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Market Volatility Continues

Friday, February 12th, 2010

1:05pm (EST)

The market is taking one on the chin today as most of the major indexes are experiencing losses but have come of the lows. The bulls have traded blows, literally, every day this week and after the win yesterday, it’s the bears turn.

There are a lot of elements causing today’s sell-off but more news that China said it would require banks to increase reserve levels is the biggie. It was the second time in a month that this sentiment was echoed which would limit the amount their banks can lend.

Currently, the Dow is down 47 points to 10,097 while the S&P 500 is off by 4 points to 1,074. Meanwhile, the Nasdaq is higher by a point to 2,178 and now seems to be the “strongest” of the big three.

Trading continues to be choppy but our feeling is that individual investors do not want to commit new money to the market and traders are squaring up positions before the long holiday weekend. The market will be closed on Monday for President’s Day.

Next week is options expiration week as the February chains expire NEXT Friday.

Folks, there could be an explosive move in store with a possible Greece resolution, options expiration week, and more pending news out of Washington expected. China will be closed next week.

We should also get a clear signal on which way the market is headed. A lot of money is being bet on the short-side but we aren’t taking sides just yet. There are some interesting gyrations developing and there is a chance the market bounces off these current lows to much higher levels.

Remember, when the herd thinks alike, the herd is likely to be wrong. Right now, the sentiment on Wall Street is calling for a market correction, a pullback, or we are headed below previous lows, meaning Dow 7,500. We don’t see that in the cards but we always look at both sides of the ball and try to play the trend.

We mentioned this morning that our trading manual is ready and folks, we are really super excited to bring you this product. Our hope is to show you how to set-up a plan to follow the market, learn how it works and to find your own option trades.

You will be able to look at a stock and its chart and figure out EXACTLY what the stock needs to do for the trade to be profitable. You will learn to figure out the best entry and exit prices and what your risks and rewards are.

Plus, with our expanded Watch Lists that includes up to date charts and detailed descriptions of what each company does, you will able to follow hundreds of stocks. However, we teach you how to focus on where the money is flowing and what sectors are hot and which ones are turning cold.

We wanted to roll this out to start the New Year but we wanted to wait because of the current changes taking place in the options market right now.

We have been using new options quotes as many of you have seen in our Members Area and last weekend we did a special write-up on how to decipher the new symbols. If you haven’t read it, click here. It is a great read and it actually makes it easier to remember option symbols.

We are planning for hard copies to be available in March and there will be a special rate for the first month. We are making this an incredible deal and it is our way of thanking all of you who have followed us for the last 2 years. One bonus is that anyone who purchases our course will get an extra one-year membership added to their current subscription or if you are a new subscriber it will be included.

We are excited about the opportunity to teach you some of the neat features that will show you option trades that could provide you returns of up to 100%, 200%, 800% and even 2,500%. Our track records from 2008 and 2009 are littered with these types of returns and you can view them at anytime.

Our 2010 track record will be available in a few weeks as we still have open trades for February so look out for it as well. Of course, if you are already a subscriber then you have access to it daily. There you will find all of our CURRENT trades AND all of the closed ones for the year. If you have any questions on the manual, please email us over the weekend and we will get them answered.

We will be back MONDAY night with the Weekly Wrap so everybody have a safe and happy 3-day weekend.

Tags: option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Hot Stocks, Market Analysis, Market Commentary, Option Trades, Sectors, Strategies, Trading Psychology, Trading Tips, Watch Lists, strangle option trades | Comments Off

Working For The Weekend

Friday, January 29th, 2010

12:45pm (EST)

The bulls showed up today to try and take the market into positive territory for the month but they have a long way to go. We have talked about how Wall Street uses January as a barometer to gauge how the market might trade for 2010 so we knew we would probably go higher today.

The theory goes that if the Dow ends January higher there is usually a pretty good chance the market ends higher for the year. If the index is lower, the market ends the year with a loss.

Based on this theory we thought the bulls would show up yesterday as well because they needed a couple of hundred points to take the Dow into positive territory for the month. They lost 100 yesterday so we are about 300 points away…Currently, the Dow is at 10,145, up 25 points and would need to reach 10,428 for the bulls to pull this one off.

If the Dow does end the month for a loss, we don’t think it’s a slam dunk we end 2010 lower but the current market environment feels like we are going lower over the near-term despite today’s rally.

We wanted to do an update on Amazon.com (AMZN, $129.00, up $2.97) now that we can give you exact prices for the strangle trade we talked about yesterday. Here were our comments:

“The premiums are probably overpriced or super rich for Amazon.com (AMZN, $123.19, up $0.44) which is why we won’t play this one but the ideal place to try and do this trade would be at the $125 level.

