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Thursday, January 19th, 2012
1:10pm (EST)
The bulls got a bevy of good news before the bell this morning which led to a good start for the market as the major averages continue to push the July 2011 highs. Bank of America (BAC, $7.11, up $0.31) is giving the Financial stocks a lift after beating Wall Street’s revenue expectations. The suit-and-ties were floored when the company posted a profit of 15 cents a share on revenue of $25.1 billion which beat their projection of $24 billion in revenues. We have been pounding the table on the stock when shares were at $5 back in December as it is a current member of our Weekly Wrap Covered Call portfolio which could start January at 10-0.
Economic news was fantastic as Initial Claims fell to 352,000 versus expectations for 384,000 while Continuing Claims were 3.43 million versus forecasts for 3.6 million. Elsewhere, Consumer Prices were unchanged which was below calls for an increase of 0.1%. The core reading, excluding food and energy, matched the hype and was up 0.1%. And finally, from the crib, Housing Starts dropped for the month of December, coming in at 657,000 versus expectations for 680,000 while Building Permits matched forecasts.
Google (GOOG, $636.00, up $3.09) will confess their quarterly numbers after the bell and shares have a history of making huge moves after they announce earnings. Of course, this is option expiration week and the January options are still in play so let’s take a look at the stock and some of the options.
The last time the company reported their quarterly results (mid-October 2011), shares surged $32-and change from $559 to $591, on better-than-expected numbers. The high that day was $599. In July 2011, Google also beat estimates and zoomed from $529 to $597 and kissed a high of $600.
A 10% move in Google would equate to a 63-point move in the stock and we could see that on an earnings miss to the downside. However, the upside may not be quite as huge if it is not a blowout quarter and could only be 5% or less which is still $30 but is it enough to create a possible strangle option trade?
The Google January 700 calls (GOOG120121C00700000, $1.10, down $0.20) and the January 575 puts (GOOG120121P00575000, $0.90, down $0.70) would cost $2 together and are a possibility but the stock would need to be at $702 or $573 for us to break even. At $704, or $571, the trade would double but again, the options expire tomorrow.
This is NOT an official option trade recommendation but we wanted to show you how strangle option trades work since we have a ton of new subscribers. The risk/ reward on this trade doesn’t look great and it may be better off to SELL these options but that is another strategy altogether and one we certainly don’t recommend on a $600+ stock.
We will take a look at these options again on Friday to see where they are at and we would like to see a blowout quarter which would help the Tech sector keep its momentum.
As we head to press, the Dow is up 14 points to 12,593 while the S&P 500 is higher by 5 points to 1,313. The Nasdaq is showing a pop of 20 points to 2,790.
As usual, we have a number of open trades and there is a lot to talk about so let’s go see where we are at. Microsoft and IBM and Intel also report after the bell so tomorrow could be explosive for either the bulls or bears depending how things go. Subscribers, check the Members Area for the updates.
Tags: goog earnings, momentum options, Momentum stocks, stock option picks
Posted in Earnings, Market Analysis, strangle option trades, Strategies | Comments Off
Friday, December 23rd, 2011
1:15pm (EST)
The bulls came into today’s session with a comfortable lead for the week following Monday’s pullback and have used their momentum to push the major indexes past resistance.
Volume has been light, all week for that matter, and is only running at 40% of normal trading. Light volume can be good or bad but the direction has been upward and Europe seems to be on the back burner for the time being. Economic news continues to provide hope the economy may be improving and we mentioned these two events could play a big role in the market going higher. So far, we have been right on that call.
Today’s highlights include New Home Sales which increased 1.6% in November and matched expectations. Durable goods orders for the month of November jumped 3.8% versus expectations for an increase of 2.2%. The core reading, which excludes transportation items, was up 0.3%. Personal income was up 0.1% which missed forecasts for an increase of 0.2%, and Personal Spending rose 0.1% as well, versus expectations for an increase of 0.3%.
As we type this up, the Dow is advancing 88 points to 12,258 while the S&P 500 is higher by 8 points to 1,262. The Nasdaq is higher by 14 points to 2,614.
Next week is the last hurrah for 2011 and we plan to be active but we wanted to go over our numbers real quick because we are excited about 2012 and we want you to be a part of it.
Our 2011 Portfolio will end the year with over $18,000 in profits. This means if you started the year with us with a $10,000 account, we made you a 180% return on your investment. If you started with a $20,000 account, the returns were 90%. If you started with a $5,000 account your return was 360%.
Of course, you return will depend on when you start with us and if you take all of our trades. Many of you have thanked us over the last few months, especially after the hot streak from mid-August until November, and now we want to thank you.
