MEMBERS AREA
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 2013: 133-74 – the Weekly Wrap is 41-4 for 2013 (85-6 since 2011) and is designed for traders that want to use options with less risk.
1:30pm (EST)
Herbalife (HLF, $76.14, up $1.31)
January 82.50 calls (weekly)(HLF140103C00082500, $1.40, down $0.20)
Entry Price: $1.70 (12/17/13)
Exit Target: $3.80
Return: -18%
Stop Target: None
Action: These options opened at $1.60 and traded up to $1.72 as we were establishing positions and when the vitamin story broke. This has been the high for the session so we shaved 20 cents off by using a limit order after we went to press. The calls have traded down to $1.25 and have since rebounded, somewhat.
The vitamin story broke as soon as we were going to press and we were caught off guard by the news. This does change the dynamics of the trade slightly but we based our research on shares reaching $85 by yearend and why we used the weekly January options. We plan to hold this trade open up until December 31 and we will see where things are at by then. The vitamin story has always been debated and we are expecting Herbalife to cover this news and provide a better understanding between good and bad vitamins. This will be a volatile trade so try not to worry about the price swings over the next few days. Our breakeven point for the trade is at $84.20 but hopefully we can get a quick run past $80 this week to lock-in profits.
Vera Bradley (VRA, $22.82, up $0.27)
January 22.50 puts (VRA140118P00022500, $0.90, down $0.10)
Entry Price: $1.20 (12/10/13)
Exit Target: $2.40
Return: -25%
Stop Target: None
Action: Another test to support at $23 is holding but it is thin with risk up to $$24 and the 20-day MA. We are expecting a drop to $21-$20.50 by mid-January.
Pulte Group (PHM, $18.05, down $0.06)
January 20 calls (PHM140118C00020000, $0.15, flat)
Entry Price: $0.50 (11/27/13)
Exit Target: $1.00
Return: -70%
Stop Target: None
Action: There is further risk down to $18 and then $17.50. While there could be a near-term test to this level, we still feel as though shares will be north of $20 come mid-January.
Opko Health (OPK, $8.23, down $0.86)
January 11 calls (OPK140118C00011000, $0.20, down $0.10)
Entry Price: $0.65 (11/26/13)
Exit Target: $1.30
Return: -69%
Stop Target: None
Action: Shares are lower on acquisition news and we did a big write in our Weekly Wrap a little while ago on the company and stock. We noted the company’s CEO purchased 150,000 shares between $8.55-$9.12 last Friday.
Support is at $8.50 but there is further risk to $7.50 on continued weakness. Short-term resistance is at $9.50 and a close above $10 would indicate the short selling is complete.
We have done our own research and we have written about Opko in our Weekly Wrap. We are expecting some good news on the company’s Phase 3 trial results for its cancer drug, Rolipitant, this month.
Galena Biopharma (GALE, $4.01, up $0.04)
January 2.50 calls (GALE140118C00002500, $1.50, flat)
Entry Price: $0.30 (11/11/13)
Exit Target: $0.90 (closed a quarter @ $1 on 11/21/13, closed a quarter @ $1.50 on 12/10/13)
Return: 358%
Stop Target: $1 on remaining half position (Stop Limit)
Action: We would like to see a close solidly above $4 today. Support is at $3.75 on another close below $4. Resistance is at $4.50. We have a stop limit of $1 on the other half of the trade that will likely get triggered if shares fall below $3.50.
Other 2013 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 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.
Millennial Media December 7.50 calls (from October 2013) – Shares need to clear $7.50 by Friday’s close. The options are asking a nickel and there is no bid.
Peabody Energy December 22 calls (from November 2013)– Shares are testing $18 again and the December calls will likely expire worthless. The ask is at a penny.
January 23 calls (from November 2013) – These calls are bidding a nickel with the ask at 6 cents so let’s close this leg of the trade at current levels.
Kodiak Oil & Gas December 13 calls (from November 2013) – The ask is 5 cents and there is no bid as these options will likely expire worthless on Friday’s close.
