Dear Momentum Options Subscriber,
Each Monday, I try to list companies that are reporting earnings during the current week. The announcements tend to move individual sectors, and the market in general, as sentiment grows bullish or bearish on a stock or outlook.
Following today’s close, Arena Pharmaceuticals (ARNA), Carmike Cinemas (CKEC), Palo Alto Networks (PANW) and RigNet (RNET) are the names I will be watching.
On Tuesday, AutoZone (AZO), Best Buy (BBY), Bob Evans Farms (BOBE), Dick’s Sporting Goods (DKS), Kate Spade & Company (KATE), Smith & Wesson Holding (SWHC) and Veeva Systems (VEEV) will announce quarterly results. I’m really interested in VEEV as a possible trade, but the premiums are expensive.
Wednesday’s action includes Craft Brew Alliance (BREW), Ctrip International (CTRP), PetSmart (PETM), Trina Solar (TSL) and Wayfair (W). I like Wayfair and the symbolism of its ticker symbol, which used to be Woolworth’s for the youngsters out there.
Thirsty Thursday’s lineup includes Chef’s Warehouse (CHEF), Costco Wholesale (COST), Diamond Foods (DMND), Fresh Market (TFM), H&R Block (HRB), Joy Global (JOY), Kroger (KR) and Skullcandy (SKUL).
Big Lots (BIG), Foot Locker (FL) and Staples (SPLS) wrap up the week with their numbers ahead of Friday’s open.
The market has been steady today and is challenging fresh highs. The Dow is up 95 points to 18,228, while the S&P 500 is higher by 6 points to 2,110. The Nasdaq is surging 27 points to 4,990, and the Russell 2000 is climbing 5 points to 1,239.
I have another New Trade below, and I have updated our current positions. Stay locked and loaded throughout the rest of the session, as I could have additional updates this afternoon.
Momentum Options Play List
Closed Momentum Options Trades for 2015: 17-1-1 (94%). 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 9 a.m. and 12 p.m. – 1 p.m. 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.
All prices given in this update are current as of 12:35 p.m. EST.
Every new Momentum Options recommendation is listed with the price at which I entered my own position. If the price is slightly different than my recommended entry or exit price when you receive the alert, don’t let that keep you from getting into or out of a trade. Occasionally, you might even get a better “fill” price than what is posted in the Open Trades and Closed Trades.
New Trade
BlackBerry (BBRY, $11.04, up $0.22)
Buy to open the BBRY June 13 calls (BBRY150619C00013000, $0.60, up $0.10) at current levels.
Shares are showing momentum, and I like these call options at current levels. Besides the improving technical picture, the company’s announcement that it would be working with Google last week was a clear indication of who might be the eventual buyer of BlackBerry.
Over the weekend, it was announced that Samsung and BlackBerry will be teaming up for their launch of the Samsung Galaxy 6.
These recent collaborations make Google or Samsung the clear front-runners for a possible acquisition, and I have mentioned that BBRY shares could fetch $20 in a takeover offer this year.
Google or Samsung could probably get a deal done for $15-$17, and a marriage during the Spring season would be a nice way to get M&A activity heated up. Without an acquisition premium, shares still look strong and appear to be headed to $12-$13.
Current Trades
TiVo (TIVO, $11.33, up $0.15)
TIVO May 12 calls (TIVO150515C00012000, $0.59, up $0.12)
Entry Price: $0.42 (2/27/2015)
Exit Target: $0.85 (Limit Order on Half)
Return: 40%
Stop Target: None
Action: Shares have traded to a high of $11.51 today. The next waves of resistance are at $12 and the 100-day moving average. Near-term support is at $11-$10.75.
Read my review of TiVo’s upcoming earnings announcement and why I like the risk/reward this trade offers in today’s Pre-Market Update.
Yahoo! (YHOO, $44.00, down $0.22)
YHOO April 47 calls (YHOO150417C00047000, $0.60, down $0.10)
Entry Price: $0.80 (2/26/2015)
Exit Target: $1.60
Return: -25%
Stop Target: None
Action: Shares are forming a solid base at $43-$44. A move above $45 could lead to a run to $46-$47. The 50- and 100-day moving averages are just below $47, which is where a major battle could occur. I’m expecting a test to this level by mid-April as long as the 50-day moving average does not fall below the 100-day moving average. If $47 clears, shares could easily test $50. If shares fall below $43-$42, I will likely close the trade.
