded into the close as I could have additional alerts for both the Daily and Weekly into the closing bell.
MOMENTUM OPTIONS PLAY LIST
Closed Trades for 2014: 83-40 – 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.
Rubicon (RBCN, $6.46, up $0.18)
December 8 calls (RBCN141220C00008000, $0.35, up $0.05)
Action: I did a big write-up on this company in the Weekly Wrap and mentioned shares may be bottoming. I want to start building a new batch of trades into October, November, and December and I like these calls at current levels.
Current Trades
Sony (SNE, $19.03, up $0.17)
September 19 calls (SNE140920C00019000, $0.50, up $0.05)
Entry Price: $0.45 (8/20/2014)
Exit Target: $0.90
Return: 0%
Stop Target: None
October 20 calls (SNE141018C00020000, $0.35, flat)
Entry Price: $0.25 (8/20/2014)
Exit Target: $0.50-$0.75
Return: 40%
Stop Target: None
October 19 calls (SNE141018C00019000, $0.70, up $0.05)
Entry Price: $0.45 (8/18/2014)
Exit Target: $0.90
Return: 56%
Stop Target: 45 cents (Stop Limit)
Action: Sony performed well on a technical basis last week after trading to a high of $19 midweek. A close above this level should get $20 in play. Support is at $18.75.
Keryx Biopharmaceuticals (KERX, $16.83, up $0.94)
September 18 calls (KERX140920C00018000, $1.20, up $0.40)
Entry Price: $0.75 (8/20/2014)
Exit Target: $1.50
Return: 60%
Stop Target: None
Action: Shares have traded to a high of $16.90 today and a close above $17 would be bullish.
Yahoo (YHOO, $37.73, down $0.28)
September 38 calls (YHOO140920C00038000, $1.60, down $0.15)
Entry Price: $1.25 (8/11/2014)
Exit Target: $1.90-$2.50 (closed half at $1.90 on 8/22/14, Limit Order to close other half at $2.50)
Return: 40%
Stop Target: $1.50 (Stop Limit on other half)
October 43 calls (YHOO1018C00043000, $0.95, down $0.05)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.20-$1.60
Return: 19%
Stop Target: 85 cents (Stop Limit)
Action: Shares have slipped below $38 but the Stop Limits are holding, for now.
World Wrestling Federation (WWE, $14.86, up $0.22)
September 15 calls (WWE140920C00015000, $0.55, up $0.10)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: 10%
Stop Target: None
Action: There is a gap to fill up to $17 and the 200-day MA is at $17.44. A run to these levels will make this trade a big winner if $15 clears this week.
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 and only cost 50 cents.
Pool (POOL, $56.15, down $0.20)
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 that is still holding.
The break-even point for the trade is at $48.90, technically, by mid-October. These options have over 2 months before they expire.
Trades on Hold – other 2014 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. View all open and 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. 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.