The February 135 calls (QZNBG, $2.90, down $0.05) and the February 115 puts (QZNNC, $3.80, flat) would cost $6.70 or $670 for just one contract of each which is why we said the premiums are rich and we are NOT doing the trade.”

If we take the current prices for these options the calls are at $2.16, down $1.42 while the puts are at 90 cents, down $2.30. This is only $3+ in premium so you would be down 50%.

The strangle trade with Netflix (NFLX, $63.15, up $0.11) wasn’t priced as rich as Amazon’s and we used both of these trades to show the risks of not knowing what to look for. One trade would have returned 200% while the other was a loser.

We have received a tremendous amount of feedback from our subscribers wanting these types of trades so we will be offering them in the future at no additional charge. However, please remember these types of trades won’t be as frequent because we have to find the right candidates and we need movement of 10%. In other words, they are a little harder to find.

Special Announcement: We have told you about the new changes coming to the options market and it looks like it is right around the corner. New options tickers will take effect on February 12th and some financial sites are already using the updated 21-character symbols.

We will be talking about these changes in the Members Area THIS weekend as we also begin to implement the new ticker symbols.

One bit of good news…Berkshire Hathaway Class B (BRK/B, $77.44, up $3.69) continues its recent surge and our subscribers are enjoying some HUGE gains on the call options we recommended last Thursday. At current levels, the trade is up 200%. We have locked in profits on half but we think this stock easily runs to $100 sometime this year.

Tags: option picks, option signals, options alerts, stock options trading
Posted in Company Commentary, Market Analysis, Market Commentary, Option Trades, Strategies, strangle option trades | Comments Off

Apple Set To Report Earnings

Monday, January 25th, 2010

12:30pm (EST)

The bulls are out today in an effort to take back some of the momentum from the bears after last week’s drubbing. The Dow started off strong and looked headed for a triple-digit gain but is only up 51 points, to 10,224, as we go to press.

The index reached 10,256 but has come off its high after a disappointing housing report. The National Association of Realtors said December sales fell 16.7% to a seasonally adjusted annual rate of 5.5 million, from an unchanged pace of 6.5 million in November. Wall Street had been expecting a 10% decline but the reaction has been mild as an expected sharp drop was in the cards after the tax credit for first-time homeowners was due to expire and was later extended.

The bulk of earnings will get underway this week and all eyes will be on Apple (AAPL, $201.43, up $3.68) after the close today. The stock was at a 52-week high last Wednesday when it reached $215 but dropped nearly 8% to close out last week.

We know Apple will report a blowout quarter but will it be enough to satisfy Wall Street’s “whisper numbers”? We have already seen quite a few companies crush Wall Street’s estimates and we honestly don’t know where the stock will trade this time out after reporting earnings.

Apple will probably move at least 10% and here is how we get that information.

If you take the premium of the February 200 calls (APVBT, $10.60, up $0.75) and the February 200 puts (APVNT, $9.00, down $3.00) you get about $20 ($10.60+$9.00) which is 10% of $200.

As you can see, the premiums are super rich but these two options will be on the move all week. It’s possible that this would be a good straddle option trade because shares of Apple will be volatile. The company will also unveil its new tablet on Wednesday and the rumored price tag is $1,000.

There are multiple ways to play the earnings and you could also use a strangle option trade. The February 180 puts (APVNP, $2.50, down $1.55) and the February 220 calls (AJLBX, $3.40, up $0.10) could be used to try to capture some profits on the volatility but we don’t really like betting against Apple.

Either of these two options could double on Tuesday depending on how the market reacts but we aren’t playing either trade. We are momentum traders and as much as we would love to go long on the calls we just don’t trust the current market environment.

With that said if Apple tanks on Tuesday we may be able to pick up some cheaper call options as a possible “rebound” trade. If shares move higher after earnings the stock could be at new 52-week highs.

We also think there is a small possibility of Apple announcing a stock-split which in our minds would be the perfect time to make such an announcement. Normally, Apple favors a 2-for-1 split and the last time they did one was in 2005 when the stock was at $90. In 2000 the company did a 2-for-1 when shares were approaching $100.

Steve Jobs loves the spotlight and it’s time for another split. We are also watching Verizon (V, $30.64, up $0.30) as we feel there is a good chance Apple announces a new partnership with them to carry the iPhone.

Special Announcement: We have told you about the new changes coming to the options market and it looks like it is right around the corner. Next month, new options tickers will take effect and some financial sites are already using using the updated 21-character symbols.