Ariad Pharmaceuticals January 7 calls (from December 2013) – Shares are up 6% today and back over $4. We will bring back coverage if shares can push $5. Continue to hold.
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 in the morning.
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10:10am (EST)
New Trade!!!
Herbalife (HLF, $77.47, up $2.64)
Buy to OPEN January 82.50 calls (weekly)(HLF140103C00082500, $1.90, up $0.30)
Action: We like these options at current levels. These are weekly options so make sure you get the right ones. Shares are moving fast so use limit orders to get the best fills.
*********************
9:00am (EST) continued…
The Dow surged 129 points, or 0.8%, to close at 15,884 on Monday. The blue-chips traded to a high of 15,930 and we mentioned we wanted to see a close above 15,900. Support is at 15,800 with risk down to 15,600 while a close above 16,000 would be bullish.
The S&P 500 soared 11 points, or 0.6%, to settle at 1,786. The index reached a peak of 1,792 and missed our go target of 1,790. Support is at 1,775 with further risk down to 1,750 on a close below this level. A rebound past 1,790 and more importantly 1,800 would be bullish.
The Nasdaq zoomed 28 points, or 0.7%, to finish at 4,029. Tech kissed a high of 4,043 and we wanted to see a finish above 4,050. The close back above 4,025 was slightly bullish with support at 4,000 still holding. A break below this level will likely get 3,950-3,900 in play.
The Russell 2000 jumped 13 points, or 1.2%, to end at 1,119.85. The small-caps cleared 1,110 on the open and we wanted to see the bulls hurdle 1,120 by the close. The index touched a high of 1,120.17 and fell just short of clearing our resistance target at 1,125. A close above this level would get 1,135-1,150 back in play as long as 1,110-1,100 holds as support.
The S&P 500 Volatility Index ($VIX, 16.03, up 0.27) stayed above 15 despite the strong pop at the open and we flashed warning signs to remain somewhat cautious. The VIX should have broken below 15 on yesterday’s action which is telling us volatility remains elevated after the index settled near its high (16.08).
The 20-day MA for the Dow is at 15,956; the 20-day MA is at 1,794 for the S&P 500. The Nasdaq’s 20-day MA is at 4,012 while the 20-day MA for the Russell 2000 is at 1,120 and the 2 main indexes we will be watching into today’s FOMC meeting.
As we head to press, futures look like this: Dow (xx); S&P 500 (xx); Nasdaq (xx).
MEMBERS AREA
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 2013: 132-74 – the Weekly Wrap is 40-4 for 2013 (84-6 since 2011) and is designed for traders that want to use options with less risk.
Vera Bradley (VRA, $22.55, up $0.08)
January 22.50 puts (VRA140118P00022500, $1.00, down $0.10)
Entry Price: $1.20 (12/10/13)
Exit Target: $2.40
Return: -17%
Stop Target: None
Action: Support at $23 is holding but it is thin with risk up to $$24 and the 20-day MA. We are expecting a drop to $21-$20.50 by mid-January. Monday’s high was $22.90.
Pulte Group (PHM, $18.11, up $0.08)
January 20 calls (PHM140118C00020000, $0.15, flat)
Entry Price: $0.50 (11/27/13)
Exit Target: $1.00
Return: -70%
Stop Target: None
Action: There is further risk down to $18 and then $17.50. While there could be a near-term test to this level, we still feel as though shares will be north of $20 come mid-January.
Opko Health (OPK, $9.09, up $0.12)
January 11 calls (OPK140118C00011000, $0.30, flat)
Entry Price: $0.65 (11/26/13)
Exit Target: $1.30
Return: -54%
Stop Target: None
Action: Short-term resistance is at $9.50 and a close above $10 would indicate the short selling is complete. Support is at $8.50 but there is further risk to $7.50 on continued weakness.
We have done our own research and we have written about Opko in our Weekly Wrap. We are expecting some good news on the company’s Phase 3 trial results for its cancer drug, Rolipitant, this month.
