MomentumOptionsTrading.com New Trade (SNE) for 1/8/2014
3:10pm (EST)
We have a New Trade that has moved from our Watch List to an official recommendation as shares have surged today on no real news. The technical picture is what is driving the stock and why we are getting into these call options. Shares have cracked $18 and could fly past $20. If so, the options will make us 100+%.
Subscribers, check the Members Area for the updates.
MEMBERS AREA
Sony (SNE, $18.20, up $0.88)
Buy to OPEN February 19 calls (SNE140222C00019000, $0.45, up $0.20)
Buy to OPEN April 20 calls (SNE140419C00020000, $0.55, up $0.20)
Action: We like these calls at current levels. Here were our comments from the Members Area this morning:
There is risk down to $16.50 but Sony could be a buyout candidate in 2014. Apple would be a perfect match. We may wait for $18 and the 50-day MA to clear before going long. We have listed some put options as well in case shares do fall below $16.50. Notice the Island Clusters in the chart. This shows extreme volatility but a break above the major MA’s could lead to a run to $20.
***********************
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 2014: 5-0- the Weekly Wrap is 2-0 for 2014 (87-7 since 2011) and is designed for traders that want to use options with less risk.
1:35pm (EST)
Galena Biopharma (GALE, $6.63, up $1.27)
January 2.50 calls (GALE140118C00002500, $4.00, up $1.10)
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, closed a quarter @ $3.50 on 1/8/14)
Return: 733%
Stop Target: $2.25 on remaining half position (Stop Limit)
February 6 calls (GALE140222C00006000, $1.05, up $0.75)
Entry Price: $0.40 (1/7/2014)
Exit Target: $0.80
Return: 163%
Stop Target: None
Action: We mentioned the analyst upgrade in our Profit Alert but we didn’t mention the Price Target. Maxim has raised their Price target for GALE from $6 to $9. Wow.
General Electric (GE, $27.26, down $0.03)
March 28 calls (GE140322C00028000, $0.45, flat)
Entry Price: $0.45 (1/7/2014)
Exit Target: $0.90
Return: 0%
Stop Target: None
Action: Shares are right at their 20-day MA at $27.24 and there is risk to $26.80 and the 50-day MA on continued weakness. Resistance is at $27.50-$28. The company will report earnings on January 17.
PulteGroup (PHM, $19.75, up $0.21)
February 22 calls (PHM140222C00022000, $0.25, flat)
Entry Price: $0.40 (1/3/14)
Exit Target: $0.80
Return: -38%
Stop Target: None
Action: Shares traded to a low of $19.48 and we said we would stick with the trade as long as $19 holds. The 20-day MA is at $19.08. PulteGroup announces their numbers on January 30.
H&R Block (HRB, $29.48, up $1.01)
February 30 calls (HRB140222C00030000, $0.70, up $0.30)
Entry Price: $0.65 (1/3/14)
Exit Target: $1.30
Return: 8%
Stop Target: None
Action: Shares are trapped between the 20-day MA and 50-day MA. We are expecting a run past $31 that should get us 100% return as long as $28.50 holds on any back test. Support is at $28-$27.50. The recent volatility has been frustrating but is still pointing towards a run past $30 on a close above $29.50.
Other 2014 Portfolio OPEN positions (0): 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.
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.
***********************************
MomentumOptionsTrading.com Profit Alert (GALE) for 1/8/2014
12:10pm (EST)
Galena Biopharma (GALE, $5.98, up $0.62)
January 2.50 calls (GALE140118C00002500, $3.50, up $0.60)
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: 692%
Stop Target: $2.25 on remaining half position (Stop Limit)
Action: CLOSE another QUARTER of the trade at current levels.
Shares have traded to a high of $6.02 on another analyst upgrade. Let’s lock-in another quarter position on the January 2.50 calls as they are fetching $3.50.
We will still have another quarter position open in the January 2.50’s and we have the February 6 calls to play further upside potential.