Every year we offer a special deal to our one-year membership and we try to stress that trading is for the long haul. Choppy and mixed markets are hard to trade but as you have seen lately, TRENDING markets are the time where you can make an incredible amount of money.
There were a lot of option newsletters that struggled this year to give you good advice because our new subscribers have told us. Hedge funds got walloped and Mutual Fund managers are at a loss for words to explain why they couldn’t give their clients a double-digit return. Not us.
We are proud of our 2011 Track Record for the Daily (65% winners) and we are tremendously happy to say the first year of the Weekly Wrap publication was a hands down success (16-0!). To show our appreciation for your support we would like to offer you a special deal for the holidays.
For a limited time, we will be offering a 1-year subscription to our Daily newsletter for $699. The publication is normally priced at $924 which is already a steep discount to our $129 a month rate. We will also be including our trading manual, How to Trade Options on Momentum Stocks as a bonus package. This is an $899 value and shipping is on the house.
Now, the next part is important.
The trading manual also comes with ongoing videos and our next video will be out on Monday night. We want to show you exactly why the market could be headed for an explosive move in 2012. The charts we will cover will clearly show you what could be coming and we will show you how to play a market breakout. We also show you why if there is more trouble ahead, we could see a massive selloff. The video will also cover a more in-depth look at our current trades and will be available to all trading course members Monday night.
We will also be including a 3-month membership to our Weekly Wrap if you hit us up on this deal. This publication is for the short to medium-term trader and aims to provide double-digit monthly income. Our Daily newsletter strides for 100% gains on every trade that usually plays out in 3 weeks or less but the Weekly focuses on buying stocks and selling calls against your position. We like monthly dividends on strong stocks and by selling options it kind of works that way as it reduces our cost basis.
Folks, if you really want to learn how to trade the market full-time and how to understand the market’s moves than there is no better times to join us. This deal will only run until the end of 2011 because we want you on board when 2012 kicks off. The total cost for the 1-year upgrade averages to just over $58 a month for the entire package so you can see the incredible savings we are offering you.
Current subscribers, please feel free to upgrade. If you recently purchased a 1-year membership (since October), email us and we will hook-up up with the add-ons if you did not get a trading manual.
1-year membership – $699 – use coupon code 60EDA4E018 – includes trading course (an $899 value) and shipping. A 3-month membership to the Weekly Wrap will also be included in your membership.
On that note, we will be heading out for the holidays after the bell to enjoy time with our friends and family. We always look forward to wishing everyone a Merry Christmas because it’s our favorite time of the year.
We have updated our Members Area to include today’s 2 new trades. We also have one trade that is up over 80% and we want to take half profits before the weekend.
We will be back Monday night with the Weekly Wrap and Tuesday morning at 9am sharp with the next issue of the Daily. Until then, have great 3-day Christmas weekend everybody!
Tags: binary options, call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading, options trading course, stock market options, weekly options, what are options
Posted in Market Analysis, Market Commentary, Option Trades, Strategies | Comments Off
Thursday, December 1st, 2011
12:55pm (EST)
It has been a rough few months for momentum stocks as a number of high flyers have come back to earth. Some of the problems have been missteps in management (Netflix), resting on your laurels (Research In Motion), shady business practices (Green Mountain Coffee Roasters), or an earnings miss or lowered guidance.
Lululemon Athletica (LULU, $44.96, down $4.74) fits the bill on the earnings side as they missed Wall Street’s estimates last night after the close.
The company reported a profit of $39 million, or $0.27 a share, on revenue of $230 million. Analysts were looking for $0.25 a share on sales of $236 million.
Going forward, Lululemon lowered its sales forecast as inventory buildup jumped nearly 80%. Yikes!
We missed a great opportunity to short this one as we knew going into the week there was a chance they disappointed the Street. We were penciling in an 8%-10% move after Lululemon reported but because we have been expecting this market bounce, we decided to stay on the sidelines. We have been recommending call options so we didn’t need the added risk of an earnings announcement when things have been going well for us. Too bad.
The December 45 puts (LULU112117P00045000, $2.10, up $0.75) closed at $1.35 yesterday and opened at $4.30 this morning. The options hit a high of $4.50 when Lululemon shares touched an intraday low of $41.70. That would have been a sweet 219% return, overnight.
Momentum stocks are great to play on the way up and sometimes even better to play on the way down. We have been able to identify some of these breakdowns and we did really well playing Research In Motion (RIMM, $18.51, up $0.65) to the downside recently. We warned at $125 that Netflix (NFLX, $66.68, up $2.15) was headed to double-digits and we have played both sides of the ball when it comes to Green Mountain Coffee Roasters (GMCR, $55.29, up $2.86).
