12:30pm (EST)
The market has traded in a tight range ahead of today’s FOMC minutes that could
offer some clues to Friday’s upcoming comments from Janet Yellen. Wall Street is
expecting her to stick to her dovish ways but how the market reacts could be a
tossup.
While there could be some volatility after the Fed minutes, a mini trading range
could be in place until Yellen speaks.
The major indexes are mostly positive heading into the second half of trading
with The small-caps lagging.
The Dow is up 28 points to 16,948 while the S&P 500 is higher by 2 points to
1,983. The Nasdaq is advancing a point to 4,528 and the Russell 2000 is
declining 4 points to 1,158.
I have another busy update with trades as you can tell from the headlines after
closing my 10-straight win since early July. I like striking the iron while it’s
hot and why I have added a few more short-term New Trades.
Stay locked-and-loaded into the close as I could have additional updates.
Closed Trades for 2014: 81-39 – 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.
New Trades!
Sony (SNE, $18.90, up $0.04)
Buy to open September 19 calls (SNE140920C00019000, $0.45, up $0.05)
Buy to open October 20 calls (SNE141018C00020000, $0.25, up $0.05)
Action: I am adding these 2 options to replace the September 18 calls (see
below).
Keryx Biopharmaceuticals (KERX, $16.28, up $0.06)
Buy to open September 18 calls (KERX140920C00018000, $0.75, down $0.05)
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 so I like
these options at current levels.
I will provide a full report tomorrow.
Current Trades
GT Advanced Technologies (GTAT, $17.90, down $0.50)
September 20 calls (GTAT140920C00020000, $0.75, down $0.20)
Entry Price: $0.70 (8/18/2014)
Exit Target: $1.40 (Limit Order to close half)
Return: 14%
Stop Target: 80 cents (Stop Limit)
Action: An analyst downgrade on the stock has knocked me out of this trade.
Shares opened below $18 and kissed a low of $17.15.
The call options opened at 60 cents before recovering to reach 85 cents on the
bounce back to $18.20. This is why it is imperative you use Stop Limits when
closing trades and Limit Orders when trading options and stocks.
I will have to read more into the downgrade but the momentum was lost following
the negative comments from the suit-and-ties.
I will keep shares on my Watch List for a possible reentry point.
Sony (SNE, $18.90, up $0.04)
October 19 calls (SNE141018C00019000, $0.60, flat)
Entry Price: $0.45 (8/18/2014)
Exit Target: $0.90
Return: 33%
Stop Target: 45 cents (Stop Limit)
September 18 calls (SNE140920C00018000, $1.00, down $0.05)
Entry Price: $0.50 (8/14/2014)
Exit Target: $1.25-$1.50 (Limit Order on another 1/3 at $1.25) (closed 1/3 at
$1.00 on 8/19/14)
Return: 87%
Stop Target: 90 cents (Stop Limit remaining 2/3)
Action: The Stop Limit on the September 18 calls has triggered despite shares
only losing 8 cents on the open. To say I feel Charlie Browned would be an
understatement.
I still believe shares make a run past $20 and why I added new positions.
Yahoo (YHOO, $37.49, down $0.34)
September 38 calls (YHOO140920C00038000, $1.55, down $0.15)
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 (Stop Limit)
October 43 calls (YHOO1018C00043000, $0.90, down $0.05)
Entry Price: $0.80 (8/11/2014)
Exit Target: $1.20-$1.60
Return: 13%
Stop Target: 80 cents (Stop Limit)
Action: The Stop Limits are holding up but could be hit on further weakness. I
would like to see $37-$36.75 hold on any pullback.
World Wrestling Federation (WWE, $14.74, up $0.34)
September 15 calls (WWE140920C00015000, $0.55, up $0.20)
Entry Price: $0.50 (8/6/2014)
Exit Target: $1.00+
Return: 10%
Stop Target: None
Action: The next wave of resistance is at $14.50-$14.75 and if cleared, will
likely get these call options “in-the-money” and the trade back to even.
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, $55.95, down $0.37)
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) – The rebound above $98 was bullish
and I have said if shares clear $100 I will likely close the trade – continue to
hold, for now.