Thursday, May 9th, 2013
The bulls and bears are dancing in the ring today instead of throwing punches as the market has traded in a tight range. Futures were slightly lower ahead of the open despite better-than-expected unemployment numbers but today’s consolidation of the recent gains is bullish as long as support holds.
It’s been a busy day as we have a number of trades in play so our commentary will be light as we focus on our portfolio.
We took profits in another Weekly Wrap winning trade that pushed our 2013 Track record to 14-1 for the publication and 58-3 overall in just over 2 years.
We are also raising stops to protect profits on some positions for our current trades for the Daily so let’s go see where we are at.
As we head to press, the Dow is down 2 points to 15,103 while the S&P 500 is lower by 2 points to 1,630. The Nasdaq is up 2 points to 3,415.
Subscribers, check the Members Area for the updates and we will be back in the morning with a full report.
Note: We could have additional Profit Alert or New Trades Alerts later in the day so stay close to your email inboxes!
Wednesday, April 24th, 2013
The Dow stretched its Tuesday winning streak to 15 as the bulls won their third-straight session while pushing resistance and the top of the current trading range. The gains on Tuesday’s have accounted for 70% of the blue-chips advance this year but yesterday’s pop was nearly wiped out in less than 2 minutes after an erroneous headline claimed there had been an attack on the White House.
The volatility came 30 minutes later following our midday update after a hacker gained access to the AP’s (Associated Press) Twitter account. The report said a bomb or explosion had occurred at headquarters and that the President was injured. We were watching the tape and started to scramble to find out why the market was plunging but the indexes had recovered by the time we figured out why. It was only a hiccup as the market quickly resumed its uptrend into the close.
The Dow gained 152 points, or 1.1%, to settle at 14,719. The blue-chips kissed a high of 14,721 but fell short of clearing the 14,800 mark that is current resistance. The dip to 14,554 after lunch knocked the index back 150 points for a loss of 13 but was quickly recovered on the false tweet.
The S&P 500 added 16 points, or 1%, to finish at 1,578. We mentioned a close above 1,575 would be bullish for another possible push to 1,600 and the high checked in at 1,579.58. The index held green all session long despite the afternoon dip back down to 1,566.
The Nasdaq jumped 36 points, or 1.1%, to end at 3,269. Tech made a run past 3,275 after reaching a peak 3,275.89 but was unable to hold this level into the close. We said there was a good chance 3,300 and new highs are tested on a close above this level but the 3,250 level still needs to be watched on any pullback. Yesterday’s drop from 3,270 to 3,247 on the false Twitter posting shows how touchy the market is to headline risk.
The Russell 2000 was up 14 points to 929 and easily cleared 920 in the process while the S&P Volatility Index ($VIX, 13.48, down 0.91) dropped 6%. We said yesterday morning a close below 13.50 on the VIX and over 920 on the small-caps would be golden for the bulls ahead of Apple’s (AAPL, $406.13, up $7.46) numbers which we will cover today in our midday update.
Shares reached an after-hours high of $425 but fell $3 on the unofficial close. As we head to press shares are at $392, down $17.
Futures are showing a mixed open and look like this: Dow (+11); S&P 500 (-1); Nasdaq 100 (-2). Subscribers, check the Members Area for the updates.
Wednesday, February 27th, 2013
The bulls are pushing resistance again today as the Dow is looking for its third triple-digit gain in the past four sessions. Of course, thrown in the mix was Monday’s steep 216-point drop. Today’s pop has the bulls pushing resistance with less than 48 hours to go before the sequester cuts are due to kick in.
We will skip the zombie talk for the most part and although there are reports the knuckleheads are working on “something” to avoid the latest political gridlock but with the president on the road and with Congress taking last week off, it appears Cinderella is going to turn into a pumpkin.
One stock we want to mention today is First Solar (FSLR, $26.63, down $4.73) as shares are down 15% after disappointing earnings. We love playing the options on this stock as the calls and puts can easily make 100% or more depending on the trend.
Shares were left for dead last summer when they bottomed at $11.43 but First Solar starting gaining momentum on better solar panel pricing. Shares recently hit a 52-week high of $36.98 on the turnaround story but solar prices have been in a decline due to oversupply and weaker demand.
First Solar beat on earnings as they reported $2.04 a share versus estimates for $1.75 a share. Revenue came in at $1.1 billion but the suit-and-ties were looking for sales north of $1.3 billion. Lowered guidance for the first quarter is calling for sales of $650-$750 million and earnings of $0.70-$0.90 per share.
As you can see, it would have been a risky earnings trade as a directional play but there was sa little money to be made with a strangle option trade.
With shares just above $31 going into yesterday’s close, a 10% swing would have placed shares at $34+ or $28 or worse.
The March 28 puts (FSLR130316P00028000, $2.31, up $1.09) could have been picked up before yesterday’s close for $1.22 and they are up a snazzy 89% and have traded up to $3.05. The March 35 calls (FSLR130316C00035000, $0.08, down $0.99) were at $1.07 going into Tuesday’s close and are down over 90%.