***********************
9:00am (EST) continued...
The Dow jumped 106 points, or 0.8%, to end at 16,531. The blue-chips kissed a high of 16,562 intraday and did well holding their gains after trading in positive territory all session long. Resistance at 16,500-16,600 needs to be cleared before we can say a rally to new highs will come and support at 16,400 needs to hold on any pullback.
The S&P 500 soared 11 points, or 0.6%, to settle at 1,838. We wanted to see a close above 1,840 and the index pushed 1,840.10 before backing off its peak. A close above this level and then 1,850 would be the green light to higher highs.
The Nasdaq surged nearly 40 points, or 1%, to close at 4,153. We talked last week about 4,150 being the battleground and the close above this level was bullish. The next level of resistance is at 4,175-4,200. Support is at 4,125-4,100.
The Russell 2000 zoomed 10 points, or 0.9%, to close at 1,157. We have been mentioning the bulls would need to clear 1,150 and then 1,160 before a run to all-time highs would resume and yesterday’s pop was a big step in getting 1,175-1,200 back in the mix.
The S&P 500 Volatility Index ($VIX, 12.92, down 0.63) made a move below 12.50 to 12.16 while holding down 13.50. This was another bullish sign in the VIX that possible higher highs are on the horizon for the market.
We opened up few more bullish trades yesterday as we got great entry prices on 2 stocks that could double our options. Remember, all we need is a 5%-8% move in a stock to make 100% with the options and we like the risk/ reward these trades offer.
As we head to press, futures look like this: Dow (+23); S&P 500 (+2); Nasdaq 100 (+4).
Subscribers, check the Members Area for the latest updates. We have added even more possible candidates to our Watch List as possible new trades as the bulls could be on the verge of another breakout. We also have some put options listed in case the bears are setting a trap.
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 2014: 5-0- the Weekly Wrap is 2-0 for 2014 (87-7 since 2011) and is designed for traders that want to use options with less risk.
Galena Biopharma (GALE, $5.36, up $0.16)
January 2.50 calls (GALE140118C00002500, $2.90, up $0.20)
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: 592%
Stop Target: $2.25 on remaining half position (Stop Limit)
February 6 calls (GALE140222C00006000, $0.40, up $0.10)
Entry Price: $0.40 (1/7/2014)
Exit Target: $0.80
Return: 0%
Stop Target: None
Action: Shares have traded to another 52-week high after reaching a peak of $5.59. We have a near-term Price Target of $7 for the stock. Support is at $5.
General Electric (GE, $27.29, up $0.03)
March 28 calls (GE140322C00028000, $0.45, down $0.03)
Entry Price: $0.45 (1/7/2014)
Exit Target: $0.90
Return: 0%
Stop Target: None
Action: Shares are right at their 20-day MA at $27.24 and there is risk to $26.80 and the 50-day MA on continued weakness. Resistance is at $27.50-$28. The company will report earnings on January 17.
PulteGroup (PHM, $19.54, down $0.30)
February 22 calls (PHM140222C00022000, $0.25, down $0.05)
Entry Price: $0.40 (1/3/14)
Exit Target: $0.80
Return: -38%
Stop Target: None
Action: Shares traded to a low of $19.48 and we said we would stick with the trade as long as $19 holds. The 20-day MA is at $19.08. PulteGroup announces their numbers on January 30.
H&R Block (HRB, $28.47, down $0.01)
February 30 calls (HRB140222C00030000, $0.40, down $0.05)
Entry Price: $0.65 (1/3/14)
Exit Target: $1.30
Return: -38%
Stop Target: None
Action: Shares are trapped between the 20-day MA and 50-day MA. We are expecting a run past $31 that should get us 100% return as long as $28.50 holds on any back test. Support is at $28-$27.50. The recent volatility has been frustrating but is still pointing towards a run past $30 on a close above $29.50.
Other 2014 Portfolio OPEN positions (0): 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.
