MomentumOptionsTrading.com Midday Update for 6/18/2014
Trading Range Continues/ 2 New Trades
I talked about a trading range developing into today’s Fed announcement and while there is a good chance it stays intact, it will depend on what Fed Head Janet Yellen has to say.
She will have to walk a fine line to keep the market happy and has done so for the most part during her short stint following the Bernanke regime. When Yellen has spoken, the market usually gets a lift due to her “dovish” comments.
If she is “hawkish” today then there could be a continued pullback. The Fed minutes come out at 2pm (EST) and Yellen will speak a half hour later.
There were a couple of solid earnings reports this morning from a few companies I regularly follow and have traded off-and-on over the years.
FedEx (FDX, $146.77, up $6.46) is up nearly 5% after beating estimates by 10 cents. The options were too expensive for a possible earnings trade but I was following the option pits for Adobe Systems (ADBE, $73.05, up $5.51) to start the week.
Shares are zooming after a beat-and-raise quarter and I was tracking the June 70 calls (ADBE140621C00070000, $3.25, up $2.36) as a way to play the continuing breakout. These calls were at 55 cents on Monday morning but nearly doubled after closing at $1.05. This worried me a little as these options expired on Friday and it was a high premium to pay.
On Tuesday, they fell 15 cents and the “ask” was at 90 cents going into the closing bell. Today, they are up 265% but have traded to $4.70, or 400% higher.
I like to take earnings trades from time-to-time but missed this one due to my timidness. I do have an earnings trade for today and hopefully I can get a triple-digit return on tomorrow’s open. I also have another trade on a stock that is on its way to 52-week highs again.
Ahead of the Fed, the market is trending lower with the Dow down 39 points to 16,769 while the S&P 500 is off a point to 1,941. The Nasdaq is lower by 5 points to 4,331 and the Russell 2000 is slipping 4 points to 1,172.
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