We will be talking about these changes in the Members Area over the next few weeks as we also begin to implement the new ticker symbols. Some of our current trades do not expire for 4 and 5 months so we need to catch everyone up to speed. The change will make it much easier to look up option symbols although some already hate it.

We have updated the current positions and we urge investors to remain patient and focused as the markets goes through its current ebb and flow. We play both sides of the market and remain excited about a market correction if there is one coming.

We still think we get a nice rally before the market fades but we are watching key support levels closely. We have seen major buying come in over the past 10 months when the market dips 5% so we will have to see how this one plays out.

Tags: option picks, option signals, options alerts, stock options trading
Posted in Apple, Earnings, Market Commentary, Strategies, Trading Psychology, Trading Tips, strangle option trades | Comments Off

Bulls Fighting Back

Tuesday, November 24th, 2009

12:45pm (EST)

The market is has come off its morning lows but is still in negative territory for the day. The China news really put a damper on yesterday’s rally. The Chinese banks were pressured by concerns of capital-raises and some regulators want higher capital ratios.

As a result, the Dow is currently down 44 points to 10,406 and the S&P 500 is off by 3 to 1,103. The Nasdaq is lower by 11 points to 2,164.

All of the Financial stocks on our Watch List are mostly lower. These stocks have been tricky to trade which is why we are waiting for the storm to pass. We made some great returns when they bottomed in March and reported back-to-back solid quarters but we are in transition with them right now.

We haven’t shorted the Financials either although there are a few that we still think are due for major corrections…American International Group (AIG, $34.37, down $0.91) is still over-inflated and should be a single-digit stock as well as Moody’s (MCO, $23.64, up $0.67). Patience will pay-off as we feel both of these stocks are headed lower at some point in the future.

Another stock we were/ are looking at is a possible option trade in A123 Systems (AONE, $14.75, up $0.22). We did a big write-up on October 21st and we simply blew this one folks. The stock was at $24 and now stands at $14. The straddle option trade would have been a thing of beauty and we do use them every now and again. We are bullish on A123’s long-term prospects but a spat a bad news has investors bailing like rats on a ship. Here we our thoughts a month ago:

“A123 Systems (AONE, $24.63, up $0.11) is the one we want to start watching…like a hawk. Its 52-week high is $28.20.

A few things we like to see are volume and volatility and this stock has both. The average daily volume is over 5 million shares and the option pits are pretty liquid.

The company makes lithium-ion batteries and had high hopes over a year ago as they thought they were closing in on a Chevy Volt contract but eventually lost out. However, they signed a deal to supply Chrysler with batteries for its cars. And the market for these types of batteries is HUGE.

Besides cars, think smartphones and other products…every iPod, iPhone and Apple laptop has a lithium-ion battery. The “new” battery is smaller, more energy efficient, longer lasting, and are effectively replacing the previous generation of nickel metal hydride batteries.

Of course, there is competition in the space but with other car manufacturers joining the race for electric cars, and the transition over to these batteries have dramatically improved the potential market. However, many other would-be competitors have not even begun mass production yet which will play into A123’s hand once demand starts to peak.

A123 will likely play a big role for temporary energy storage for utilities and they were recently awarded a $250 million grant from the Department of Energy to build a manufacturing plant.

On the negative side, the stock could see some selling pressure once their “lock-up period” is up. Typically, when a company goes public, its insiders can’t sell their shares for a certain period of time which is usually 90 days to a year. If a company is full of smoke-and-mirrors or has some skeletons in its closet, company insiders who know about them can’t act on this “inside” knowledge until after the lock-up period has ended. They will start to sell stock before the public learns of any bad news hoping to get out at the top.

Now, I’m not saying A123 is shady or anything, I’m just explaining how the IPO market works.

A123 appears to be a boom or bust company and from the way it has been trading it has become clear there is action in the stock. The key for us will be to watch for an opportunity to get into some options. We might go long, we might go short, or we might do a straddle or strangle trade. However, we have to wait for our opportunity.

Keep this one on your Watch List and when we see a trade, we will alert our subscribers.” (END)

Well, the “hawk” left its perch and we didn’t get into a trade. Bummer.

We are excited about the possibilities of an Apple (AAPL, $204.12, down $1.76) deal in the future but the company has been hit with some bad news of late that has caused a steep drop in its shares.

Fiat recently tinkered with Chrysler’s electric car plans which included A123’s batteries and this has caused some concerns due to the uncertainty. The company also recently announced earnings and posted a $23 million loss but did see an increase in revenue.