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.
Cliff’s Natural Resources (CLF, $24.45, down $0.05)
January 26 calls (CLF140118C00026000, $0.25, down $0.05)
February 28 calls (CLF140222C00028000, $0.58, down $0.07)
Thoughts: If shares can clear $26.75-$27 we may send out a New Trade Alert. There could also be a back test to $24 so we may have to wait for it to complete.
Osiris Therapeutics (OSIR, $16.92, up $0.68)
February 19 calls (OSIR140222C00019000, $0.80, up $0.20)
Thoughts: The bid/ask spreads are getting better. We are expecting a run past $20 over the near-term.
Spiders Gold Shares (GLD, $118.82, down $0.68)
February 122 calls (GLD140222C00122000, $1.50, down $0.25)
February 114 puts (GLD140222P00114000, $1.30, up $0.05)
Thoughts: We would love to see a test to $120 before a possible drop to $110. Monday’s peak at $120.39 may have been the short-term top we have been looking for.
Exact Sciences (EXAS, $13.74, up $0.84)
January 13 calls (EXAS140118C00013000, $0.80, up $0.35)
February 14 calls (EXAS140222C00014000, $0.85, up $0.25)
Thoughts: We often get emails asking why we don’t use 50% stops on our options trades. Our long-time readers know we do try to use 50% stops on options that trade over $1-$1.25 but on options that trade under $1, we don’t.
The reason is simple as volatility can knock a trade down 25%-50% in a day or week but if support holds OR an event we are waiting to happen, hasn’t happened, we still will likely stay in a trade. An option at 50 cents that drops to 25 cents is a 50% loss. However, the total premium is $500 on 10 contracts and may be a part of an overall batch of current trades. On higher priced options, 10 contracts on $1.50 option is $1,500. This is three 50-cent trades.
We also make mistakes and should have stuck with our chart work when we closed out 2013. We like to get off to good starts and some of the trades we wanted to keep open, we cut for tax reasons and to lighten the load going into 2014 as the market was right up on the fluff targets we gave from November.
As a trader, it is always important to cash-in at the top, and we did, as the first 3 days of 2014 were bearish. Still, we should have kept this trade open as we cut losses on the January 13 calls on the last trading day of 2013. We recommended the trade on the day before Christmas when the January 13 calls were at 45 cents. They were closed at 25 cents. As you can see, they are at 85 cents and could clear $1 on continued strength. We blew it and we apologize.
We like the February 14 calls at current levels as we have said a run to the mid-teens was coming. Shares could push $20 on continued momentuand a break above $15. If we lick our wounds and decide to get back into the fray, we will send out a New Trade Alert. A close back below $12.50 would signal a possible short-term top.
Under Armour (UA, $86.78, up $0.17)
February 95 calls (UA140222C00095000, $1.10, flat)
Thoughts: Shares are approaching 52-week highs again and a break above $88 should lead to $90+. Shares should trip $100 at some point in 2014 and earnings on January 27 could be the catalyst to get shares pushing triple-digits.
Ariad Pharmaceuticals (ARIA, $6.72, down $0.10)
January 7 calls (ARIA140118C00007000, $0.40, down $0.05)
February 8 calls (ARIA140222C00008000, $0.55, flat)
May 9 calls (ARIA140517C00009000, $0.90, down $0.05)
Thoughts: We will likely use the February or May calls to get back in this name. Shares are volatile so we can use these options to play quick moves as they are very liquid. If shares clear $7 again we could send out a New Trade Alert.
Barrick Gold (ABX, $18.327, down $0.08)
February 19 calls (ABX140222C00019000, $0.70, down $0.05)
February 18 puts (ABX140222P00018000, $0.80, down $0.05)
Thoughts: If Gold can make a run back to $1,300 the miners might get a lift. These options were very active yesterday as nearly 2,400 contracts traded. The 200-day MA is at $18.64 and a close above this level would be bullish if it held. If shares fall back below $18 we could go short by using the puts.
