The bulls are trying to gather momentum for a final push to new all-time highs and their journey will likely depend on the help or hurt that Amazon.com’s (AMZN, $270.69, down $5.35) and Facebook’s (FB, $31.27. down $1.20) earnings provide.
Amazon is on deck after today’s close and Facebook will be announcing their numbers Wednesday. Amazon carries a rich premium and will need to trounce Wall Street’s numbers while Facebook will have to show strong growth in its mobile division. We haven’t studied the numbers but we have listed a Facebook option trade on our Watch List.
The trade could do very well depending on Facebook’s numbers and shares will likely move 10% or more one way or another. The downside is they disappointment the suit-and-ties and shares fall below $30. For this you would use put options to try to double your money. If shares make a run at $38 on a beat-and-raise, then call options would be your best bet for a triple-digit win.
We will likely stay on the sidelines but we are afraid if we do, shares could rocket like Netflix (NFLX, $164.23, up $2.12) did last week. The earnings trade we profiled was one of the biggest returns we have ever seen (4,000+%) and it showed how a 40 cent option went to over $14 and then $30, Amazing.
Facebook doesn’t have the power to move $100 after earnings but a $5-$10 move is not out of the question.
Research in Motion (RIMM, $15.08, down $1.11) will introduce its new Blackberry 10 model at 10am (EST) on Wednesday and the Fed will give a statement in the afternoon. Tomorrow is lining up to be a big day for news and nonfarm payroll are due out Friday morning.
Hold on tight because we might get white knuckles going into the weekend and the start of February. We love thrill rides and this market is setting up to take us on a wild trip.
We have a lot to cover with today’s trades so let’s get on it. As we head to press, the Dow is up 57 points to 13,939 while the S&P 500 is higher by 5 points to 1,505. The Nasdaq is down 5 points to 3,149.
We have a NEW TRADE and we are closing half positions on another trade that is up 23%. Subscribers, check the Members Area for the updates.