Galena Biopharma (GALE, $3.97, down $0.17)
January 2.50 calls (GALE140118C00002500, $1.50, down $0.15)
Entry Price: $0.30 (11/11/13)
Exit Target: $0.90 (closed a quarter @ $1 on 11/21/13, closed a quarter @ $1.50 on 12/10/13)
Return: 358%
Stop Target: $1 on remaining half position (Stop Limit)
Action: Support is at $3.75 on another close below $4. Resistance is at $4.50. We have a stop limit of $1 on the other half of the trade that will likely get triggered if shares fall below $3.50.
Other 2013 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 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.
Millennial Media December 7.50 calls (from October 2013) – HOLD
Peabody Energy December 22 calls (from November 2013)– HOLD
January 23 calls (from November 2013)
Kodiak Oil & Gas December 13 calls (from November 2013) – HOLD
Ariad Pharmaceuticals January 7 calls (from December 2013) – HOLD
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.
Jabil Circuit (JBL, $19.68, up $0.61)
January 19 puts (JBL140118P00019000, $0.55, down $0.25)
Thoughts: Earnings are due out on Tuesday. We have been bullish on JBL in the past but shares look like they could drop below $18 if earnings come in below expectations.
Oracle (ORCL, $33.54, up $0.31)
December 32 puts (ORCL131221P00032000, $0.25, down $0.05)
January 32 puts (ORCL140118P00032000, $0.52, down $0.08)
Thoughts: Earnings are due out on Wednesday. This is our favorite earnings trade for the week and while we have listed December puts, we will likely use the January puts if take action. Shares could test $30 if Oracle pulls up lame on its earnings numbers.
Carnival (CCL, $36.47, up $0.48)
January 36 puts (CCL140118P00036000, $1.00, down $0.15)
Thoughts: Earnings are due out on Thursday. A close above $36.50 ahead of earnings might be a bullish sign but we feel shares could test the low $30’s if the company offers weak guidance going forward.
SolarCity (SCTY, $51.79, up $0.63)
January 45 puts (SCTY140118P00045000, $1.30, down $0.20)
January 47 puts (weekly) (SCTY140103P00047000, $0.95, down $0.30)
Thoughts: Shares could be headed for a back test to $40 but the options are expensive. We would like to see a test to resistance at double-nickels before possibly going short.
Morgan Stanley (MS, $30.92, down $0.17)
January 32 calls (MS140118C00032000, $0.55, down $0.10)
Thoughts: Resistance is at $31.50. Support is at $30. A close below $30 would be bearish.
Exact Sciences (EXAS, $12.04, down $0.10)
January 13 calls (EXAS140118C00013000, $0.35, down $0.05)
Thoughts: Resistance is at $12.25-$12.50 and a close above this level would be bullish for a run past $13 that could lead to $14-$15. Support is at $11.50 and the 50-day MA with risk down to $11 on a close back below these levels.
Twitter (TWTR, $56.61, down $2.39)
January 60 calls (TWTR140118C00060000, $3.10, down $1.20)
January 49 puts (TWTR140118P00049000, $1.15, up $0.25)
Thoughts: Watch for now.
Gold Shares (GLD, $119.69, up $0.31)
January 115 puts (GLD140118P00115000, $1.20, down $0.20)
Thoughts: We have said the yellow metal could touch $1,100 this year. We could go short on a break below $117.50 but we would love to see a back test to $122 this week.
Cliff’s Natural Resources (CLF, $23.76, up $0.25)
January 25 calls (CLF140118C00025000, $0.85, up $0.05)
Thoughts: The close below $24 was bearish and could lead to the low $20’s.
iShares Russell 2000 (IWM, $111.15, up $1.31)
January 114 calls (IWM140118C00114000, $0.95, up $0.25)
January 107 puts (IWM140118P00107000, $1.10, down $0.40)
Thoughts: We could go short on a close below $109 or long on a pop past $112.50.
International Business Machines (IBM, $177.85, up $5.05)
January 170 puts (IBM140118P00170000, $1.20, down $1.45)
Thoughts: We are looking for one last push to $180 before possibly going short. Support is at $170 and a close below this level would be very bearish that could have us on board.