Millennial Media (MM, $7.46, down $0.15)
May 10 calls (MM140517C00010000, $0.70, down $0.05)
Thoughts: Shares are in a nice uptrend and a test to $8 could be in the works. Notice the “golden cross” that has formed with the 20-day MA breaking through the 50-day MA (check 1/5/14 Weekly Wrap for chart). A close back below $7 would be bearish and would signal the end of the momentum.
We believe Millennial Media is a takeover target that could catch a bid from one of the bigger players in the game. We aren’t sure if it will come by late February or not but we are watching the May 10 calls as the open interest is pushing 2,000 contracts. We are expecting a move past double-digits over the next 6 months and we could go long on a break above $7.75 with these call options.
PowerShares QQQ (QQQ, $87.12, up $0.80)
January 87 calls (QQQ140118C00087000, $0.75, up $0.25)
February 90 calls (Qqq140222C00090000, $0.47, up $0.12)
Thoughts: The break below $87 could lead to a near-term test of $85 on further weakness. We will likely wait for a break above $88 before going long.
Morgan Stanley (MS, $31.52, down $0.10)
February 32 calls (MS140222C00032000, $0.95, down $0.05)
Thoughts: If Support holds at $30.50 along with the Financial sector, we like these calls for a push past $32.
iShares Russell 2000 (IWM, $114.71, up $0.95)
January 116 calls (IWM140118C00116000, $0.50, up $0.15)
January 111 puts (IWM140118P00111000, $0.20, down $0.20)
Thoughts: We could go short on a close below $112.50 or long on a pop past $115. At current levels the options together might make a good strangle trade.
Imax (IMAX, $28.48, down $0.15)
February 31 calls (IMAX140222C00031000, $0.45, flat)
March 33 calls (IMAX140322C00033000, $0.40, flat)
Thoughts: We believe Imax is a takeover target in 2014. We have covered the company since shares were under $3 in 2008 and said it would be a $10-$20 and then a $30 stock before we suggesting selling it. Disney is an obvious choice as a partner but a Chinese company could make a sweet offer north of $40 for a 33% premium from current levels.
Sony (SNE, $17.32, up $0.02)
February 18 calls (SNE140222C00018000, $0.50, flat)
April 19 calls (SNE140419C00019000, $0.55, flat)
April 15 puts (SNE140419P00015000, $0.40, flat)
July 13 puts (SNE140719P00013000, $0.30, flat)
Thoughts: There is risk down to $16.50 but Sony could be a buyout candidate in 2014. Apple would be a perfect match. We may wait for $18 and the 50-day MA to clear before going long. We have listed some put options as well in case shares do fall below $16.50. Notice the Island Clusters in the chart. This shows extreme volatility but a break above the major MA’s could lead to a run to $20.
PowerShares QQQ (QQQ, $87.20, up $0.80)
March 80 puts (QQQ140322P00080000, $0.53, down $0.12)
April 79 puts (QQQ140419P00079000, $0.67, down $0.13)
Thoughts: We want to show you early how to prepare and play a possible downside slide and these puts have done well since last week when we profiled them. If the QQQ’s test $90 like we hope they will, we can follow different puts on the way up to maximize our entry point on a pullback that may take a few weeks. A back test to $85 could also be in the works.
Twitter (TWTR, $61.46, down $4.83)
February 90 calls (TWTR140222C00095000, $0.95, down $1.25)
February 45 puts (TWTR140222P00045000, $1.45, up $0.25)
Thoughts: We may have to wait a few more weeks but there could be an earnings trade coming.
International Business Machines (IBM, $189.71, up $3.71)
February 180 puts (IBM140222P00180000, $1.95, down, $1.00)
January 190 calls (IBM140118C00190000, $1.75, up $1.10)
Thoughts: We will get a chance to short this stock at some point and we may take a swing if $187.50 holds.