That is the beauty of trading stocks and options. You can play them up or down – but most investors only want to buy a stock low and sell high. A lot of investors get scared when the market of stock slips or corrects and many investors don’t have a clue on what options do. Not us. We see opportunity.
As far as the market, the action is flat with the bears holding a slight advantage following yesterday’s massive move. The price action is what we expected and we saw the same thing on Tuesday following Monday’s big pop.
As we head to press, the Dow is down 37 points to 12,008 while the S&P is off by 3 points to 1,243. The Nasdaq is higher by 4 points to 2,624.
One of our call option trades from last week is up 86% and we have action to take. Subscribers, check the Members Area for the updates.
Tags: blue-chip stocks, chicken option trade, chicken trade, momentum, momentum options, option mentoring, stock options trading advisors, straddle option trade
Posted in Earnings, Strategies | Comments Off
Sunday, August 21st, 2011
10:40pm (EST)
1. Market Summary
2. Is Dendreon (DNDN) a Steal in the Low Teens?
3. Selling Puts on Stocks You Like Can Be Beneficial
4. Earnings
5. Weekly Wrap Portfolio Update
6. Week Ahead
(To view the charts, please log into the Members Area and go to the Weekly Wrap Premium section)
= = = = = = = = = = = = = = =
If you are not a subscriber but would like to read more and check our chart work for the Dow, S&P 500 and the Nasdaq please click here. We are expecting a busy and volatile week so look for Trade Alerts throughout the day. Sign-up now and receive access instantly!
Tags: call option, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put option, stock options trading, volatile options
Posted in Hot Stocks, Strategies, Weekly Wrap | Comments Off
Thursday, July 21st, 2011
12:55pm (EST)
We have been calling for the market to make new highs in July while most of the talking heads and money managers have been telling you there is going to be a pullback. Although we aren’t there yet, we are feeling pretty good about our predication so far.
We have been busy today but we want to cover a powerful option strategy that many of you may not be familiar with. We will cover the market at the end of our update but let’s look at what a “strangle” option trade can do for your portfolio.
We profiled a strangle option trade for Travelzoo (TZOO, $57.27, down $28.44), which is down a whopping 33%, earlier this week and here is the beauty of this type of option strategy. We knew with the company reporting earnings today there was a chance for a HUGE move but we weren’t sure which way the stock would move.
Below is a chart from Monday morning showing how we drew it up in the sand and the possible move that we thought the stock could make. The green line represented resistance on an earnings beat while the red line (with black circles) represented lower levels of support on an earnings miss.
Here were our exact comments inside our Members Area:
“Thoughts: The 52-week high is $103, the low is $13.75. Last time out shares moved over $20 and have moved higher in the last 4 quarters. If the company can impress the Street, then the stock could hit triple-digits again. If not a drop to double-nickels ($55) could be in the cards.” (END)
The August 90 calls (TZOO110820C00090000, $0.20, down $6.40) opened at $3.10 on Monday and had more than doubled by Tuesday afternoon to $7.20 as the stock reached a high of $90 after opening at $77 that morning. This is where you would have CLOSED the call options side of the trade because it was up 130% in two days and would have allowed you to hold the put options open for free.
The August 60 puts (TZOO110820P00060000, $7.40, up $5.70) opened at $2.20 on Monday morning and were at $1.70 yesterday. Today they are up 335%.
A strangle option trade involves buying both a call and put option and the trade was up 66% going into Wednesday’s action with both sides open. Of course, you would have had to have managed this position daily but the premiums for both options were $5.30 on Monday morning. Even if you didn’t sell the call option and are still holding both, the trade is up over 40% if you closed at current levels. If you played the trade perfectly then you could have made over 100% on EACH option just on the volatility.
Here is a current chart for Travelzoo with today’s drop:
As you can see, strangle option trades can be a great tool if you know a stock is going to make a big move but you are unsure of the direction. They are also known as “chicken trades” and sometimes they don’t work out, especially if a stock stays flat and doesn’t make the anticipated move your were counting on.
We teach these strategies in our trading manual, How to Trade Options on Momentum Stocks, and in our videos.
As we head to press, the Dow is up 115 points to 12,687 while the S&P 500 is higher by 14 points to 1,340. The Nasdaq is showing an advance of 15 points to 2,829.
We are just getting warmed up and there is a lot to cover in our Members Area so let’s get on it. Subscribers, check for the updates.
Tags: Travelzoo stock, TZOO earnings
Posted in Strategies, Trading Psychology, Trading Tips | Comments Off
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Market Breaks Resistance
Friday, December 23rd, 2011
1:15pm (EST)
The bulls came into today’s session with a comfortable lead for the week following Monday’s pullback and have used their momentum to push the major indexes past resistance.