A 10 contract trade for each options would have cost $2.29, or $2,290, and the present value of the strangle option trade is at $2.39, or $2,390, despite the big loss on the call options. If you would have cashed the puts out shortly after the open the trade could have made nearly 50%.
We didn’t like the risk/ reward the options offered as the premiums were a little juiced with First Solar being a high beta name.
The market has erased Monday’s losses and is showing strong gains as we head into the second half of trading. The Dow is higher by 128 points to 14,028 while the S&P 500 is up 16 points to 1,512. The Nasdaq is advancing 37 points to 3,166.
We have a NEW TRADE we are getting into se we have to roll. The trade was on our Watch List and with today’s pop, we believe we are getting a great entry price on the options we are recommending. Subscribers, check the Members Area for the latest updates and use limit orders to get the best fills.
Thursday, February 14th, 2013
Sketchers USA (SKX, $21.81, up $2.24) shares are approaching their 52-week high of $22.37 as they have traded up to $22.15 today. We have played this name in the past and shares always seem to make a huge move after they report earnings so keep this in mind down the road.
We recently revised and sent out our trading manual, How to Trade Options on Momentum Stocks, so for all of those who ordered the 1-year deal back in December, you should have your copy as they shipped last week. If you haven’t, email our support team.
We wanted to cover Sketchers because we profiled a strangle option trade on our Watch List this week that did really well today. These options trading strategies can be hard to understand but we have simplified it in our option manual and will try to do so here in this space.
With February options expiring todmorrow, we could have used “cheap” options to play this move in Sketchers. Now, trades like this will need a move of 10% or more or otherwise the options premiums will get deflated as both options could expire worthless if shares would have stayed flat or moved less than 5%.
Sketchers went into yesterday’s close at $19.57 so a 10% move would mean they needed to trade up to $21.50 or fall below $17.50 for this trade to have a good chance of hitting a triple-digit return. Here is how it would have played out.
The February 20 calls (SKX130216C00020000, $2.00, up $1.50) were going for 50 cents into Wednesday’s close and are up nearly 300% on the news.
The February 19 puts (SKX130216P00019000, $0.05, down $0.35) were at 40 cents going into yesterday’s close and will likely expire worthless tomorrow.
A 10 contract trade in each option would have been $900. Ten contracts of the call options would have cost $500 and they could be closed at $2.00. This would net $2,000 into your account. The puts cost $400 for 10 contracts and they will likely expire worthless tomorrow.
The $900 you invested is now worth $2,000 and you would be out of the trade after the puts expire. The return is a little more than 100%.
These type of trades are also know as “chicken trades” because you are unsure which direction shares will move after the earnings announcement. We may use these types of strangle option trades in the future as they can pay 100% or more in a matter of a day or two as you can see but you have to be careful.
As far as the market today, the bears are growling but support is holding as better-than-expected economic news has shielded Wall Street from the worse-than-expected GDP numbers from around the world.
The Dow is down 10 points to 13,973 while the S&P 500 is up a point to 1,521. The Nasdaq is higher by 3 points to 3,200. Subscribers, check the Members Area for the latest updates and we will be back in the morning with a full report.
Wednesday, February 13th, 2013
The bulls took another step at setting new 52-week highs on Tuesday and did a good job of holding their gains considering the headwinds before the bell. North Korea will remain a dark cloud over the market for 2013 (and beyond, as well as other nations) and we have mentioned geopolitical events or saber rattling will effect Wall Street but nonetheless, the indexes moved higher.
The Dow added 47 points, or 0.3%, to settle at 14,018. The blue-chips fell 3 points after the open to 13,968 but were up by 70 points intraday before giving back a little into the close. The bulls aren’t going to rest until 14,200 trips and, believe it or not, it was only the second close above 14,000 in February. At the first of the month, the Dow closed at 14,009 and yesterday’s peak of 14,038 was higher than 14,019 set that day. Support has been moving up but the bears would like to get the action back below 14K and then 13,900. We have said to watch for anything below 13,800 as a reversal and our wiggle room is 1.5% from current levels.
If you are not a subscriber but would like to read more please click here. We are one of the fastest growing stock options trading advisors on the internet and we had an incredible 2012. We offer 2-3 powerful call or put option trades each week (depending on market conditions) aimed at triple-digit returns for our Daily newsletter and our Weekly Wrap Covered Call Portfolio strides for double-digit returns on a monthly basis. Together, we were 159-70 (70% win rate) for both newsletters in 2012 with over 30-triple-digit winners. Our 5-year track record from 2008-2012 is now a staggering 621-273 that is also a 70% win rate. We doubt you will find a better options trading service. We are 14-2 so far for 2013 with 2 trades that returned triple-digits.
Our average option recommendation usually last 3 weeks or less and we have closed some trades in as little as 24 hours. We target triple-digit returns for all of our option picks for the Daily and double-digit returns for the Weekly Wrap.
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