Western Union (WU, $19.90, up $0.38)
WU April 20 calls (WU150417C00020000, $0.50, up $0.10)
Entry Price: $0.36 (2/25/2015)
Exit Target: $0.75
Return: 39%
Stop Target: None
WU March 19 calls (WU150320C00019000, $0.90, up $0.15)
Entry Price: $0.40 (2/13/2015)
Exit Target: $0.80 (closed first half at $0.60 on 2/19/2015)
Return: 88%
Stop Target: $0.58 (Stop Limit)
Action: Shares are on the verge of tripping $20 and have reached a peak of $19.91 today. There is additional fluff from the six-year chart up to $22 on closes above $20.
American Express (AXP, $81.97, up $0.38)
AXP April 87.50 calls (AXP150417C00087500, $0.50, up $0.05)
Entry Price: $0.56 (2/25/2015)
Exit Target: $1.15
Return: -11%
Stop Target: $0.25
Action: Support is at $82-$81.50, followed by $80. The next layers of resistance for AXP are at $82.50, followed by $83.50-$84.
The position could be volatile over the next few weeks, but I like this trade longer term, which is why I used April call options.
Flextronics (FLEX, $12.26, up $0.08)
FLEX April 12 calls (FLEX150417C00012000, $0.60, up $0.05)
Entry Price: $0.67 (2/24/2015)
Exit Target: $1.35
Return: -10%
Stop Target: None
Action: Short-term support is at $12.25-$12. Resistance is at $12.50-$12.75. A close below $12 would be a bearish development.
Marvell Technology (MRVL, $16.36, up $0.24)
MRVL May 18 calls (MRVL150515C00018000, $0.35, flat)
Entry Price: $0.50 (2/18/2015)
Exit Target: $1.00
Return: -30%
Stop Target: None
Action: Near-term support is at $16. A close below this level could lead to a backtest to $15.75-$15.50 and the 50-day moving average. Resistance is at $16.25-$16.50.
Brocade Communications Systems (BRCD, $12.44, up $0.05)
BRCD March 13 calls (BRCD150320C00013000, $0.13, up $0.01)
Entry Price: $0.24 (2/13/2015)
Exit Target: $0.50-$0.75
Return: -46%
Stop Target: None
Action: Support is at $12.25-$12 on a continued pullback followed by the 50-day moving average.
JDS Uniphase (JDSU, $13.72, down $0.05)
JDSU March 14 calls (JDSU150320C00014000, $0.35, flat)
Entry Price: $0.78 (1/8/2015)
Exit Target: $1.00
Return: -55%
Stop Target: None
Action: The close above $13.75 was bullish and should lead to a run to $14+. Support is at $13.40 and the 50-day moving average on a pullback. The breakeven point for the trade is at $14.78. This is one of our longest running trades, and I would like to see a close above $14 this week.
Trades on Hold – other 2015 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. Click on the Open Trades and Closed Trades pages to see all open and closed positions.
Philip Morris (PM) March 75 puts (From January 2015) — Continue to hold.
AT&T (T) March 36 calls (From February 2015) — Support is at $34 and the 200-day moving average. Resistance is at $34.75-$35 — Continue to hold.
CBOE Holdings (CBOE) March 67.50 calls (From February 2015) — Closed first half at $1.10 on 2/5/15 — Continue to hold.
I Want To Hear From You
We’re off to a great start in 2015. In the last two months, we’ve locked in profits on 17 of 18 closed trades, including 5 triple-digit home runs — 286% in Starbucks, 193% and 111% in Boston Scientific, 136% in Marvell and 111% in Opko Health. Besides finding great trades for you, my favorite part of Momentum Options is hearing about your success.
So today I want to know, in addition to more winning trades, what would make Momentum Options more valuable to you? What was your favorite trade, how much success have you had and how have I helped to improve aspects of your trading strategy?
I look forward to hearing from everyone. Simply click here to send me your comments.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options