Volume has been light, all week for that matter, and is only running at 40% of normal trading. Light volume can be good or bad but the direction has been upward and Europe seems to be on the back burner for the time being. Economic news continues to provide hope the economy may be improving and we mentioned these two events could play a big role in the market going higher. So far, we have been right on that call.
Today’s highlights include New Home Sales which increased 1.6% in November and matched expectations. Durable goods orders for the month of November jumped 3.8% versus expectations for an increase of 2.2%. The core reading, which excludes transportation items, was up 0.3%. Personal income was up 0.1% which missed forecasts for an increase of 0.2%, and Personal Spending rose 0.1% as well, versus expectations for an increase of 0.3%.
As we type this up, the Dow is advancing 88 points to 12,258 while the S&P 500 is higher by 8 points to 1,262. The Nasdaq is higher by 14 points to 2,614.
Next week is the last hurrah for 2011 and we plan to be active but we wanted to go over our numbers real quick because we are excited about 2012 and we want you to be a part of it.
Our 2011 Portfolio will end the year with over $18,000 in profits. This means if you started the year with us with a $10,000 account, we made you a 180% return on your investment. If you started with a $20,000 account, the returns were 90%. If you started with a $5,000 account your return was 360%.
Of course, you return will depend on when you start with us and if you take all of our trades. Many of you have thanked us over the last few months, especially after the hot streak from mid-August until November, and now we want to thank you.
Every year we offer a special deal to our one-year membership and we try to stress that trading is for the long haul. Choppy and mixed markets are hard to trade but as you have seen lately, TRENDING markets are the time where you can make an incredible amount of money.
There were a lot of option newsletters that struggled this year to give you good advice because our new subscribers have told us. Hedge funds got walloped and Mutual Fund managers are at a loss for words to explain why they couldn’t give their clients a double-digit return. Not us.
We are proud of our 2011 Track Record for the Daily (65% winners) and we are tremendously happy to say the first year of the Weekly Wrap publication was a hands down success (16-0!). To show our appreciation for your support we would like to offer you a special deal for the holidays.
For a limited time, we will be offering a 1-year subscription to our Daily newsletter for $699. The publication is normally priced at $924 which is already a steep discount to our $129 a month rate. We will also be including our trading manual, How to Trade Options on Momentum Stocks as a bonus package. This is an $899 value and shipping is on the house.
Now, the next part is important.
The trading manual also comes with ongoing videos and our next video will be out on Monday night. We want to show you exactly why the market could be headed for an explosive move in 2012. The charts we will cover will clearly show you what could be coming and we will show you how to play a market breakout. We also show you why if there is more trouble ahead, we could see a massive selloff. The video will also cover a more in-depth look at our current trades and will be available to all trading course members Monday night.
We will also be including a 3-month membership to our Weekly Wrap if you hit us up on this deal. This publication is for the short to medium-term trader and aims to provide double-digit monthly income. Our Daily newsletter strides for 100% gains on every trade that usually plays out in 3 weeks or less but the Weekly focuses on buying stocks and selling calls against your position. We like monthly dividends on strong stocks and by selling options it kind of works that way as it reduces our cost basis.
Folks, if you really want to learn how to trade the market full-time and how to understand the market’s moves than there is no better times to join us. This deal will only run until the end of 2011 because we want you on board when 2012 kicks off. The total cost for the 1-year upgrade averages to just over $58 a month for the entire package so you can see the incredible savings we are offering you.
Current subscribers, please feel free to upgrade. If you recently purchased a 1-year membership (since October), email us and we will hook-up up with the add-ons if you did not get a trading manual.
1-year membership – $699 – use coupon code 60EDA4E018 – includes trading course (an $899 value) and shipping. A 3-month membership to the Weekly Wrap will also be included in your membership.
On that note, we will be heading out for the holidays after the bell to enjoy time with our friends and family. We always look forward to wishing everyone a Merry Christmas because it’s our favorite time of the year.
We have updated our Members Area to include today’s 2 new trades. We also have one trade that is up over 80% and we want to take half profits before the weekend.
We will be back Monday night with the Weekly Wrap and Tuesday morning at 9am sharp with the next issue of the Daily. Until then, have great 3-day Christmas weekend everybody!
Tags: binary options, call options, futures options, high beta stocks, Hot stocks, momentum options, Momentum stocks, option market, option tips, options, options mentoring, options trading, options trading course, stock market options, weekly options, what are options
Posted in Market Analysis, Market Commentary, Option Trades, Strategies | Comments Off