On the bright side, electric cars are the future and there is a major push for their development. President Barack Obama’s recent China visit was a good indication that things will happen sooner rather than later. He has called for the U.S.-China Electric Vehicles Initiative to help get the snowball rolling.

We are still uncertain of the direction A123 Systems shares take from here but we would think most of the “bad” news is already priced into the stock.

Only time will tell if electric cars will turn into an avalanche for the American consumer but if you can identify the companies that have their fingers in the pie before it is main stream then there may be some opportunities down the road.

Which brings up a good point.

Most of you know we are working hard to get the “Momentum Options Trading” Playbook (or whatever we call it) ready and it is our trading manual that is aimed at teaching you how to trade options and to find your own trades. The manual will go hand-in-hand with the website and we really believe it is a must read if you really want to understand the market and to get a better “feel” for our trades.

Yes, we are an option trading service but we also want to be your mentor as well. We have repeatedly said we will limit the number of subscribers we are allowing because we don’t want our trades crowded but we also want you to LEARN how to trade options. We have a success rate of 80% on our trades and it isn’t by accident.

We hope that you seriously consider a subscription before we are full. We cover a lot of things outside of the Members Area but today we wanted to bring you a short story on A123 Systems.

Tags: A123 Systems, American International Group, Apple, momentum stock option trading, Moody's, Netflix, option trading online, option trading picks, options mentoring, options newsletters, options track record, support and resistance levels, triple-digit option trades
Posted in Apple, Company Commentary, Earnings, Financial Stocks, Market Analysis, Market Commentary, Option Trades, Sectors, Strategies, Trading Psychology, strangle option trades | Comments Off

AIG Now Pushing $50

Thursday, August 27th, 2009

12:45 pm (EST)

Wow. I knew last night/ this morning when I was writing the American International Group (AIG, $48.19, up $10.50) blog, I was thinking to myself… “this thing really could hit $50.” Folks, there are no shares to short and the only play has been long for the past few weeks. From 3:30am this morning:

“If AIG continues to shoot to the moon then the calls will continue to go higher and they could triple again if AIG goes to $50. They would be worth $15.”

AIG has hit $50 today and is currently up 30%. The call options I’m talking about are the September 35 calls (IKGII, $15.00, up $9.55) which closed yesterday at $5.45. As Biggie Smalls would say..”It Was All a Dream”…but this dream has come true. Bam, The September 35’s are right at $15, up 175%. Folks, they opened at $7.50 and have doubled.

Of course, the September 25 puts (AIGUY, $0.40, down $0.16) are trading lower BUT look at how much value they have despite the $10 pop in AIG.

The real story here is this. Remember, AIG did a 20-to-1 REVERSE stock split when the shares were at $1 so really shares are back up to $2.50. There is buzz that this thing could go to $100. In reality, that would get the stock back to $5 if the split wasn’t done.

I told you there were a lot of ways to play this stock and if you are in the September 35’s, you can sell now and lock in a 200% gain from the strangle trade or you can place a stop around $12 if you want to see if AIG continues to run.

For those who were thinking outside the box this morning when the opening bell rang…

The September 50 calls (IKGIX, $6.45, up $5.32) are up an astounding 470%. The calls opened at $1.65. So what does this mean? Well, if you would have bought 10 contracts this morning for $1,650 you would be looking at a profit of $4,800.

Now, the reason the put options haven’t dropped to zero is because options traders are selling a lot of the September 50 calls because there is no stock to short. Continue to hold the September 25 puts and make sure to set a stop on the calls.

Rick@MomentumOptionsTrading.com

Tags: AIG, American International Group, option picks
Posted in strangle option trades | No Comments »

No fancy spreads. No iron condors. No need to watch the markets all day long.

LAWRENCE O.
Hey Rick! Here is an update on what your picks have done in my accounts.

1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

C.J.
Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

SHAUN
Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

MICHAEL K.
I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
profitable calls. Keep up the good work.

PARAG P.
Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

JAY P.
Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

MIKE
Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

TRISH D.
Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

MIN L.
Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock!

JOE G.
Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you!

GREG F.
Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming.

NOEL
I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

TODD F.
Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

PAUL H.
What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you!

NOEL
“Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

CHRISTIAN
“Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.”

JOHN
“I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.”

CHARLES M.
“I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.”

BRYAN C.
“I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.”

JOHN H.
“I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.”

JEFFREY
“Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.”

ED
“I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.”

GREG
“Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

KEN
“Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

GARETT
“Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

TERENCE
“Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

Archive for the ‘strangle option trades’ Category

Market Volatility Continues

Working For The Weekend

Apple Set To Report Earnings

Bulls Fighting Back

AIG Now Pushing $50